Professional Documents
Culture Documents
Optimisation
Work Book
Prepared by
Norm Hanson
Whittle Consulting Pty Ltd
For
University of Queensland
Sept 2008
Worksheet 1
Mining
Processing (CIP)
Gold
US$900/oz
Prices
Grams
31.103 grams per oz
2240 lbs per tonnne
Unit Prices
Recoveries (CIP)
Value =
92.5%
Revenue
Costs
Worksheet 2
The Value with Multi-Metal, Destinations
If you have more than one metal or more than one possible
4. 250 Tonnes of 0.25% Copper & 0.5 g/t Gold from an Oxide Zone
In this example the truck could go to two different processes, a floatation (but since it is oxide ore and
has lower recoveries) or SXEW (a form of heap leach with a solvent extraction)
Mining
Processing (SXEW)
Processing (Floatation)
Costs
$ 1.50
$ 5.00
$ 8.00
Gold
US$400/oz
Copper
US$1.20/lb
Prices
Grams
Unit Prices
Recoveries (SXEW)
Recoveries (Floatation)
Value =
Revenue
Tonnes
31.103 grams per oz
2240 lbs per tonnne
65%
25%
30%
75%
Costs
Example 44b- .5 grams Au plus 0.25% Cu per tonne in 200 tonnes to flotation
= [(0.5*250 * PriceAu * 25% + 0.25%*250*PriceCu*75%)
- (250 * $8)]- (250 * $1.50)
=
Worksheet 3
Simple Example
Let us consider a very simple ore body which is rectangular, of constant grade, and sits beneath a
horizontal topography. Let us further assume that it is of infinite length, so that we do not have to allow
for end effects, and need only consider one section.
The following diagram shows such an ore body.
Surface
Bench Level
100 tonnes waste
Pit
Ore
Waste
500
100
1,000
400
Total
600
1,400
900
1,600
2,500
3,600
4,900
6,400
If we assume that ore is worth $2.00 per tonne and that waste costs $1.00 per tonne to mine and
remove, then the following table shows the value of each pit.
Pit
Value
1,600
Worksheet 4
Floating Cones
Trace around the Optimal Pit
Case A
-30
-80
-80
+100
+100
Case B
-20
-30
-80
-70
+200
+40
+60
Worksheet 5
As an example we can have a two dimensional model 17 blocks long by 5 blocks high. Only
three blocks contain ore and they have the values shown (after mining). All other blocks are
waste and have the value -1.0.
23.9
6.9
Structural arcs
for each block
Draw the Lerch-Grossman network and determine the most profitable pit.
23.9
Worksheet 6
Z
Desired
Slope
1,2
1,1
2,1
3,1
etc
1, 1
1, 1
>
>
1, 2
2, 2
>
Worksheet 8
Surface
Bench Level
100 tonnes waste
Value
Mill Capicty 500 tpp
Mill Capicty 1000 tpp
900
900
900
1,600
1,530
1,530
2,100
1,917
1,868
2,400
2,085
2,011
2,500
2,057
1,956
2,400
1,851
1,552
2,100
1,486
1,049
1,600
978
449
Value
Mill Capicty 500 tpp
Mill Capicty 1000 tpp
900
900
900
1,600
1,530
1,530
2,100
1,935
1,898
2,400
2,154
2,068
2,500
2,220
2,105
2,400
2,161
1,993
2,100
2,002
1,790
1,600
978
449
Worksheet 7
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
1.00
1.00
1.00
1.00
1.00
1.00
1.00
0.53
0.48
0.43
0.39
0.35
(1-D/100)
0.66
0.66
10.00
0.59
0.59
0.53
0.48
0.43
0.39
0.35
0.51
0.47
0.42
0.39
NPV
5.86
(1/(1+D/100))
0.68
0.62
0.56
NPV
Worksheet 9
Cut-Off Grades
Value = [(METAL* PRICE * REC) - (ORE*COSTP)]- (ROCK*COSTM)
Breakeven situation is when Revenue from Recovered Metal = The Cost of Processing
METAL* PRICE*REC
= ORE*COSTP
= ORE*COSTP
GRADE
GRADE
CUT-OFF GRADE
Worksheet 10
Cut-Off Grades
Label this graph
Worksheet 11
Delay Cost
We again have a cash flow of $1 million for ten years.
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Actual Cashflow
1.00
1.00
1.00
1.00
1.00
1.00
1.00
Simple Discount Factor (10%)
0.91
0.83
0.75
Discounted Cashflow
0.91
0.83
0.75
Year 8
Year 9
Year 10
TOTAL
1.00
1.00
1.00
10.00
0.68
0.62
0.56
0.51
0.47
0.42
0.39
0.68
0.62
0.56
0.51
0.47
0.42
0.39
0.35
0.47
0.42
0.39
0.35
Cost of Delay
6.14
Worksheet 12
Change (Cost)
If we could somehow receive a higher cashflow in the first five years (say $1.2 million) and then accepting a
lower cash flow later (eg $0.8 million), what happens to the NPV?
This is like starting with a high price which falls over time.
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Actual Cashflow
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
Discount Factor
0.91
0.83
0.75
0.68
0.62
0.56
0.51
0.47
0.42
0.39
Discounted Cashflow
0.91
0.83
0.75
0.68
0.62
0.56
0.51
0.47
0.42
0.39
Our Desired CashFlow
1.20
1.20
1.20
Discount Factor
0.91
0.83
0.75
Discounted Cashflow
1.20
1.20
0.8
0.8
0.8
0.8
0.8
0.68
0.62
0.56
0.51
0.47
0.42
0.39
Change in NPV
10.00
6.14