What do mine plans cover?

Mine plans are a set of:

plans

cross sections

longitudinal sections

that show the entire workings of a mining or quarrying operation.

The mine plan must:

include any previous workings at the mine if any part of the mine has been worked in the past or
if the mine was previously abandoned

be drawn to a scale that allows for legibility, including legibility when copied

be revised when necessary to show any significant changes to the mine workings

be produced, on request, to a district inspector of mines or to any other person authorised in

writing by the district inspector of mines to inspect it.

The plan must be certified and signed by the authorised mine surveyor. The authorised mine
surveyor:

may include appropriate and useful additional information on the mine plan

should ensure that any information about a danger to the mine, adjacent mines, or adjacent
strata if worked, is recorded accurately on the plan.

The Importance of Mining Plans

Any well-run business starts with a plan, and a mining operation is no exception. Plans and
budgeting or forecasting allow management to prepare for a future period, whether in the short-
term or in the long run. Based on projections, management can allocate and prepare the
necessary resources required to meet a business’ anticipated demands.

While a mining plan may have certain similarities to a budget or forecast, it differs considerably
in relation to its scope. Below we describe the typical mine plan along with its technical features
and explain how it differs from a budget or forecast. Most importantly, we explain why
consideration of a mining plan is paramount when analyzing a mining loss.

What is a Mine Plan?

A mine plan is a comprehensive set of reports, Key Performance Indicators, maps, etc. that
describe the overall operations of a mine with the goal of optimizing the extraction of minerals
utilizing the mine’s available resources. In many countries and jurisdictions mining plans are
required by law to be filed with the relevant regulatory body on an annual basis. The mine plan
can be integrated (depending on software interface) with vendor management, client
management and even accounting applications. Put generally, a mine plan forms the basis for
the entire operation of the mine.

It typically contains information, such as:

Details on all mineral(s) to be mined

Detailed estimated information over time (short/mid and long term): volume, grade, yields, etc.

Equipment to be utilized / extraction methods

Health, safety, hazardous waste, regulatory considerations

Detailed mine maps (topographical and cross-sectional) with campaign specifics / expected
phasing or sequencing

Mine Plan vs Design vs Scheduling

The expressions “mine plan”, “mine design” and “mine scheduling” are sometimes used
interchangeably. However, they differ in respect of their scope or focus.

Perhaps the best way to think of them is as follows:

Mine Design = Physical “allocation” of the mine into blocks, benches, faces, etc.

Mine Scheduling = Sequencing of equipment, actions/inputs: i.e., the “where / when / how”

Mine Plan = Design + Scheduling (Forms the basis for the entire operation of the mine)

What Is A Mining Plan Used For?

Oftentimes we are questioned regarding how a mining plan differs from a general budget. While
there are certain similarities, they differ in terms of their depth and breadth. That is, while a
budget focuses on short- or mid-term outcomes (volumes and revenue), a mining plan focuses
on resources as well as outcomes, and typically drills down to more granular detail and
encompasses a longer period of time.

While both budgets and mining plans can provide short-term and (perhaps) mid-term planning
information, the mine plan provides long-term planning information. Typically, this long-term
planning includes projections related to the entire life of the mine.

Mines take on different forms, but the most typical ones are either underground mines or open-
pit mines. As the process of extraction of minerals progresses, either underground or across
the different strata of an open-pit mine, different concentrations of minerals are expected to be
found at different locations and depths. This concept is important since a mining operation
cannot typically be thought of as constantly “uniform”.

This reason is perhaps behind one of the unique elements of a mine plan (compared to other
forecasting tools); the mine plan contemplates the anticipated grade, yields and volume of
mineral extracted at the different extraction points/locations and depths, and the
resources/specialized equipment required at these different faces.

How Can It Help Us When Analyzing a Loss?

The mining plan speaks to the operation of the entire mine, not just a damaged piece of
equipment or section of the mine. That is, the mining plan details the overall plan and permits to
visualize if the mine was actually performing as management had planned. It also allows us to
understand the different limitations of the operations and any related bottlenecks.

In addition, what is perhaps its most important use, a mining plan holds the key as to how
management can modify the extraction locations to meet its demands in the case of an
unforeseen event. That is, the mining plans helps us to understand what mitigating actions are
possible as a result of a loss event. It allows us to visualize if management altered its plan (in
the event of a loss), and if so, where and when. Furthermore, a mining plan allows us to
ascertain if management later returns to the original mining plan once repairs are completed.

Future or now?

While mining operations have existed for thousands of years, they are no strangers to
technological advances and automation. Aside from the use of self-driving vehicles, drones, and
modernized equipment, mining operations now have access to integrated mine planning
software.

The use of these integrated mine plans ensures up-to-date reporting and allows any
modifications to the plans to contemplate surrounding events and factors in “real time”.

Summary
Given the dynamic nature of a mining operation, and the ability of management to reassign
extraction points and resources for the purpose of mitigating losses, mining plans constitute
essential tools in understanding the mine’s operations, existing bottlenecks, how management
intended to operate had no loss occurred, and what mitigating actions can take place. As such,
mining plans form an integral part of the documentation requested and analyzed when
measuring mining losses.

Strategic Mine Planning for Open Pit Mine

In order to determine the value of a mining project, mine planning engineers must first produce
a Life of Mine production schedule which will be used as an input to accumulate income and
costs in order to determine the optimised cashflow. Open pit production scheduling is a
strategic planning problem that seeks to define the optimal material extraction sequence i.e.,
determine when, if ever, to extract a block of ore and/or waste in a deposit and once mined,
where to send the material e.g., send the material to a processing plant, stockpile or waste
dump. In this last section of the I will be expanding a little bit more on the importance of
ensuring that the material flow in your mine plan is optimised as well as the basic economic
evaluation and analysis of mines.

1. Material Allocation

In the strategic planning process, Material Allocation is all about determining how best
to transport, stockpile and treat material in order to generate all the required products.
The basic open pit material allocation flow diagram is shown in Figure 1. The Material
Allocation Optimiser functionality (on Datamine's Studio NPVS) can be used to change
the processing destination of where material is sent and determines a stockpiling
strategy to meet different product delivery requirements.

Figure 1: Basic material flow diagram in the open pit mining environment.
Stockpiles

It is important to highlight that where grades and contaminants are crucial for the
strategic objectives, the optimal pit schedule may not always the optimal plant feed
schedule. In such cases, stockpiles become a very important aspect of the mine plan
and should be considered in the strategic planning process. Stockpiles are intermediate
destinations for material that has been mined, and it is planned to be processed at a
later date (Elkington, 2009). There are different types of stockpiles with different
intentions and roles in mining operations. It is possible to combine more than one
approach into a single stockpile. These are as follows:

1. Long-term stockpiles – Stockpiles that are designed to store ore material that does
not meet current blend characteristics. The material on these stockpiles can potentially
become economic in the future;

2. Buffer stockpiles – These stockpiles are used as a buffer for solving short-term
fluctuations in production or plant processes; and

3. Blending stockpiles – these stockpiles are designed to blend material based on

single or multiple block characteristics (grades, contaminants etc.) in order to enhance
the homogenization of the ore material that is fed into the plant.

Part 2 of the strategic planning series briefly discussed the ex-pit strategic scheduling
process, which was based on the underlying, optimied pushbacks. The ex-pit production
profile produced in Part 2 of the series is shown in Figure 2. One thing to note from
Figure 2 is the inconsistent ore production out of the pit.

Figure 2: Ex-pit optimised production schedule.

The inconsistent ore supply may result in periods where the plant is not operating
optimally due to lack of optimal material to process. This is where stockpiles become
vital in order to ensure that there is consistent material feed into the crusher. Once
stockpiles are introduced into the schedule and the material flow is optimised, the plant
feed schedule can be optimised as shown on Figure 3.

Figure 3: Optimised plant feed schedule with the inclusion of stockpiles.

The optimised ex-pit schedule without the consideration of stockpiles and the
optimised schedule with stockpile considerations are compared on Figure 4. It is clear
to see that the introduction of stockpiles via the Material Allocation Optimiser (MAO)
has resulted in consistent plant feed as well as a slight reduction in total waste material
dumped. Due to the introduction of the stockpiles, the NPV has increased from around
$608.2 million to around $662.6 million.

Figure 4: Material movement (regular ex-pit schedule vs. schedule with material
allocation optimisation.
In this case, the introduction of stockpiles also allowed for earlier processing of higher-
grade material and delayed the processing of low-grade material for later in the Life of
Mine as shown on Figure 5. Improved cashflows in the earlier years of the operation
results in an increase in the NPV of the project. The NPV is still relatively high even
though the low-grade blocks that were deferred to the future would have greater
discounting to them.

Figure 5: Grade comparison between the regular ex-pit schedule vs schedule with
material allocation optimisation.

Waste Dumps

Traditionally, mine planning has been and still is primarily focussed on ore production
more than anything. More often than not, the scheduling of waste dump material is over
-simplified. Dumps are often treated as a single dumping point with a known volumetric
capacity. The lack of detailed information regarding spatial waste material dumping
makes it difficult to predict the waste dump progression pattern over the Life of Mine
(Li,2016). Without such long-term spatial guidance, the operation would fail to achieve
the long-term objectives such as waste dump height, capacity, footprint, and slope
angles. Other negative downstream impacts include inaccurate estimation of the
required truck hours, poor capital planning etc.

The way we plan to mine waste (addressed by the pit production schedule) and the
subsequent hauling and dumping of the waste materials are really not discreet activities.
Therefore, the waste dump schedule (volumetrics and spatial representations) must be
fully integrated with an optimised pit schedule. Datamine’s Minemax Scheduler can be
used at the strategic planning level to simultaneously optimise the pit schedule, the
plant schedule as well as the waste dump schedule while satisfying different
constraints and strategic objectives. Minemax Scheduler can be set-up and used to
rapidly determine the haulage distances (and consequently costs) from each waste
block in the pit to all the possible dumping destinations assigned to the waste block as
shown in Figure 6. This allows users to establish an optimal spatial dumping sequence
as well as how far and high you should dump.

Figure 6: Haulage and waste dump scheduling optimisation on Minemax Scheduler.

If interested in optimisation of waste dumps, you can read one of my articles titled
"Don't give up yet. There is a way to optimise your waste dumping schedule". Figure 7
shows an example of the integrated pit and waste dump progression schedule for the
first 5 years of the strategic plan.

Figure 7: An example of the integrated pit and waste dump progression schedule.

2. Economic Evaluation and Analysis

I do not have much information about the Economic Evaluation and Analysis process. I
developed more interest in this field after my colleague (Matthew Jarvis) did a great
presentation of this topic. Basically, EEA involves looking at and understanding key
economic metrics:

Net Present Value or Discounted Cashflow:

As discussed before, once the production schedule is defined the next step is to use the
schedule as an input to accumulate income and costs in order to determine mainly the
NPV as shown on Figure 8. NPV is used to determine the present value of all future
cash flows i.e. future cashflows throughout the life of mine discounted today.

Figure 8: An example of a basic cashflow based on the schedule as an input.

NPV is a great instrument for commercial valuation since it includes good valuation of
both short-term value (which received little discounting) and long-term value (which
received greater discounting) (IFRS, 2012). However, looking solely at an NPV can be
deceptive. Risk (greenfield vs. brownfield, new country new orebody, new processing
techniques etc.) is not incorporated into a single NPV other than the discount rate.

Internal Rate of Return

Internal Rate Return measures the rate of return of projected cash flows generated by
your capital investment (Lanctot, 2019). The IRR for each project under consideration by
your business can be compared and used in decision-making. Internal rate of return is
measured by calculating the interest rate at which the present value of future cash
flows equals the required capital investment (Lanctot, 2019). This is an important
economic instrument for comparison of two project. However, one of the biggest
downfall is that is doesn't take into consideration the sizes of the projects in
comparison.

Marginal cost of production

The analysis of the marginal cost of production is based on the fact that fixed costs in
mining do not vary with production output. It is important to distinguish between fixed
costs (costs remain the same regardless of production output.) and variable costs
(costs that change based on the amount of output produced). The main question here
is whether the optimisation of equipment use today can deliver a significant future
benefit –common principal of this is pre-stripping of overburden. Can we leverage off
an existing fixed cost structure early on, allows for seamless access to higher-grade ore
in the future? However, shareholders would not eagerly support lower cashflows for un-
guaranteed future benefit…

There are many other important aspects to take into consideration when running the
Economic Evaluation and Analysis. Snowden offers an Economic Evaluation of Mineral
Resources Course that will equip you with the tools and understanding to effectively
optimise your mine and plans. I should be enrolling for one too :)

Anyway, that brings me to the end of the Strategic Planning series. I had fun writing
these, and I hope you had fun reading them too.