1. Lecture 11 Optimizing Cut-Off Grade Strategy
©2010 Dr. B. C. Paul
Note – These slides contain screenshots from the program MineSight® created by Mintec Inc. Concepts found herein dealing with cut-off grade optimization can be traced to early journal articles by Lane and Henning in the 1960s although the concepts they first taught are now widely understood in the profession and found in numerous sources in the technical literature.

2. How Do You Improve the Value of a Project
Bring profits closer in time
Delay expenses
We figured out a pit sequence that got us to the richest ore first and potentially helped us delay stripping
We also know with Break Even Cut-Off Grades how to never mine stuff that looses us money.

3. Suppose We Have Ore With The Following Grade Distribution
Is the Average Grade of the
Ore I Do Mine Increased when
I Don’t Mine Below the Break Even
Cut Off Grade
Tons of Ore available
The part
Down here
Looses
money
Grade of Ore

4. The Average Grade But What if it Isn’t?
Variable Costs determine what the
Break Even Cut-Off Grade is
But What if it Isn’t?
Tons of Ore available
The average
Grade must still
Be high enough to
Pay for fixed costs.
Grade of Ore

5. You Have to Raise the Cut-Off Grade to Control the Average Grade
I wonder if I could do that to
Sweeten the grade of ore
Going to my concentrator
Tons of Ore available
Grade of Ore

6. Findings I can get my metal out of my ore faster
By processing higher average grades earlier
By processing more ore faster
Often can increase value by setting a higher cut-off value for the mill early and letting lower grade ore wait till later to be processed
Can do this my having more than enough mining capacity to feed the concentrator
Then let the concentrator pick and choose
MineSight has a routine to help us calculate the best ore handling plan – after we have already sequenced where we will mine – Called MSVALP

7. MSVALP is Started From the MineSight Menu and Picking Economic Planner Programs

8. We Get the Familiar Compass Menu
And Double click on MSVALP
To start the routine.

9. The First Panel is Just Like the One Where We Identify Our Block Model in MSOPIT

10. The Second Panel Is Also Like MSOPIT – It Wants to Know Where Our Surfaces File (file 13) is at

11. This Panel is Unique
It wants to know which pit surfaces identify our phases of expansion and push-back.

12. It Needs to Know Which Item in Our Block Model gives the % Rock
This is just like
In MSOPIT

13. Here is Our Prices and Cost Panels
Again – just like
In MSOPIT

14. There is some unique stuff on this panel
Note will still have the familiar option to change mining costs by bench
Just like in MSOPIT

15. Here is a Unique Panel About Our Processing and Mining Capacity

16. Here is a Unique Panel on Processing Our Stockpile (if we have one)

17. Our Audit Options Panel is Just Like MSOPIT
And we will ignore it just like when we ran MSOPIT

18. Our Output Instructions Page is a Little Different than MSOPIT

19. Over-All About 5 Panels that are new and unique to MSVALP
We will visit each panel and explain how to fill it in and how the information is used to optimize and change the cut-off grades as the mine moves forward.
Panels with same-old same-old we will skip over since you already know how to fill them out

20. Our First Unique Panel We plan a Series of pits And Pushbacks
(like you are
Doing in
HW #8) or
I did is slide
Show #10
We need to identify which pit surfaces in our special file 13 have those pit surfaces
At the end of each mining phase.

21. Objective and Restrictions
The purpose of the panel is to show the computer what ore will be available in each phase of our mine development
The pits must go from small to large and each smaller pit must be contained in the next larger pit
(You can’t put material back in place in the ground after you mine it)

22. There is Just One Little Problem
We drew our pits with the Pit Expander tool and then triangulated a surface
They are not gridded surfaces
They are not in the special file 13 used by MineSight® Economic Planner
Of course we have actually dealt with this before because our topo surface was also a triangulated surface that had to be coded into our file 13 so we can put our pit surfaces in in a similar way.

23. Remember What a Gridded Surface Is
Its like the little dots on our computer monitors and TV screens
Each dot can only have one color
But there are so many so close together it looks like one continuous picture.
In a gridded surface file the surface is represented as a bunch of little boxes, each of which has the average elevation of that little area.

24. Lets Look at My Initial Pit that I Will Mine from the Top Down
Suppose I want
To make a
Gridded surface
File from this in the
Pit 40 area of
My special file 13.

25. First Turn On the Model View for Pit 40
I do this with the
Data manager
But nothing
Happens to my
View because
There is nothing
In Pit 40 (good
Reason to store
My info there)

26. Right Click on Pit 40 to Pop Up the Menu
Then pick
Properties.

27. The Model View Editor Opens
Obviously we want to
Display our pit 40
Surface we are going
To make
Preview – we will then
Jump to the geometry
Tab and pick our
Final initial pit surface
We were just looking
At. Then we will go
To the Grid Surface
Tab and tell the
Computer to calculate
The average elevation
Of each little box on
The gridded surface of
Pit 40.
When we click the
Little blue line box
It will show us all
The available
Display variables
(one of which will be
Pit 40 which we will
Select by clicking
On it).

28. On the Geometry Tab
We can pick the surface we will grid from but note there is only a red box – no blue
Worm. The red box means we will pick our file with the data manager (MineSight’s
Version of windows exploring).
Click on the Red Box.

29. It Asks If I Already Have A Geometry Set That Tells What Surface to Grid From
I have the ability
To save and
Retrieve lists of
Objects is I keep
Using them.
In this case I have
No such set so I
Will have to move
On to pick my
Object from the
Data manager.

30. Now It Asks Me to Pick the Object to Use
In my case there
Is some old work
Stored but yours
Will likely be blank
I click the red box
To be shown the
Data Manager list

31. Here is My Data Manager List – I’m Now Ready to Pick

32. I Left Click on My Merged Initial Surface File to Pick it.
Then I left click
On Ok to confirm
I have done my
Work.

33. I Now Have My Surface Listed On the Object Screen
I left click on the
Object to highlight It
Then I left click
Ok.

34. Now I’m Back to My Geometry Set Screen
If I may use the
Same set of
Objects again
I can give the
List a name and
Save it.
I’m not feeling the
Need so I will
Just click OK

35. The Program Tracks the Latest Geometry Set Choice (in case I need to redo something soon)
It ask me if I
Should keep
The latest
Choice or
What ever was
Chosen before
I’m going to tell
It to go ahead
And keep the
Latest (though
Its not really
Important to me
For what I’m
Doing).

36. Now I’m Back to the Model View Editor
I’m go to the
Grid Surface tab
I’ll tell it what surface
To keep the grid
Data in.
Then I’ll click on the
Command to Grid.

37. I Can See Another Surface Showing
I click Ok to finish
With the Model
View Editor.

38. Turning on the Model View of Pit 40 and Turning Off My Initial Pit Surface
I now have the
Initial pit in my
Specialized file
13 which will be
Used by MSVALP

39. Short Detour – I hate that gray color
Left click on pit40
Right click to
Pop up the menu
Highlight
Properties and
Left Click.

40. Up Comes the Model View Editing Screen
Check to make
Sure I’m working
With Pit 40
Then left click
On Cutoffs

41. The Cutoff Colors Window Opens

42. Drag My Mouse Across the Elevation Range (what little there is of it)
It turns blue
Now left click on
Properties

43. The Object Properties Window Opens
Left click on the
Global Color
Pallet
(yes I’m about
Ready to set my
Color)

44. I Pick My Color From the Color Pallet
Then I Ok my
Way out through
The open screens

45. And I Have A Pretty Color Initial Pit

46. I Repeat the Process to Get My Pit After the First Push-Back

47. Repeat Again for the Second Push-Back

48. The Third Push Back

49. Understanding the Cutoffs Panel
An interest rate tells us how much money we loose or spend for each delay period.
A period is almost always a year (it doesn’t have to be) so need to enter the annual
Interest rate. Mining is often a 15% interest rate so we would put in 15

50. Mining Amounts
The program tries to schedule our mining so we need to tell it how many tons at a
Time to look at for a schedule – normally we want about 1 weeks worth of mining – If
My equipment could move 50,000,000 tons per year and I ran about 50 weeks a year
I would put in 1000 (because 1,000,000 is 1000 units of 1000 tons each)

51. The Cutoff Controls
Need to understand how the program optimizes a cut-off grade to know what
These numbers do.

52. You Won’t Go Below the Cost of Processing for Anything You Send to the Mill
Enter the minimum grade of material that is practical to consider processing
At the mill.

53. How the Program Optimizes
The program first assumes that all material above break even cut-off grade is processed when it is mined
It assumes each push back is mined from the top down and the good stuff is sent to be processed
The Program calculates the Net Present Value of the mine.

54. How the Program Works Continued
Material that will not be mined or processed for many years will be less valuable to the NPV (it is being multiplied by a discount factor less than 1)
What if I Process low grade ore that gives me on 5 cents per ton of profit
But meanwhile there is high grade ore waiting to be mined that could make me $100/ton
If I wait 5 years to get it it would only be worth $50/ton - I’d loose $50/ton
If I’m running low grade crud through my mill I’m loosing $50 bucks a ton to get 5 cents a ton
I’d be better off tossing the low grade stuff aside and getting to the really hot items!
The program says – what if I put really really low grade ore aside so I can get the good stuff faster – would that make my NPV go up
If the answer is yes it raises the cut-off grade
It then tries the next higher cut-off grade to see if that makes NPV increase

55. Other Boxes Say How Much to Try to Increase the Cutoff and How Many Increases to try

56. Rechecking Cut-Offs Every Year
It will recheck cut-off every year. We need to tell it how many times to try increasing
The NPV all total.
(Probably want to try for at least 100 to make sure the program
Has plenty of tries to do its thing).

57. The Item I’ve Been Avoiding
If I’m going to have a cut-off grade I better tell it what mineral I’m going to apply it
To and which spot in my Block Model has the info in it - I bet its not Topo% -
In our case maybe it will be Cu for Copper.

58. So Why Was I So Worried About Telling You What Mineral the Cut-Off Grade Applied to?
If the ore deposit is mined for only mineral like copper there is no reason for me to hide
The problem is that many deposits today are Paulymetalic (woops Polymetalic)
That means they get their value from more than one mineral
Maybe a deposit that is mined for Copper and Molybdenum (like our example deposit) or Copper and Gold, or Copper Gold Molybdenum and Uranium (like Bingham Canyon)

59. Do We Want to Adjust Cut-Off Grades with One Mineral?
A possible response
Create an Equivalent Grade
If our main mineral is copper
And copper is worth $3/lb and moly is worth $9/lb
Then a pound of moly is equal to 3 lbs of copper
Ore Block has 0.3% Cu and 0.1% Moly
Moly *3 is like .3% Cu
Add them up
The block has 0.6% equivalent copper

60. Another Trick Do Cut-Offs in dollars
When you run MSOPIT have it save the dollar value per ton of each block back in the model
Then do cut-offs on the dollar per ton values
Obviously you have to pick the variable in your model that has the information you chose stored in it
Now you know why I saved it for last to explain.

61. How Do I Get MSOPIT to Store Values in the Block Model
Right here on Output
Instructions you can save
The value per ton back into
The Block Model.

62. Unique Screen #3 This screen Specifies your Mining and Processing
Capacity.

63. How Does Capacity Relate to Optimal Cut-Off Grade?
To maximize the NPV of ore the best answer is to tell Scotty to beam up all the metal in the whole deposit now.
That way there is no discounting of future earnings
In practice you can’t do that
Scotty was on a science fiction show and you have to mine with trucks and shovels that all cost money
If you spend a fortune on production equipment you will only use for a year obviously you are going to get financially creamed.

64. Tell the Program How Much Stuff You Can Move
Note that your input
Is in 1,000s of tons
(thus if I can move
20,000,000 tons a
Year I input
20,000)
This mining capacity limits how fast you could go through the ore deposit.

65. Remember the Economic Parameters Screen
You identified
Destinations
For material
In your
Homework
Destination 1
Was your
Concentrator
2 was a heap
Leach
3 was a dump
4 was waste

66. Here Are Your Destinations
For each process you
Indicate the amount
Of capacity you have
(remember – its in Ktons)
If you have a process
With unlimited capacity
Just put in an ungodly
Big number
If the process is available
To be used then click
A check in the used box
(not all processes may
Be available when a mine
First starts)
Default units are in tons
(controlled on grade line)

67. The Critical Role of Processing
For almost all metals and a lot of industrial minerals the processing plant costs more than the mine
You cannot afford to have your critical asset sitting idle (A metal concentrator can easily cost $2,000 an hour just to own – it will financially eat you alive if its not producing something of value for you)
Thus one “must do” is to keep the concentrator fed all the time

68. Indicating Processes That Must Be Kept Running Full
Check the rate box
To indicate that it is
A critical process that
You must feed
You may have more
Than one
(if you have a lot of
Investment in your
Leaching operation
This might also be
Critical)

69. Indicate Your Total Critical Feed Amount
(Side note –
Your total
Mining capacity
Better be more
Than this or
You have a real
Imbalance
Problem)
Give the total tonnage that must be fed to critical processes. (If my mill can handle
20,000,000 tons per year and it is my only critical process I would probably put
20,000 in the line to specify that I want that mill kept running full).

70. How Much Is This Going To Cost?
You can put in how
Much money is going
To be spent to set
Up this process.
(If you do it will take
The investment away
From the NPV of
The profits to give you
A total NPV. If you
Put nothing in here it
Will get you the NPV
Of the earnings but
You will have to handle
The NPV of the
Investment)

71. How Does the Program Crank
It will mine each push back in order from the top down at a rate limited by your mining capacity
It will keep your critical processes full using break even limits on ore grades
If it can keep the process full using less than the total mining fleet capacity it will
If it finds that at some times the fleet cannot strip enough overburden to keep the processes full it will try to do pre-stripping in earlier times
It calculates the NPV
Then it tries increasing the cut-off grade so that better ore goes through the mill sooner and sees whether it can improve the NPV
It keeps doing this until the NPV stops improving

72. The Time Period Sometimes mines Change capacity with
time. You can set the
Time periods over
Which a particular
Set of capacities
Apply.

73. I Can Set Up to 5 Different Time Periods

74. Why Would Capacity Change?
Stripping ratio increases with depth and truck cycle times become longer
I may not buy all my trucks up front. I may add trucks as needed to keep up with the stripping ratio
(Remember – one way to improve NPV is to put-off expenses)
My Available Processes May Change
Many copper or gold deposits have ore that has oxidized at the top
Oxide ores often can be easily leached so I may have a leach to start with and then add my mill as I get into the sulfide ores that need more special processing

75. The Bootstrap Trick
Remember – one way to improve NPV is to put-off expenses
Suppose I start by building a smaller mill and then I use profits from the operation to expand the mine and mill
Using your businesses own profits to grow instead of going for full capital at the very start has been called pulling yourself up by your own bootstraps.

76. What of the Low Grade Ore I Throw Out of the Mill to get to the High Grade Sooner?
I can either toss the
Low grade stuff
Away as waste – or
I can stockpile it
And send it through
The mill later.
This next panel
Controls the
Stockpiles.

77. Each Destination Can Have A Stockpile
Numbers are
Just like those
On the
Capacities
panel
In your homework a waste dump (destination 4) would not have a stockpile.
It is also likely that a dump leach (destination 3) would not have a stockpile.
A mill (destination 1) would also certainly have a stockpile. The leach pads
Could be either way depending on your design.
A check on use means a stockpile exists and can be used at that time.

78. The Cost of Rehandle
Picking up anything almost always costs 25 cents per ton or more. It costs something
To rehandle out of a stockpile and take low grade to the mill when there is a lull.
You need to identify what material retrieval costs (if you put in a zero that at the very
Least it will process everything when the mine shuts down)

79. Minimum Profit
Remember that break even cut-offs make sure that material can pay its own variable costs for processing
What about the mine’s fixed costs
The average grade of the material must cover the fixed costs.
If you are feeding just low grade at the end the average grade may not handle the fixed costs
You may have to require a certain minimum profit per
Ton of material processed to handle the fixed costs of keeping the operation open.

80. Here is Where We Enter the Minimum Profit

81. Rules May Change With Time Period
Here you
Specify the
Start and
End year for
The
Conditions
You entered.
Click add if
You want to
Add data for
Another time
Period. (It
Starts out with
Just one time
Period shown).

82. What Happens with the Stockpile
If the mine is short on ore for the mill it will
Pull in ore from the stockpile
This may be more cost effective than moving up stripping work to an earlier time period to have ore uncovered.
If the ore in the stockpile is more desirable than what is being mined now it may also want to bring it in.

83. The Program Will Try Different Options
The program will try different cut-off grades in different years pulling in stockpiles at the right time trying to get the highest NPV
Is there any guarantee the best answer won’t be between two things the program tries
No.
There are analytical solution algorithms but they have more restrictions on conditions
For long term planning with other uncertainties a good try a range of things algorithm is probably a reasonable attempt to optimize.

84. What is Likely to Happen?
Early in the life of the mine the cut-off grade will usually be high
(there is a lot of premo stuff being put-off in time that could be processed sooner if we bumped out some low grade)
As time goes on – the future becomes closer – and the amount of ore yet to be mined get smaller
The cut-off grade will usually decline with time.

85. Is Cut-Off Grade the Only Thing to Optimize?
I can try to maximize the NPV of my ore by bumping low grade out of the concentrator to get to high grade faster.
But I can also get to it faster by trying different mill sizes
There is no analytical solution to tell you what the best size is
There is only trial and error with different sizes

86. Size Value Relationships
Project
Value
If the equipment
Purchase is too big
You’ll never have the
Time to get a good
Return on the
investment
If the mine is too small then good
Material will wait so long for
Processing that it will make no
Difference to the NPV
Mine (Mill) Size

87. Seeking Out the Best Size
Can keep running different cases with MSVALP
MineSight has an option to save you sitting there and plugging
(because a lot of the time you just change a few numbers and run it again)
You can use the Multi-Run option
Put the changes you want in a que and then tell the program to try different things and report back when it is done
I’m not going to get you into the detail of doing Multi-Runs in this class but the option is there

88. Output Control

89. How to Design a Mine Get a Model of your reserves
Select a mining method to try
* For Open Pit
Use a Lerch Grossman routine to find the ultimate pit
Use options such as Price-Fake and Multi-V to select a series of stage pits and push-backs that work out to the ultimate pit
Try to get the best ore areas first
Fit practical mine pits to the theoretical ones with tools like the pit expansion tool
Give the Pits to MSVALP
Use variable cut-off grades and multi-runs to find the best mine size and the cut-off grade history to provide the best return
Develop your exact haulage network
Run MineSight Strategic Planner which will show exactly what ore and waste to mine from where each year
Give the ore to be mined each year to your short term mine planners so they can schedule the shovels and trucks to keep the mill filled with a steady even grade of ore.

90. Lets Try Running VALP on Our Example
I had MSOPIT store
The value per ton
Of ore back into my
Block model
(I’m going to use
That fact when I
Plan my cut-off
Grade trials)

91. How Did I Do That? This is the output Panel of MSOPIT I said to store
The net value
Per ton back into
VALPT in the
Block model
I indicated not to
Include mining
Costs.
(I’ll explain why
A little later)

92. Another Preparation
I am going to need to commit to a production rate to try.
Lets say I believed I had 900,000,000 tons of ore
At 1:1 strip ratio
Optimum mine life is usually around 15 to 30 years
At 30 years for a big mine this suggests
30,000,000 tons/year of ore
60,000,000 tons/year of total mining

93. Fire Up VALP

94. Identify My Block Model Location Just Like in MSOPIT

95. Identify The Location of My Special Gridded Surface File as Before

96. Each of My Stage Pits is Called a Phase
I start with my
Undisturbed surface
Then I take out my
Small top-down
Initial pit
Then I do my 1rst
2nd, and 3rd push
Back
(Note – I stored these
Phase surfaces in my
File 13 as you
Remember)
(The pits must get progressively bigger with each stage
Pit nested entirely in the pit that follows it).

97. Identify Which Item in My Block Model says how much of each block is rock (just like in MSOPIT)

98. The Economic Panels Are Similar to MSOPIT
Note – However
That I have made
VALPT a grade
Variable even
Though I am
Clearly not using
It.

99. And I Fill in the Economics Panels for the Other Destinations

100. Now the All Important Cut-Off Grade Panel
My ore deposit is
Polymetallic so rather than
Change cut-off grades
For just one ore mineral
And ignore the rest I am
Going to do cut-offs in
Terms of value per ton of
Ore. (That’s why I had
MSOPIT save the block
Values and why I told my
Economics panels in
VALP that VALPT was
A grade item)
My lowest cut-off grade I will consider is my Break Even
Cut-Off Grade. At this grade the block value is 0 – it exactly
Breaks even. Note also when I saved my Value per ton I should
Not include mining costs since my Cut-off pertains to what I will send
Through the mill.

101. I Need to Identify What Cut-Off Grades I Will Try to Find My Optimum
I’m allowed to try
Up to 10 cut-off
Grades – and I’m
Going to use them
All
I’m going to
Increment the
Cut-offs every 50
Cents per ton.
(now that will only
Go up to $5/ton
When I have blocks
Worth over $60/ton)
My reason for having all my cut-offs at the bottom end of the range
Is because I expect most cut-offs to involve low value ore – I’ll
Find out how good my guess was.

102. Control Variables I need to set The size of Ore increment That the
Program will
Shift between
Ore and waste –
It should be
About 1 weeks
Production. In
My case
60,000,000 tons
Per year and
52 weeks per
Year is around
1,000,000. Since
They want ktons
I enter 1,000
The typical interest rate for mining projects is 15%
I will set a high number of iterations so it can be sure to try the
Options it needs to.

103. The Next Panel Sets My Process Capacity
I’m going to set up 25,000,000
Must have tons for my mill
(I’ll add a lower cost leach
Option in a minute)
My total mining capacity will be
As I estimated before.

104. Continue Filling Out the Panel
I’m going to
Try to have the
Same capacity
Over my mine
Life. I start in
Year 1 and
Then go to
A number that
I think will
Exceed the
Mine life.
I could indicate the total number of investment dollars I have made but I don’t have
To and it won’t change how the program runs. If it tells me my optimum NPV
Is $5,000,000,000 then I know I can’t invest more than $5,000,000,000.

105. I Need to Enter My Destination Capacity
I’m going to set
My waste dump
Capacity at
60,000,000 tons
(my full mining
Capacity) although
I’ll be very upset
If everything really
Goes to waste
I wanted about 30,000,000 tons of ore processing – (Remember my initial estimate)
I’ll try putting 25,000,000 tons of that in a very expensive mill and 10,000,000 tons in
A more economical, but not as efficient Leach Pad.

106. Now For the Check-Off Boxes
Use means that the
Process is available
In the time period
Range. (Remember
I can have more
Than one time
Period range so
Different processes
Might be available
At different times).
Of course not in my
Case so I check off
Use for all 4
Processes)
Rate means that it is a critical process that must be kept running
To capacity. You have to have 1 rate controlling process. In my
Case that’s easy – a mill could easily cost $300,000,000 – I’m not
About to let that kind of capital investment sit idle!

107. The Next Panel is Stockpiles
If I use a high
Cut-off grade for
The mill then
Low grade ore
May not get to
Go through
When it is mined.
I can stockpile
That ore for
Later processing
It will cost me something to dig material out of the stockpile and haul it to a processing
Site. I can put that rehandle cost in.
If I wanted I could also require some minimum profit per ton (if I’m processing all very
Low grade at the end of the mine life the material might not carry my fixed costs). I
Can require a minimum profit per ton – I’m not going to mess with it right now.

108. I’m Going to Leave the Audit Options Alone for Now (Just like I did in MSOPIT)

109. I Set My Output Instructions
The essential items
Are a name for
The run
And an extension
For the report file.
I have the program
Store back into the
Model the pushback
That took the ore,
Its destination, and
The year it was
Mined.
(obviously I need to have this variable space
Set up in my block model)

110. And We Run the Program

111. The Program Issues a Variety of Reports
I go for the bottom line on my rptvap.rt1 my first basic summary report
This info is right near the bottom
If I just mined my final pit from the top down the NPV would be $4.1 billion

112. I Planned Out My Expansion Sequence Though
Thanks to the brilliance of my sequencing I improved the NPV to $5.5 billion or
An improvement of 33.4%

113. If I Adjust My Cut-Off Grades With Time I Can Improve My NPV
To $6.9 Billion Dollars or another 25.8% Improvement
You can see why being able to optimize a mine plan makes ore deposits out
Of interesting mineral occurrences!

114. I Can Look at A Report on Each Stage Pit
It tells me how
Much ore and
Waste I had in
Each stage pit
And what my
Strip ratio was
For that pit.
One thing that I
Notice is my total
Amount of waste
Was much less
Than 1:1

115. I Also See A Mistake I Made
Pit 1 - $40.26/ton with
A S.R. of to 1
Pushback 1
$26.04/ton with a S.R.
Of to 1
Pushback 2
$28.86/ton with a S.R.
Of to 1
Pushback 3
$17.78/ton with a S.R.
Of to 1
I’m trying to get best
Ore first and put off
Stripping – whats wrong
With this picture?

116. My Mistake
After My Initial Pit I could expand out to the west or to the east.
It looked like from the ways my shells expanded that I should go west first
Unfortunately the report shows that I would have richer ore with less stripping had I gone east first and then turned west
Well I have a feeling someone will be redoing stage pits.

117. As With MSOPIT Reports I Can Check My Inputs

118. The Detailed Report Det.r1 tells me about the Cut-Off Strategy
During the early
Years most of the
Mill feed comes
From the mine
The Cut-Off grade
Is high with
Material going to
Leach and
stockpile
At the end the
Mill keeps running
Off the stockpile for
2 years.

119. The Report Also Show Inputs and Outputs from the Mill Stockpile
There is my last 2 years from the
Stockpile.
I’m stockpiling some pretty high grade at first

120. So Recaping A Long Term Design
Get a Block Model of Your Ore Deposit
Guess at your mining scale and economics
Find the Ultimate Pit with those economics
Get the computer to outline where the most profitable ore is at
Plan out a series of stage pits that are practical and follow the best ore first
Select your planned capacities
Look for a cut-off grade strategy that sends the highest value material to your mill first

121. Things We Have Not Done
You Would Also Try a Series of Different Mining Capacities to find out what mine sizes give the best return
To do that we would use the Multi-Run option in MineSight
You’d give it a whole bunch of different capacities to try and then have MineSight run VALP on all of them
Multi-V keeps you from having to manually keep loading and trying different scenarios
I’m not going to have you do Multi-Runs

122. What Multi-Run Would Show
PVR (Dollars of NPV/dollar of investment)
Size
(you just tried one size and got one point on this curve)

123. How Do You Optimize Your Plan?
You put together a stage pit sequence that goes after the most profitable ore first and the least valuable last
You raise your cut-off grade and stockpile or reroute low grade ore so that your most costly asset (your mill) is processing all high grade early in the mine life
You try different sizes and expansion strategies so that you get the maximum number of dollars of NPV for each dollar of investment (maximize the PVR)

124. This Gets You An Over-All Profit Maximizing Strategy
You still need to have more info to pass on to short term mine planners that will run every day operations
You add in your haul roads and pick your exact haul trucks and equipment
You get your truck cycle times and thus the capacity
You feed this to Strategic Planner
It will show exactly which blocks should be mined each year and where they should be sent
With this and the haul roads you hand off to your shorter-term planners
Your shorter term planners will schedule which shovel and truck set is where each day in order to give a steady even feed to your mill and stay within capacity limits every single day.

125. Now Its Your Turn Do Assignment #9
Put your stage pits from Assignment #8 into VALP
Make your best guess at a capacity strategy
Run an Optimized Cut-Off Grade
Fill in the Output Table
25 bonus points to the Weiner who comes up with the most valuable mine!