chap.

2
Short and long term
mine planning strategies
Grade control sampling and
SMU size optimization using
conditional simulation

Open pit short term mine planning depends, in many cases, on the definition Ignacio Vlez and Ivn Gonzlez.
IGA N Consultores, Spain
of the areas (polygons) of ore and waste by sampling of drillholes that, de-
pending on the operation, will be used afterwards as blasting holes.
Usually, the selection of the grid in which this grade control sampling is
performed, is based on criteria that do not maximize the recovery of the min-
eral reserve or minimize dilution, and answer to operational or simplicity
reasons that do not allow the maximum potential of the orebody to be achieved.
In the same way, the selection of the Selective Mining Unit (SMU) size,
that is critical for the definition of ore and waste, is left in the hands of
subjective criteria. Many times this criteria is influenced by what is done in
similar operations, and the specific characteristics of the reserve are not
taken into account.
A methodology based on conditional simulation is presented. This meth-
odoly allows for the calculation of the sampling grid that minimizes ore loss
and dilution. At the same time, this technique analyzes rigorously the effect
of the SMU size over the recovery and dilution, and constitutes a method of
selecting an adequate size.
This method is applied to the Cerro Colorado orebody in Minas de Riotinto
(Spain) and conclusions are extracted regarding the optimum sampling grid
and the adequate size of the SMU that will allow achieving an optimal recovery
in terms of dilution and ore losses.

***

27
INTRODUCTION
The Rio Tinto area in Huelva Rio Tinto has been a mining centre for the last 2000 years. Mining in
this area stopped in 2001 due to low metal prices. Today EMED-Tartessus (EMEDT) holds the
propriety of a mining lease that includes several orebodies (San Dionisio, Planes, San Antonio,
Cerro Colorado...) and plans to restart the Cerro Colorado open pit for copper extraction. The
current published reserve of the Cerro Colorado orebody is of 123 Mt at 0.49% copper grade for a
0.2% cut-off grade (AMC Consultants (UK) limited, 2010). EMEDT is in the process of obtaining the
regional administration permits to operate the mine.
Generally speaking, the distribution of an economically interesting mineral species (or element) in a
deposit is what controls the dilution (defined as the mixture of waste with ore material) and the ore
loss (ore that gets classified as waste) and both, dilution and ore loss, depend of the size of the
mining block defined, called the selective mining unit (SMU). There is a clear balance between the
size of the SMU and the selectivity; larger SMU will allow bigger equipment and higher
productivities while a smaller SMU allows for greater selectivity and lower dilution and ore loss.
Traditionally, SMUs are selected based on estimation techniques (such as kriging, polygons or
inverse to the distance) that will generate as a result a specific grade of the element for each SMU.
Conditional simulation, on the contrary, generates a number of equally probable images of the field
being simulated (in our case, grade) that will honour the statistical distribution (histogram and
variogram) of the input data; the preservation of the statistical distribution is not achieved by
estimation techniques such as kriging, that will usually have a smoothing effect. The difference
between these alternative models reflects the uncertainty that is left once they are conditioned to the
data available at the time of the prediction study. As opposed to maps of estimated values,
conditional simulation provides images of the grade spatial distribution that are not smoothed.
Such smoothing generally leads to underestimation of the proportion of SMUs with extreme high
grades, and overestimation of the proportion of SMUs with low grades.
The method here proposed analyses the effect of using different grade control meshes to calculate
the impact on the expected recovery of the reserve as well as the effect of using different SMU sizes
to calibrate the impact over the dilution and ore loss. Mathematical formulation falls out of the
scope of this article, but good descriptions of geostatistics and simulation are collected in Isaaks &
Srivastava, 1989; Englund & Heravi (1992) and Goovaerts (1997).

BACKGROUND
The town of Minas de Riotinto is located in the province of Huelva in southern Spain. The Cerro
Colorado deposit is located just to the north of the town. Mining in the Ro Tinto area dates back to
the Phoenician period over 2000 years ago. Since then it has been mined by the Romans, Moors,
British and Spanish. The focus was initially on gold deposits associated with gossans and massive
sulphides typical of the Iberian Pyrite Belt (IPB).
The Cerro Colorado deposit of the PRT contained one of the largest concentrations of sulphides in
the world. It is estimated that there were initially 500 Mt of massive sulphides of which 20% were
leached to form gossans. The PRT has been mined for over 150 years for copper and sulphur, and
gold and silver from gossans.

28
Between 1964 and 1967 an exploration campaign resulted in the discovery of the Cerro Colorado
copper deposit. In 1969, the copper concentrator started up with a design capacity of 3 Mtpa. This
was later expanded to reach the current nominal capacity of 9 Mtpa. In 1971, a gold leach plant
commenced operation at a designed throughput of 1.5 Mtpa and was later expanded in increments
to reach a design throughput of 6 Mtpa. After several changes in the propriety of the mines and
mainly due to low copper prices, the Rio Tinto Mine closed in 2001. Since then it has been under
care and maintenance. EMED-Tartessus bought the property in 2008 with the intention of
reopening the mine for the extraction of copper from the Cerro Colorado pit.
Since the acquisition of the property in 2008, EMEDT has undertaken several works to prove the
technical and economic viability of the project, including a feasibility study (AMC, 2010) and a
JORC compliant reserve calculation (JORC, 1999; Snowden, 2008) and the project now is waiting for
the approval of the regional administration for start-up.
EMED, as part of the studies they are undertaking to fine tune the operations start up, wanted to
investigate the impact of different drill grids in the quality of the grade control as well as the effect
of the size of the blocks (SMU) used to define ore and waste contacts. The interest of EMEDT, apart
from the obvious benefits of performing such analysis, was based on the problems that the previous
operators always had to achieve the expected grades to the mill.

METHODOLOGY
In many metallic mines the separation between of ore and waste is done based on a block model of
estimated grades (David, 1977) to which various cut-offs are applied and dig polygons defined
around the blocks that are above (or below) the different cut-offs. For simplicity, in all that follows,
only one degree of classification will be considered, ore or waste, but the method here delineated is
applicable to orebodies were several classes are needed with different cut-offs.
The block model used to draw the dig polygons is, in many mining operations, calculated with the
values of samples taken with drillholes done on the bench that is going to be mined on a more or
less regular pattern, as is the case for the Cerro Colorado pit. The spacing and distribution of this
sampling grid is usually not analysed and the consequences of modifying it are not fully
understood in many operations. This effect is known as the information effect.
In the same way, the block size used in the model is a critical factor to define adequate polygons
that are mineable and represent correctly the dilution and recovery expected form the operations
(Jara et al., 2006). Blocks that are to big will lead to excessive dilution and reduced recovery; too
small and excessive selectivity will be needed, having a negative impact on productivity. This effect
is known as the support effect.
Even considering that there are several precursors of this work in the literature (Jara et al., 2006;
Glacken, Nopp, & Tittley, 2000; Leuangthong, Neufeld, & Clayton, 2003), both the selection of the
sampling grid and the size of the SMU, are usually left to inadequate criteria based in what is done
in similar mines or orebodies. As it will be seen, the selection of both the sampling grid and block
size can have an important impact in the recovery of a mineral reserve.

29
Conditional simulation
The aim of conditional simulation is different of estimation techniques. While estimation techniques
(like kriging in all its forms) look for local accuracy, simulation techniques emulate large scale
structure by preserving the statistical parameters of the data the simulation is based on (namely the
histogram and variogram).
Simulation, as mentioned before, does not generate a single result, but a set of equally probable
scenarios while it ensures that the scenarios are conditioned to the original dataset.

Reblocking and Resampling

The method here presented is largely based in Journel & Kiriakidis (2004) and it is a reblocking and
resampling use of conditional simulation (Glacken, Nopp, & Tittley, 2000).
It takes a set of simulations to a small scale and treats them as if they were the reality. This is
possible because simulation does not smooth the data and keeps the statistical properties of the
initial data set.
This small scale simulation is sampled as if it was the real orebody, in our case with a set of
drillholes with different spacing (emulating the grade control sampling) and the results of those
synthetic grade control holes, after the data quality is worsened to take into account assay and
sampling errors, are used to calculate a grade control model that is compared with the original
real model to see the quality of the classification that can be done with that particular sampling
and SMU size.

CERRO COLORADO CASE STUDY

Initial dataset
One of the requisites to apply conditional simulation is that it is applied to areas in which the
geostatistical parameters are preserved, in other words, these techniques must be applied to every
In the Cerro Colorado orebody, six domains have been defined (Snowden, 2008) based on
geological and geostatistical aspects as seen in Table 1.

Table 1 Geological domains

Domain Description
1 Acid Volcanics
2 Basic Volcanics
3 Filn Sur
4 Filn Norte
5 Oxides
6 Slates

30
From these domains, domain 1 is the one that contains most of the reserve, for this reason all the
simulations were constrained to this domain, due to the fact that is going to be the one driving most
of the grade control and mining costs. However, future work is planned to be done to study the
sampling and mining block size in other domains, especially in the Filn Norte domain that has a
complex metallurgy and much higher contaminants content with higher copper grades.
The available drillhole database containing over 420 km of drilling was filtered to obtain only the
samples corresponding to domain 1. A total of 25,575 samples were selected. Only the Cu grade
was object of this study, this was because Copper is the most important element to analyse from an
economic perspective, but future work will include the behaviour of other elements such as
sulphur, silver, arsenic, bismuth, antimony and mercury.
Some statistics of the filtered copper set can be seen in Figure 1, experimental and modelled
variogram in figure 2.

Figure 1 Copper grade historam and statistics for domain 1

Figure 2 Domain 1 Cu experimental and modelled variogram

31
Simulation process
The reserve block model was done in 12.5 x 12.5 x 12 meter blocks (AMC Consultants (UK) limited,
2010), based on this size, a dense point simulation of copper grades was done in 1.5625 x 1.5625 x 6
meter blocks (dividing by 8 in X and Y directions and by 2 in de Z direction). A total of 50
simulations were done using gaussian sequential simulation with ordinary kriging. Both the
variogram model and kriging parameters were extracted from the resource calculation done by
Snowden (Snowden, 2008).
These dense grid simulations were reblocked to 3 different sizes 12.5 x 12.5 x 6, 6.25 x 6.25 x 6 and
4.6875 x 4.6875 x 6. These 3 block models per simulation will constitute the real selection model .
The dense point simulations were artificially drilled in several grid sizes, from 3 x 3 to 9 x 9 meter
grids, varying every meter for a total of seven different grade control grids.
Resampling usage of simulation, such as the one presented here, takes an existing set of data (in our
case the existing drillhole database) as the seed data to produce the simulations, it is assumed
(Journel & Kiriakidis, 2004) that this initial data is of high quality, or at least of a better quality than
the grade control holes done for polygon delineation (assumes samplig and assay errors close to 0
in the initial dataset). On the contrary, the data coming from the sinthetic drillholes needs to be
worsened in quality to mimic the sampling error incurred in sampling blastholes as well as the
assay errors. There are some error models in literature to achieve this (Journel & Kiriakidis, 2004 ;
Springett, 1989) but in the Cerro Colorado case, the historical grade control data was used to
calibrate the dispersion of values in an environment of a certain copper grade. An error model was
produced for several intervals of copper grade values.
A moving average window was applied with two radii (3 m and 5 m) to the dense simulation so for
every block an envirnonment grade was calculated. The error applied to each of the grade control
holes took into account not the grade of the particular dense simulation block, but the grade of the
environment of that block. For example, in the Cerro Colorado case, high grade areas had bigger
errors that low grade areas.
The real grade control samples value were worsened by the addition of the described error. These
values are then used to calculate the block models that will be used as selection criteria in the future
operations.
A total of 2,100 cases were analyzed: 3 SMU sizes, 7 grade control grids, 2 error fields for 50 dense
simulations.

RESULTS AND DISCUSSION

For every one of the 2100 cases mentioned, a calculated selection block model was developed
(based on the error biased drillholes). This model was compared with the real selection model for
all the cases. The results of this comparison are summarized in figures 2 and 3. This comparison is
taking as the base case the real 12.5 x 12.5 x 6 m model. The figures present the average values for
the 50 simulations and the 2 error fields.

32
 Figure 3 Ore metal contents and grades for different SMU sizes and sampling grids.

Figure 4 Ore loss and dilution for different SMU sizes and sampling grids

The conclusions that can be extracted from these results are:

From a pure statistical point of view, there is a limit to the dilution that can be controlled. The
nugget effect of the orebody makes impossible to classify correctly all the SMU no matter how
intense the sampling is, always considering that both the sampling and assay errors stay in the
values considered in the error model.
Even though dilution is minimized with exhaustive sampling, ore loss is not so. Ore loss is
minimized at 5m x 5m as a general rule.
The SMU size at the time of mining needs to be smaller than 12.5x12.5x6. An SMU of 6.25m x
6.25m x 6m is, from the scope of this study, a good compromise between size that will allow fast
mining rates and good recovery of the reserve (3% better metal recovery than with the 12.5m
SMU).

33
 There is a statistical limit to the size of SMU that can be correctly sampled. SMUs below 6.25m
do not seem to have any advantage, since what is gained in selectivity is lost due to the
impossibility of correctly sampling (and classifying) SMUs below a certain size.
The recommended size for sampling is a mesh of 5m x 5m meters with an SMU of
approximately 6.25m x 6.25m x 6m.
If compared with the proposed strategy of the feasibility study (7x7 m sampling and 12x12x6
SMUs) the head grade improves by 4% and the metal content by 3%. In other words, by
decreasing the feed tonnes by 1.3% the metal input to the mill improves by 3%.
Based on this study, EMED reconsidered the selection of the production drills, because the blasting
holes are ideally the ones to be used in grade control, and hence an appropriate diameter to achieve
a 5m x 5m (or similar) grid would be 6 (154mm).
This technique has proven its advantages in numerous operations and gives a robust way of
gathering knowledge about decisions that are made on uncertain data (such as grade block
models). EMED plans to continue using this kind approach to evaluate other parameters such as
sampling for elements other than copper, bench height selection or single flitch or double flitch
mining.

ACKNOWLEDGEMENTS
The authors wish to thank EMED Tartessus for their complete disposition to publish this paper
using the data gathered in their Rio Tinto operations. We have to especially mention John Ingram,
technical services manager, for his collaboration and supervision of the study.

REFERENCES
AMC Consultants (UK) limited (2010) PRT Restart Report, AMC.

David, M. (1977) Geostatistical Ore Reserve Estimation, Amsterdam: Elsevier.

Englund, E., & Heravi, N. (1992) Conditional simulation: Practical application for sampling design
optimization Geostatistics Troia '92, Kluwer, pp. 613624.

Glacken, I., Nopp, M., & Tittley, M. (2000) Mining Bench Height Evaluation for the Wallaby Resource A
Conditional Simulation Case Study, 4th International Mining Geology Conference, pp. 195205.

Goovaerts, P. (1997) Geostatistics for natural resources evaluation, New York: Oxford university press.

Isaaks, E. H., & Srivastava, R. M. (1989) An introduction to applied geostatistics, New York: Oxford university
press.

Jara, R., Couble, A., Emery, X., Magri, E., & Ortiz, J. (2006) Block Size Selection And Its Impact On Open-Pit
Design And Mine Planning, The Journal of The South African Institute of Mining and Metallurgy, pp.
2052011.

JORC. (1999) Australasian code for reporting of mineral resources and ore reserves, Melbourne: The Australasian
institute of minig and metallurgy.

Journel, A., & Kiriakidis, P. (2004) Evaluation of Mineral Reserves: A simulation Approach, New York: Oxford
University Press.

34
Leuangthong, O., Neufeld, C., & Clayton, V. D. (2003) Optimal Selection of Selective Mining Unit (SMU) Size,
<http://www.uofaweb.ualberta.ca/ccg/pdfs/2003%2027-smuselect.pdf>.

Snowden. (2008) EMED Public Limited: Proyecto Rio Tinto, Spain, Resource evaluation, Snowden.

Springett, M. W. (1989) Biasing unbiased data: Mine vs mill, 21st International Symposium 1986 - Application of
Computers and Operations Research, SME, pp. 283296.

35
Mine planning for Autonomous
Haulage System

Gabriela Mistral Division, has operated with the biggest autonomous truck Marcelo Navarrete and Chang Ja
Kim. Codelco, Chile
fleet in the world since 2008 to date. This has allowed a developing planning
model that suits the conditions and the operating parameters of the Auton-
omous Haulage Systems (AHS) technology. This technology consists of a
haulage system where the trucks are operated from a central, through a software
that delivers instructions to operate those trucks in different mining circuits
with mineral haulage and mine development. The trucks are equipped with
a wireless navigation system that allows a wireless communication, as well
as service equipment, including a truck interactive system, that performs
support in the mine.
Gabriela Mistrals mine planning has developed a planning method to
incorporate the following variables: Design of operating width for loading
and haulage equipments inside the mine; road width; stochastic models with
operating variables (simulations) for the cycle time and performance for
loading and haulage equipments; route development and improvements for
the haulage performance, ramps and dump designs. All of the above, with a
continuous KPI evaluation of AHS and it has to be considered that the mine
business variables such as ore feed rates, mine development rates and drill-
ing-blasting requirements allow a mine planning method for an Autonomous
Haulage System.

***

37
INTRODUCTION
Division Gabriela Mistral (DGM) operates the mine since its discovery in 1996 by Codelco. The
mine is located in the 2nd region of Chile, Antofagasta, the area is named Pampa Elvira, about 120
km south of Calama city and 220 km east of Antofagasta city. The nearest cities within 150 kms are
Chuquicamata, Calama, Baquedano and San Pedro de Atacama.
In the DGM business strategy theres the incorporation of technologies, highlighting the operation
of Autonomous Haulage System (AHS) since the beginning of the operation, in 2008. Its one of the
first worldwide pionner and counts with the biggest fleet of completely autonomous transport
equipment.
The aim of this paper is to present the experience of the Division Gabriela Mistral regarding the
mines planning with different transport technology from traditional operation known until today,
focusing on the monthly schedule.

Autonomous Tecnology and Operation

Gabriela Mistral operates with a traditional pattern of copper open pit mine that is drilling,
blasting, loading, haulage and support activities. The haulage of materials is carried out using a
integrated autonomous operation system, which uses the latest GPS technology, hardware -
software and communication that allows the operation to haul trucks without human help,
interacting with other equipments and facilities operated manually which are equipped with
autonomous components: service vehicles, bulldozers, wheeldozers, water tucks, graders, loader
equipment and primary crusher.
The autonomous haulage system (AHS) has a high-speed wireless network, high GPS accuracy,
laser side reference, starting guidance navigator and control systems inside the truck.
The AHS running involves not only extraction trucks but also all the processes and equipments that
interact directly and indirectly with the trucks. These are support equipments within the mine, light
vehicles and services that operates manually. The truck moves with reference a network of routes
and locations provided by the central office. The autonomous truck needs to know exactly the route
it will travel. This information must accurately represent the location of the boundaries of
footprints, loading and dumping areas.
For moving the system must assign permissions information, so each truck. Using the GPS, the
truck calculates the location given by the head quarters according to the information provided by
the GPS.

38
 Figure 1 Trucks major system components

METHODOLOGY

Planning the AHS Operation

The mine operation with the autonomous haul trucks (AHT) function allows to understand that
mine operational events planning should be performed incorporating the AHS technical
specifications achieving positive results in terms of truck effective use and performance. The
conceptual evolution between the operation and planning AHS is shown in the following diagram.

AHT with a Mine operation

Mine
conventional with AHS with a
AHT planning
mine planning conventional
for AHS
and operation planning

Figure 2 AHS mine planning evolution

In the 3th step the AHT is successfully integrated with the rest of the equipments and the mine
processes in AHS operation. And the next step integrates the AHS mine planning process.
Planning and operation of autonomous trucks at various stages can be summarized as follows.
1. Implementation of the technology which began testing the operation of the truck and the
collection of data for an initial design features.
2. Autonomous truck operation in a mine designed and prepared for a conventional operation.

39
 3. Learning and mine design improvements to optimize the operation of the AHT and collect
AHT operational information for a data analysis.
4. Mine planning integrating AHT operation, mine design and interaction with other support
equipments in the mine, creating the AHS for DGM.
DGM is using deterministic production planning, based on the inputs of mine-plant maintenance
and operational performances of loading and autonomous haulage equipment. These are a back
analysis results from historical data obtained in the autonomous operation in DGM.
A big change and challenge in the planning of autonomous trucks are design parameters for the
operation. Understanding the logic of the autonomous truck, the variables that affect the effective
use and performance, determine that the traditional systematic planning process is not optimal in
an autonomous operation.
The following figure shows a simplified flow sheet of the mine planning process in DGM.

Production Plan - Cu ton

Waste development ton

Real Speed haulage AHS
Survey BACK ANALYSIS
Load parameters
Extraction Area
AHS QUALITY CONTROL
OPTIMIZACION

AHT parameters Mine Design

Haulage distance
AHS Survey AHS

Cicle time
Effective use
BACK ANALYSIS

Performance CAEX AHS

QUALITY CONTROL
Availability OPTIMIZACION

Reserves & Delays ALL DATA

Figure 3 Simplified Mine Planning process flow sheet

An optimal incorporation of the Survey design, fulfillment of the technical specifications as loading
area with operating widths, has allowed an optimal system performance of the haulage system.

40
 Figure 4 Mine sequence and haul route

Figure 5 Data base loaded in the AHS platform

41
 Figure 6 Permission route generation in the AHT system

Figure 4 to 6 show the planning stage of the transport route of the autonomous trucks with design
parameters ensuring optimum operation of the AHS. Some of the design parameters to be
considered are for example those shown below.

AHT route design parameters

Figure 7 Autonomous trucks intersection parameter

42
 Xm Xm

x
ym

s
Z
y

Figure 8 Operation AHS design parameters

Figure 7 and 8, not only consider the design parameters and the status of the path of the trucks, but
also loading areas and the importance of the route maintenance.
One indicator that shows understanding and optimizing the process then is the effective use of
autonomous trucks. Not without difficulties, between July 2010 and July 2011 there was a technical
pause in the AHS operation to enable the autonomous system improvements. In September of 2011
AHS operation is resumed, generating a gap between the actual and planned in the effective use.
This was part of the process of understanding the logic of AHS, obtaining better results in late 2012.

43
 100.00
Effective Use
Autonomous System Manual System Autonomous System
90.00

80.00

70.00
% Effective Use

60.00

50.00

40.00

30.00

20.00

10.00

0.00
may-10

may-11

may-12
mar-10

oct-10
nov-10

mar-11

oct-11
nov-11

mar-12

oct-12
nov-12
jun-10

sep-10

dic-10

jun-11

sep-11

dic-11

jun-12

sep-12

dic-12
feb-10

jul-10
ago-10

feb-11

jul-11
ago-11

feb-12

jul-12
ago-12

feb-13
apr 10

apr 11

apr 12
jan 10

jan 11

jan 12

jan 13
%Uef Real %Uef Plan

Figure 9 Truck fleet effective use

As a future challenge in planning in DGM is the tool incorporating discrete event simulator to
determine the behavior of the autonomous system and predict different AHS planning scenarios. In
addition, future software upgrades AHS incorporating improvements in the design of routes. It
joins the online database, accessible and analysis of stochastic events.

RESULTS AND DISCUSSION

The importance of design regarding haulage routes, loading and discharge areas, and its proper
implementation in the Mine is essential for optimal operation AHS.
AHS involves working with multidisciplinary equipment planning - operation - maintenance, with
a good teamwork and communication in arranging a proper design and implementation of the
AHT route survey.
The analysis of the results obtained in the AHS operation gives back great help to understand and
continuously improve the operation of AHS hardware and software technology, trucks
performance and mine safety.
Figure 9 shows the development in a timeline in DGM AHS system, which has been affected by
difficulties and challenges, with a technical pause to make improvements in the technology and the
understanding of the logic of autonomous trucks and behavior of people towards this technology.
The AHS technology applied in the Open Pit Mine haulage system with a correct planning process
has great business potential in the medium and long term, in term of mine production and safety,
breaking paradigms in the copper mining industry.
Today, DGM has reached a operational continuity in the AHS. The next step is reach and improves
the traditional trucks performance.

44
CONCLUSION
The results obtained by DGM with the implementation and use of new technology as the AHS has
been successful, demonstrating reliability in production plans, mainly because it replaces the
human element in decision-making in the transport system, with the various errors that may be
committed by improving the level of uncertainty.
The result that the DGM has today regarding AHS is the result of a great effort from its beginnings
to today.
The most important factor for the success of this technology lies in advance planning in which
different actors involved agreeing and implementing the goals proposed by the DGM production.
The reliability of production plans depends on the understanding of how people interact with
technology autonomous trucks and AHS logic, proper planning yields to predict future cycles and
times.

ACKNOWLEDGEMENTS
The authors kindly acknowledge the GRMD and Mine Operation teamwork from Division Gabriel
Mistral for their constant effort to control and improve the AHS, contributing in the future mining.

NOMENCLATURE
AHS: Autonomous Haulage System
AHT: Autonomous Haul Truck
DGM: Division Gabriela Mistral

REFERENCES
Komatsu (2010), Introduction of Autonomous Haulage System (AHS), Part 1

Komatsu (2010), Introduction of Autonomous Haulage System (AHS), Part 2

Navarrete, M. (2012), Camiones Autnomos, Lecciones Aprendidas.

GRMD - Divisin Gabriela Mistral (2012), Planificacin Mina AHS.

GRMD Divisin Gabriela Mistral (2013), Utilizacin Histrica CAEX AHS.

45
Mine control from reliability
for plans until the key reporting:
A Minera Spence overview

The Minera Spence operative model is based in Deming cycle (plan-do-check- Francisco Arcos and Pablo Letelier.
Minera Spence S.A ., Chile
act). As a consequence, the productive strategy has been to allow the tools
developments which facilitate the interactions between different pieces in
the cycle. The cycle begins with plan evaluation from quality to quantity. For
the quality view it is necessary to have an expert appraisal with focus on the
medium long term plan. Afterwards, a quantity test is made for this mine
plan. According to this evaluation, a specific reliability model (multi-variable)
was developed. In fact, this model gives us all possible mine material movement
in monthly results. For instance, all variables which impact the material move-
ment can be modeled, such as availability, rates and utilizations of mine
equipment (load and hauling). In addition, some key inputs from the monthly
plan will be used to run the model. Later, through Montecarlo Simulation, all
possible scenarios will be generated. In short, the probability to have a mine
material movement equal or greater than the budget, forecast or specific value
is given by Y=(1-P[x]), where x is any value for the monthly plan movement and
Y the probability to achieve or do better than the plan. After the mine plan is
approved (quality and quantity) the next step begins. Hence, for execution
control, different reporting has been developed with focus on the achievement
of key factors. Some reports are sent on daily, weekly or monthly periods, and
others in specific situations. In particular, the reporting philosophy was de-
signed to show the advance in plan execution, and to alert about the deviations
regarding the expected results. These reports absorb the variability ranges
from historic results for each process. Finally, this operative model has given
good results. Nowadays one picture in terms of mine sequence, ex pit, mine
material movement and mine cost have a high strategy adherence (budget).

***

This book, both digital and hard-copy, only includes

the abstract of this work.

47
Dynamic cut-off grade and its
application to maximize mineral
reserves inventory

In the mining industry there are two events which lead to a mining business, Mario Pacheco. Empresa Minera Los
Quenuales S.A ., Peru
the first is the occurrence of ore and the second is the market condition
(McIsaac, G. 2008). The most important outcome variable to estimate is the Jos Antnio Kurcewicz and Pablo
de La Cruz. Minera Altos de
cut-off to apply as a filter and quantify the amount of mineral reserve tech-
Punitaqui Ltda., Chile
nically and economically minable.
For open pit operations, the economic reserve around the resource block
model is determined using the Lerch-Grossman algorithm, or method of
floating cones, which performs an optimization process based on incremental
prices, where only economic blocks within particular price limits are defined
as mineral reserves.
Minera Altos de Punitaqui, operating an underground mine with the sub-
level stoping mining method, has quantified its mineral reserve inventory
applying an analogy of the Lerch-Grossman algorithm with marginal cost
analysis, allocating a cut-off for each block. This process allowed us to max-
imize our ore reserves.
The methodology, called the application of the dynamic cut-off, assigns a
cut-off value to each block of ore, according to the stage where the block is or
will be each time the deposit is evaluated, and assigns only remaining costs
to be absorbed in any new status in the future. This demonstrates that ore
blocks with greater values support all the costs associated with the primary
development phase, and in many cases, the preparation of the exploitation
phase. Consequently, the blocks adjacent to these sectors should be evaluated
only with costs that complement the process chain around the mining
business.
This methodology is applicable when there is cost management by activities,
allowing the costs of each mine process (primary development + preparation
+ mining + transport to metallurgical plant) and subsequent processes to be
defined, which will have an estimate of dynamic cut-off for each block accord-
ing to the status at each moment.

***

49
INTRODUCTION
In the process of estimating reserves, Minera Altos de Punitaqui follows the JORC code, while
applying an analogous method to the Lerch-Grossman algorithm, with the aim of applying it to
underground mining, specifically when using the sublevel open stoping method.
This method has allowed us to maximize our reserve inventory, increasing it by 12%, when
compared to static cut-off grade methods.
When applied to one block, the cut-off grade (COG) is the present net cash flow value generated,
which must be equal to the investment capital needed to exploit this block.
The relationship that can be attained with the Lerch-Grossman algorithm is:
For the exploitation of a block by open pit method, the COG must cover the mining cost and
marginal clearing, considering that adjacent and nearby blocks have already assumed costs of
clearing upper benches.
For the exploitation of a block using underground mining methods, the COG must cover the
cost of marginal mining development, considering that adjacent or nearby blocks have already
assumed the cost of primary development, and in some cases, the preparation (Rendu, J. M.
2008).

METHODOLOGY
The mathematical principle can be explained using the Lane algorithm (Lane, K. 1988):

(cm + cp + f + i * NPV ) NPV = f (COG )

COG =
( p s) * r
Where:

For an Open Pit, with a Lerch-Grossman algorithm, in addition to the marginal cost of each mined
block, a capital or opportunity cost is added, which is the marginal cost associated with the
stripping of the block.

50
 B A

Figure 1 Open Pit Case

Block B also assumes the stripping cost of -2, since block A assumed a stripping cost of -4.
In our case, with Underground Mining, each mining block, in addition to its marginal cost, has a
capital or opportunity cost assigned, which is the cost of development and/or preparation.

MINED
ZONE

Concluded Primary MINED

ZONE
Development

MINED MINED
ZONE ZONE
MINED
ZONE

Concluded Primary MINED MINED

ZONE ZONE

Without Primary Development

Figure 2 Underground Case

51
For blocks that have already been prepared, the equation (i * NPV = 0) is equal zero, and hence
COG is less, since adjacent explored blocks have assumed the primary development and
preparation costs (Rendu, J. M. 2008).

CONVERSION OF MINERAL RESOURCES TO RESERVES USING DYNAMIC CUT-

OFF
In order to apply this method, it is important to consider the following:
Have the mine infrastructure design according to the exploration method used in function of
the characteristics of the ore body, which will allow variables of primary development ratios
and preparation to be defined by sector.
Define mining recovery and dilution variables by sector. Ore grades, and subsequently ore
values, are adjusted with these variables.
Have proficient management of the Activity-Based Costing (ABC) method, which will allow
each block to be assigned a marginal and capital cost at each stage or process.

Table 1 Operation Processes

Primary Development (US$/t)
Preparation (US$/t)
Explotation (US$/t)
Transport to Plant (US$/t)
Plant Cost (US$/t)
Indirect Cost / Overhead cost (US$/t)
Concentrate Freight (US$/t)

Profit

Financial
Unit Cost Analysis 100%
95%
Capex 90%
85%
Deductions 80%
75%
Smelting 70%
65%
Concentrate 10% 60%
Freight 55%
Indirect 50%
45%
Mill 27% 40%
35%
Transport 30%
5% 25%
Explotation 20%
12% 15%
Preparation
10%
7% 5%
P. Development 5% 0%

Figure 3 Cost according to Process

52
 In terms of the following parameters, each mining block should be assigned a status, which will
change in time and in function of the depth and development, hence the opportunity cost will
decrease in time.
With this information assigned to each mining block, the COG for each block or sector can be
estimated.

Table 2 Technical and Economic Parameters

Parameter Unit Amount
Mining Dilution % 10
Mining Recovery % 90
Pillar Recovery % 70

Primary Development (US$/t) 4.00

Preparation (US$/t) 5.57

Parameter Unit Amount

Explotation (US$/t) 10.27
Transport to Plant (US$/t) 4.65
Plant Cost (US$/t) 23.08
Indirect Cost (US$/t) 8.75
Concentrate Freight (US$/t) 0.79
Total Cost (US$/t) 47.55
Copper Price (US$/t) 8,000
Silver Price (US$/Oz) 27
Copper recovery % 77
Silver recovery % 55
Copper Conc.Grade % 27
NSR Copper (US$/tmf) 7,109

Table 3 Cut-Off-Grade Estimate (COG)

Type of
Parameter COG Unit Amount
COG
No Primary Development (DP) COG 2 1.07 %Cu (US$/t) 57.12
With Primary Development (DP) COG 1 1.00 %Cu (US$/t) 53.12
With Prim. Develop. + Preparation COG 3 0.89 %Cu (US$/t) 47.55

COG 1 is applied to blocks (Rendu, J.M., 2008) that have already been through primary
development and need to go through the preparation stage and subsequent stages (DP).
COG 2 is applied to blocks that have not been through primary development or subsequent stages
(SDP).

53
COG 3 is applied to blocks that have been through the primary development and pereparation
stages, but have yet to undergo the exploration stage or subsequent stages (DP+ P).

RESULTS AND DISCUSSION

With the following parameters assigned to each mining block, one can proceed to convert all
indicated and measured resources to proven and probable reserves.
From a 5x5x5 block model, new grids and blocks (measuring 30m high x 10m wide x potency) are
generated, which are the units of exploration that must be greater than the Cut off Grade (COG) in
order to be considered reserve.

Table 4 Estimate of Reserves Applying Dynamic Cut Off Grade

Block Tonnes(M) CuT (%) CuS (%) CuI (%) Ag (g/t) Au (g/t)

Sector I 1.92 1.34 0.08 1.26 4.82 0.01

Sector II 4.30 1.44 0.08 1.36 9.13 0.02

Total general 6.22 1.41 0.08 1.33 7.80 0.02

Table 5 Estimate of Reserves Applying Constant Cut Off Grade

Block Tonnes(M) CuT (%) CuS (%) CuI (%) Ag (g/t) Au (g/t)

Sector I 1.69 1.37 0.08 1.29 5.00 0.01

Sector II 3.79 1.47 0.08 1.39 9.39 0.02

Total general 5.48 1.44 0.08 1.36 8.04 0.02

Where:

CuT (%) Copper content

Cu S (%) Copper soluble

CuI (%) Copper Insoluble

Ag (g/t) Silver content

Au (g/t) Gold content

CONCLUSIONS
This methodology allowed us to increase our reserves by 12.0% in tons of mineral and 11.4% in
metallic fine tons, increasing the life of the mine (LOM).
The total reserve value increased by 11.14% in tons of fine copper which is equivalent to an
additional 46.6 million dollars in the companys cash flow.

54
This dynamic cut-off grade estimation methodology assigns a cut-off value to each mineral block,
according to the stage in which it is found, each time the deposit is evaluated. This block is only
assigned the remaining costs, which will be absorbed in a future state.
This demonstrates that ore blocks with greater values support all costs associated with the primary
development phase, and in many cases, the preparation of the exploration phase. Consequently, the
blocks adjacent to these sectors should be evaluated only with costs that complement the process
chain around the mining business (Camus, J. P. 2002).
This methodology is applicable when there is cost management by activities, which allows one to
define the costs of each mining process (primary development + preparation + mining + transport to
metallurgical plant) and subsequent processes, which will have an estimate of dynamic cut-off for
each block according to the status in which it is at every moment.

REFERENCES
George McIsaac (2008), Strategic Design of an Underground Mine under Conditions of Metal Price Uncertainty.

Jean Michel Rendu. (2008), An Introduction to Cut-Off Grade Estimation.

Juan P. Camus (2002), Management Of Minerals Resources Creating Value In The Mining Business.

Kenneth Lane (1988), The Economic Definition of Ore: Cut-Off-Grades in Theory and Practice.

55
Application of an evolutionary
solver to the optimization of
an open pit mine

A solver developed for life-of-mine schedule optimization in the context of Lorrie Fava. MIR A RCO, Laurentian
University, Canada
selective underground mining operations, known as SOT, for Schedule Opti-
mization Tool, has been assessed for its applicability to the optimization of
an open pit mine. A range of optimization techniques are employed by the
solver including heuristic methods and a custom evolutionary search algorithm.
It produces life-of-mine schedules that conform to precedence constraints
and operational resource constraints, optimized based on net present
value.
A case study exercise was conducted using a small, steeply dipping gold
deposit with an average grade of 3.3 grams per tonne, within a block model
consisting of over 58,000 uniform blocks, with less than half a percent of
these being ore blocks. Mining rates for ore and waste, both for individual
blocks and for the mine, conformed to constraints based on fleet sizes. Ac-
ceptable slope angles were maintained by adherence to over 470,000 prece-
dence constraints. The software tool was applied to simultaneously optimize,
based on net present value, the pit limit and the extraction schedule of the
mine. Fleet sizes and, correspondingly, production rates were varied to de-
termine the most cost-effective scenario.
The exercise indicated that SOT is suited to the integrated design and
scheduling of an open pit mine, without any aggregation of the blocks, while
optimizing for net present value.

***

57
INTRODUCTION
The economic value of an orebody that is close enough to surface to be exploited via open pit
mining has been assessed by the application of an evolutionary solver. The problem of determining
the economic value of an orebody consists of determining the ultimate pit and the life-of-mine
schedule, given the block model.

Conventional Solution Techniques

Most solvers for determining the ultimate pit are based on the Lerchs-Grossman technique (Lerchs
& Grossman, 1965, Newman et al., 2010). Newman et al. (2010) explain how, conventionally,
mineral prices are varied to produce nested pits, from which an extraction sequence can be
generated. Related open pit optimisation techniques are also reviewed, most of which involve
aggregation of blocks in order to decrease the problem size.

SOT
SOT, the Schedule Optimisation Tool (Fava, Millar, & Maybee, 2011), aims to maximise the net
present value (NPV) of selective underground mining operations by identifying progressively
improved schedules of mining development and production activity. This paper reports on an
exercise intended to assess whether SOT can be effectively applied to the optimisation of an open
pit mine.
SOT searches for high-valued life-of-mine schedules, making use of heuristics to generate a good
starting point for the search. An evolutionary learning mechanism is then employed, similar to a
genetic algorithm (Goldberg, 1989), with mechanisms in place to ensure that all schedules
generated during the search are feasible. Here, feasibility means that a schedule adheres to all
precedence and operational resource constraints. A financial model specifies capital costs,
operating costs, projected mineral prices, and a discount rate to be used in evaluating the NPV of
each schedule.
For a mine life that may span decades, scheduling periods can be of any desired duration; for
example, in the case study that follows, waste mining activities had durations of just over two days,
and were not aggregated; the fleet constraints were applied at that level of granularity.

CASE STUDY
The case study involves a block model with 58,141 uniform blocks, 25 m in each dimension. Of
these, 245 blocks have mineralisation, with an average gold grade of 3.316 grams per tonne.
Precedence constraints were generated to ensure a maximum pit slope angle of 45 degrees.
For the base scenario, the fleet allows for a maximum of three active faces; one for ore and two for
waste. The assumed fleet also determines extraction rates, separately for ore and waste, as well as
limits on the overall mining rates for both ore and waste. Each ore face is extracted at 5,000 tonnes
per day, and each waste face at 20,000 tonnes per day. Fixed capital costs total $42.673 million, and
operating costs are fixed at $2 per tonne for waste and $14 per tonne for ore. Dilution is assumed to
be 5%, and the projected gold price is $1,200.

58
Integrated optimisation
In an integrated optimisation process, SOT was deployed to determine the ultimate pit and a block-
by-block life-of-mine schedule optimised for NPV. The optimised ultimate pit for the base scenario
consists of 3,364 blocks and the life-of-mine schedule has an NPV of $411 million and a mine life of
11 years. Figure 1 illustrates the ultimate pit, and Table 1 gives some details of the life-of-mine
schedule.

Figure 1 A section view of the block model with blocks coloured and sized proportional to gold grade, with
blue as the lowest grade and red as the highest; waste blocks are shown only if they are in the ultimate pit

Table 1 Optimised life-of-mine schedule

Year Ore mined Waste mined Gold production Discounted cashflow NPV
(kilotonnes) (kilotonnes) (kilograms) (million $) (million $)
2013 675.0 14,095.6 2,210.3 4.6 4.60
2014 1,156.6 13,877.5 4,018.0 95.3 99.87
2015 651.4 13,188.0 2,459.8 47.2 147.06
2016 621.6 13,201.4 2,665.6 49.8 196.90
2017 439.2 12,523.6 1,740.2 24.5 221.39
2018 464.1 12,730.0 1,966.6 27.7 249.11
2019 791.7 12,012.4 2,945.3 45.9 295.01
2020 389.5 12,324.3 1,220.0 9.2 304.20
2021 295.3 12,395.9 1,084.5 6.5 310.67
2022 759.4 11,734.2 3,711.2 50.7 361.33
2023 590.6 6,368.6 3,557.3 50.0 411.32

59
Nested pit shells
SOT produces an ultimate pit, and a life-of-mine schedule, without aggregating blocks. SOT
generates many complete schedules during the optimisation process; that is, schedules that extract
all ore blocks. Each complete schedule is viewed as a set of nested pit shells, in the following way.
For a given complete schedule, and for each ore block, the software computes the cumulative NPV
of a partial schedule, as if mining would be halted after mining that ore block. A partial schedule
has an associated pit shell, which is the set of all blocks included in the partial schedule. There are
245 ore blocks in the block model used for this study, so a complete schedule consists of 245 nested
pit shells. For each complete schedule, the pit shell associated with the partial schedule having the
highest cumulative NPV is a candidate ultimate pit.
Thus, each complete schedule has a candidate ultimate pit, which is composed of a set of nested pit
shells, each with an economic evaluation based on discounted cash flows. The evaluation does not
require the nested pit shells to be scheduled sequentially; waste removal needed for a given shell
but not for prior ones may be underway before the prior shells have been mined out.
Of all potential sets of nested pit shells, SOT searches for the one having the highest NPV for the
corresponding ultimate pit. Figure 2 describes the optimised pit shells, the ultimate pit, and the
optimised life-of-mine schedule for the base scenario of this case study.

60
 Figure 2 Properties of the 245 pit shells generated by SOT, highlighting properties of the optimised ultimate
pit; it contains 162 ore blocks, 3,364 blocks in total ( ), and has an NPV of $411.32 million ()

There are discontinuities in the trends apparent in Figure 2 at the points describing the ultimate
pit. This is the case because significant additional waste removal would be required for the first ore
block in the complete schedule that is excluded from the ultimate pit; there would be an additional
668 blocks in the next largest pit shell, which would result in a significant negative impact on the
NPV.

Sensitivity Analysis
Sensitivity analyses can be used to study the effect on the ultimate pit and the NPV of parameters of
interest, such as gold price projections and operating costs. As a simple example of this, a
sensitivity analysis was undertaken to study alternative fleet sizes. Table 2 shows, in the first row,
the scenario resulting from the fleet size used for the base scenario described above. Five additional
fleet sizes were studied for their effect on the NPV and the mine life.

Table 2 Life of mine schedules for scenarios with varying fleet sizes
Ore faces Waste faces Cost of fleet Mine life NPV
active Active (million $) (years) (million $)
1 2 9.00 11.0 411.3
1 3 12.38 8.0 463.9
1 4 15.76 6.0 493.6
2 3 14.62 8.0 464.2
2 4 18.00 6.0 494.4
2 5 21.38 5.0 511.0

This example analysis does not account, however, for any traffic congestion issues that will
eventually arise as the fleet size is increased.

FUTURE WORK
Future work will compare the use of SOT to the use of a Lerchs-Grossman solver for determining
the ultimate pit for an orebody mined by surface mining techniques. At present, the technique set
out herein simply offers an alternative to Lerchs-Grossman for ultimate pit determination that
accommodates the discounting process.
The financial model used in this case study had fixed costs, but the optimisation process can
accommodate operational costs that vary according to the depth of the block, to reflect haulage
costs that increase as the pit deepens. For this study, there was no consideration of pushbacks, or of
limits on the proximity of working faces. Additional constraints would be needed within the
optimisation formulation to limit proximity, and to allow for on-the-fly aggregation of blocks into

61
working faces of an appropriate size. As well, the current study did not account for pit roads, and
the effect that road locations may have on operational costs and constraints on scheduling. These
issues will also be the subject of future work.

CONCLUSION
This case study indicates that SOT can design and schedule an open pit mine in one optimisation
process, at a level of detail of individual blocks, considering block extraction rates and overall
mining rates. Nested pits are generated in the process, without artificially varying the economic
value of blocks. SOT provides a distinct alternative to the Lerchs-Grossman algorithm for
determining the ultimate pit, with an approach that can easily accommodate both depth-varying
costs and discounted cash flows.

ACKNOWLEDGEMENTS
The author gratefully acknowledges the technical assistance of Vijay Sharma, Scott McGarvey, Bob
Anderson and Darren Janeczek. Prof. Dean Millar provided valuable feedback on a draft
manuscript.

REFERENCES
Fava, L., Millar, D., and Maybee, B. (2011) Scenario evaluation through mine schedule optimisation, R.
Kuyvenhoven, E Rubio & M Smith (Eds.), Second International Seminar on Mine Planning, Santiago,
Chile: Gecamin, 10p.

Goldberg, D. E. (1989) Genetic algorithms in search, optimization, and machine learning, Boston, MA:
Addison-Wesley Longman.

Lerchs, H., & Grossman, I.F. (1965) Optimum design of open-pit mines, Transactions of the CIM, vol. 68, pp.
1724.

Newman, A.M., Rubio, E., Caro, R., Weintraub, A. & Eurek, K. (2010) A review of operations research in mine
planning, Interfaces, vol. 40, no. 3, pp. 222245.

62
Feasibility analysis of chemical
stabilization technologies for
closure plans

Upon the enactment of Decree 41 that regulates Law 20.551, mining companies
Sat Sansar Singh. MAYCO
have been forced to include in their closure plans the necessary actions to Consultores, Chile

ensure the chemical stability of their massive deposits including tailings,

Juan Rivadeneira. Universidad
waste dumps and leached ore. Mining companies are now commonly faced Adolfo Ibaez, Chile

with choosing the best chemical-stabilization alternative for their closure

Raimundo Bordagorry. Universidad
plans. A feasibility analysis that compares the benefits offered by different Diego Portales, Chile

chemical-stabilization technologies has been successfully applied to aid in

decision-making at three mining facilities in Chile, including a copper smelter,
a major porphyry copper mine with SX-Smelting-EW, and a stratabound Cu
mine and processing plant. The feasibility analysis includes identifying attri-
butes for nine criteria, including human health and the environment, applicable
regulations, long and short-term effectiveness, reduction of toxicity, mobility
or volume, technical feasibility, cost, and acceptance by regulatory agencies
and communities. Implementation of this feasibility analysis at mining sites
in Chile has exhibited a strong sensitivity to technical feasibility and costs,
while it is anticipated that some other criteria, particularly acceptance by
regulatory authorities and communities, will start playing a major role. It is
proposed that different weights and values can be assigned to each criteria
at different mining sites, adding up to a composed index, allowing a compar-
ative ranking of alternatives, thus facilitating the management and deci-
sion-making process associated with the design and implementation of closure
plans at mining facilities and sites.

***

63
INTRODUCTION
Upon enactment of Decree 41 that regulates Law 20.551, mining companies have been forced to
include in their closure plans the necessary actions to ensure the chemical stability of some of their
massive deposits, including tailings, waste dumps and/or low-grade ore, tailings, leaching tailings
and mineralization at slopes, pit walls and access ramps which due to their exposure to
environmental conditions may represent a risk in the generation of acid drainage or mobilization of
metal species as a result of changes in their oxidation status.
Various cutting-edge technologies are currently available to improve the chemical stability of the
deposits. Thus, mining companies are now commonly faced with the decision of choosing the best
chemical-stabilization technology for their facilities.

METHODOLOGY

Feasibility Analysis
A feasibility analysis based on the procedures developed by the United States Environmental
Protection Agency (USEPA)1 has been successfully applied to aid in choosing the best chemical
stabilization option at three (3) mining facilities and sites in Chile. The feasibility analysis envisages
a qualitative and/or quantitative description (scoring) of the benefits offered by each technology
based on nine criteria, which are later compared with a multi-criteria matrix.
The above criteria are described below:

Protection of Human Health and the Environment

This criterion establishes the degree at which chemical stabilization offers suitable protection to
human health and the environment by eliminating, reducing or controlling risks from exposure to
toxic constituents. The protection of the environmental receptors may involve preserving and/or
restoring environmental components, e.g., surface water or sediments as well as avoiding the
generation of any adverse effects on ecological receptors. The compliance of Chilean health
standards should be borne in mind. Additionally international standards, i.e., USEPA or European
standards (many times more demanding in terms of concentrations and compounds) should be
taken into consideration.

Compliance with applicable or relevant regulations

This criterion assesses the degree of compliance of the chemical stabilization technology with
eventual applicable regulatory requirements, or, in case of absence of applicable regulations or
standards, with the appropriate requirements.

1United States Environmental Protection Agency (USEPA), 1988. Guidance for Conducting Remedial
Investigations and Feasibility Studies under CERCLA. Office of Emergency and Remedial Response.
EPA/540/G-89/004

64
Effectiveness and Continuity in the Long-Term
This criterion assesses the eventual presence of remaining risks post-compliance of the chemical
stabilization objectives. It involves both the magnitude of the residual risk and the adjustment and
reliability of the control mechanisms associated with the risks. Additionally, it includes the period
of time guaranteed by the technology 10, 20 or 100 years.

Reduction of Toxicity, Mobility or Volume

This criterion assesses the reduction of toxicity and total mass of toxic constituents as well as the
volume of the contaminated environment - commonly the most significant threats posed by
contaminants. The mobility of mining deposits (where toxic metal concentrations are frequently
high) is mostly determined by the oxide-reduction (Eh) potential and pH.

Short-Term Effectiveness
This criterion assesses the potential effects of remediation technology (ies) on site personnel,
communities and the environment which may have been caused during the construction and
implementation stages until accomplishing the chemical stabilization objectives. It envisages the
potential threats faced by workers who are exposed to hazardous substances. In addition, this
criterion assesses the time needed to reach the chemical stabilization objective. Finally, it makes
reference to hazardous criteria associated with the implementation of various stabilization options.

Feasibility of Implementation
Assesses the technical and administrative feasibility of implementing a chemical stabilization
technology, including an assessment on the availability of equipment, materials and services
needed to implement this option.

Costs
This criterion envisages an estimate of the costs needed to implement each chemical stabilization
technology, including capital costs, operation and maintenance costs.

Acceptance by Public Entities

This criterion assesses the degree of acceptance of the chemical stabilization technology by
competent and related public entities. It includes the Environmental Assessment Agency, and the
Ministry of Health, among others.

Community Acceptance
This criterion assesses the degree of acceptance of the chemical stabilization technology by the
community. It may eventually include community participation through an Administrative
Instruction or Public Consultation.

65
 EXAMPLES OF FEASIBILITY ANALYSIS IN MINING SITES

Copper Mining Site and Processing Plant

Results of a site investigation at a major (65.000 T Cu cathodes per year) copper open pit plus
underground mining site with Concentrator Plant-Smelting plus Leaching Piles-Electro winning
facilities in northern Chile, including soil sampling and analysis, exhibit concentrations above
clean-up levels for the following constituents:
Antimony
Arsenic
Copper
Mid-Range Total Petroleum Hydrocarbons (C10-C34)
Table 1 below shows a comparative analysis of the nine criteria described above for a set of pre-
selected chemical stabilization options associated with a Closure Plan at the site:

Table 1 Feasibility Analysis of Chemical Stabilization Technologies at a Copper Mine and Plant
Facilities in Northern Chile
CHEMICAL STABILIZATION TECHNOLOGY
Stabilization
Criterion Ex situ Excavation Hydrocarbon Vapour
Soil Washing
Chemical Biological Leaching and Disposal Bioremediation extraction
Stabilization Stabilization
Protection of Low to Low risk due Low risk of Low risk of Low to Low to Low to
human health medium risk to potential contact with contact with medium risk medium risk of medium risk
and the of exposure presence of extracting leaching of inhaling inhaling of inhaling
environment due to gases at acids if solutions if contaminated particulate toxic vapours
potential depths. managed with managed particulate matter and (volatile
mobility of Regulated by Health and with Health matter toxic vapours hydrocarbons)
metals after interaction Safety Plan and Safety (volatile
injecting with Plan hydrocarbons)
stabilizing biological
agent. agents
Compliance Generally Generally Complies Complies Complies Complies with Complies
with applicable complies complies easily with
or relevant and degradable hydrocarbons
appropriate compounds,
regulation not with
poorly
degradable
products)
Effectiveness High under High under High under Depends on High Depends on High
and continuity current current current leaching biodegradation
in the long- environmental environmental environmental potential of of
term conditions conditions conditions constituents contaminants
of interest

66
Reduction of High High Medium Medium High High for easily High
toxicity, degradable
mobility or compounds
volume

Short-term Medium to Medium Medium, High if Medium to Depends on High

effectiveness high depending on constituents high presence of
the potential have not nutrients such
of the migrated to as Nitrogen
constituents to lower layers and
be extracted or Phosphorus,
groundwater Carbon Source,
humidity,
permeability
and soil density
among others),
and on treated
contaminants
Feasibility of Medium Medium-low High; High High High Medium
implementation depending on technology
microbial highly used in
flora the area, acid
commonly availability
found in soil guaranteed
Cost US$60-290/ton US$60-290/ton US$10-140/m3 US$10/m3 1) If non- US$30-60/ton US$20-50/ton
of soil to be A fraction of hazardous
treated the costs is waste:
recovered US$10/m3
via sale of 2) If
metals hazardous
waste:
US$85/ m3 +
US$190/ Ton
Acceptance by Only if agents High Requires Requires Requires High High
regulatory are harmless permit and permit and compliance
agency and non authorization authorization with
hazardous to manage to manage Supreme
leachates leachates Decree 148
Specifications
Community Less feasible Less feasible Less feasible Feasible Feasible Less feasible Feasible
acceptance due to due to due to due to potential
potential risk potential risk potential risk risk of exposure
of exposure of exposure of exposure

67
The results of the feasibility analysis indicate that:
Removal and ex-situ disposal, chemical stabilization, biostabilization and bioremediation
(mainly land farming) are the chemical stabilization technologies recommended to be used in
each of the areas with metal concentrations above clean-up levels.
To assess the technical feasibility of the measures proposed, we recommend to conduct metal
solubility and mobility tests in soil applying procedures such as one step chemical extraction
(SPLP or Synthetic Precipitation Leaching Procedure) or several sequential steps, e.g., PBASE
(Potential BioAvailability Sequential Extraction).

Copper Smelter
Results from a site investigation including soil sampling and analysis at a Copper Smelter with an
operating capacity of approximately 900,000 T per year of Cu concentrate in Chile, indicate the
following conditions:
As and TI concentrations are adsorbed in the limo-clay phase of the soils in the site. This is
consistent with the enrichment reported for these constituents in the fine fractions ( < 0,063 mm)
of all the soils in monitored areas.
The content of the lime-clay fraction of soil in the site has been estimated in 10%. This is based
on soil descriptions of the site and experts opinions.
Water and acid is available in the site.
Table 2 below shows a comparative analysis of the nine criteria described above for a set of pre-
selected chemical stabilization technologies assessed as part of a Closure Plan for the site.

Table 2 Feasibility Analysis of Chemical Stabilization Technologies at a Copper Smelter in Chile

Solidification/ Ex Situ Leaching Pyrometallurgical In Situ Washing
Vitrification
Stabilization Recovery
Protection of Risks due to Safety risk due to Risks from Risks due to the Risks due to
Human Health exposure to exposure to high exposure to structure needed exposure to acids
and the compounds temperatures leaching agents, to implement or complexing
Environment in during injection surfactants, technology: chelating agents
the short-term acids or Heavy
chelating agents construction and
vapor emissions

Protection of Medium as Favourable. Risks occur if the Reduced due to Medium as

Human Health injection may The vitreous fine material metal injection can
and the mobilize metals mass removed is not volatilization mobilize metals
Environment in beyond the site. encapsulates treated properly. beyond the site.
the long-term metals thus
reducing
exposure

68
Compliance Contributes to Contributes to Contributes to In shor-term Contributes to
with applicable reducing metal reducing the metal reducing the reducing metal
or relevant and source, but may source in the metal source; source; may not
appropriate not comply with short-term may not comply comply with
regulation cleaning levels with cleaning cleaning levels
beyond site due levels if beyond site due
to mobilization remobilization to mobilization
takes place
beyond the site

Long-Term Medium. High. Reduced High. Low High. Medium due to

Effectiveness Reduced presence of humidity content possibility of
Permanence presence of fines organic and of soil and arsenic
and organic halogenated temperatures precipitation
matter compounds above 0 suggest
encourages together with long-term
effectiveness and estimated effectiveness
permanence. presence of
Presence of salt glass-forming
may weaken metals
links. Depends contributes
on oxidation positively.
condition of
metals and
oxide reduction
potential

Toxicity Favourable Extremely Favourable Favourable Favourable

Reduction. Favourable
Mobility or
Volume

Short-Term Medium Not effective in Variation Very Low. Medium,

Effectiveness the short-term as reported in soil Larger particles do depending on
high metal grain size may be not allow heat soil pH and
content may less effective transfer whereas redox status of
result in short- fines may increase metals
circuit content of
particulate matter
in gas emissions

Possibility of Medium. Cannot be Easy to Relatively easy to Medium. Pilot

Implementation Depends on implemented in implement as implement. tests are required
availability of situ as high metal simple facilities Necessary to to determine
chelating agents content may result are required remove force of reagents
in short-circuit (cyclone or impurities.
gravitational.
Low percentage
of fines in soil
implies lower
waste disposal

69
Costs (US$/T) 60-290 375-425. In the 30-400 208 to 458 Not available
upper range as a
result of need of
applying higher
temperature to
generate
homogenous
smelting by particle
grading

Acceptance by Feasibility to May require May require May require May require
regulatory agency infiltrate permit and/or permit for permit and/or permit for
according to SD treatment for air treatment and/or treatment for air treatment and/or
46 needs to be emissions due to infiltration of emissions due to infiltration of
assessed high content of washing water volatilization of washing water
volatile metals metals and
(Hg and Cd) particulate
matter

The results of this pre-feasibility assessment lead to select acid extraction washing as the chemical
stabilization technology for areas containing metal concentrations. This process will help reduce
the volume of metal-impacted soils by approximately 90%. We recommend that the selected
material for applying this technology should be treated by disposal in authorized dumps. The
approximate cost of implementing this technology is US$ 2,953,165.

RESULTS AND CONCLUSIONS

Based on the feasibility analysis conducted, the following results were obtained:
A criterion that prevails in the analysis is the feasibility of implementation, applied as a
threshold mechanism rather than a merit mechanism. An example of this is the implementation
of biological stabilization, which is highly dependent on the existing microbial flora and on the
new conditions imposed by the stabilization strategy to be used.
Soil with high concentrations of metals with economic interest - the selected option is ex situ
leaching. This is influenced by the potential use of the current facilities in the mine site. The
above strategy implies conducting chemical stabilization activities (starting by removing any
potential contaminants that may have an economic value) before the closure of the work sites
and dismantling of the facilities.
The selected technology for deposits that contain metals and no signs of hazardous wastes is the
excavation and disposal or the disposal in an authorized dump. Similar to the case mentioned
above, this is influenced by the resources available in the mine site.
In the case of hydrocarbon-contaminated soil, the selected option is excavation and disposal.
The reason for this is that areas are clearly demarcated and this option is complemented by the
possibility of biologically degrading hydrocarbon compounds in order to generate less toxic
elements that could be mobilized.

70
Consequently, the feasibility analysis described above helps to objectively select the best chemical
stabilization option(s), among various chemical stabilization technologies, to comply with the
requirements defined in a closure plan for a mine site in northern Chile.
We propose to develop a scoring system to qualify the benefits offered by each criterion. The scores
may be further weighed by applying an equation where the most critical variables have a greater
weight, and thus establish an Index to rank the different technologies.

REFERENCES
Law Number 20551, Regulates closure of mining sites and facilities.
Decree 41 Ministry of Mining, Approves regulation of law on closure of mining sites and facilities.

United States Environmental Protection Agency - USEPA (1988) Guidance for Conducting Remedial
Investigations and Feasibility Studies under CERCLA, Office of Emergency and Remedial Response,
EPA/540/G-89/004.

71
Market analysis, mine planning
and cost estimation of quarries
in southern Brazil

Worldwide aggregates industry has been evolving and transforming small Eduardo da Silva and Rodrigo
Peroni. Universidade Federal do Rio
family businesses into large industry of highly specialized nationwide com-
Grande do Sul (UFRGS), Brazil
panies. Based on these improvements, this sector is obtaining higher economic
outcomes, which requires sounder financial backing and more sophisticated
management. On a sound financial footing, it makes possible to increase
capital investments in facilities and, consequently, determination of reserves
is necessary to achieve economies with high capacity of production. In this
sense, further specialized studies and advanced techniques are necessary in
order to consolidate quarries to take into account an increasing market de-
mand so as to match the growth of the country. Highly trained technical
team is required for monitoring, negotiation and, therefore, meeting the
industry requirements. Long-term and short-term production planning and
cost analysis aiming to estimate variations in demand requirements in
order to avoid loss and to understand the markets companies are inserted
in become essential. Considering consolidation and constant progress of
industries in this sector, improvements in products are taking place. Todays
market is not the same as it used to be, in which producers would compete
only against each other; industries who seek new fields and new products in
order to expand their markets are turning into a more competitive and chal-
lenging game. Taking into consideration that aggregates are consumed by
markets located surrounding the units of production, and that the diversity
of operations spread around the country are making this business as significant
as iron ore in terms of mass movement, this paper deals with conceptual
changes aiming to bring this industry improvements usually left into a second
place. This work was developed based on scenario analysis of aggregates in-
dustry units in order to verify and monitor their evolution and consolidation
in local market.

***

73
INTRODUCTION
In most cases, economic feasibility of an aggregate deposit is a function of transportation cost to
deliver final products to the market and the cost of competitive movement of aggregates at the
same market (Dunn, 1991). Concerning this observation, it is essential for an aggregate mining
survival to study and understand the market where it belongs, the costs associated with the
extraction and planning their activities.
According to Calaes & Netto (2012) the main aspects when developing market analysis for a project,
enterprise or business vary according to the nature of the product offered; size, project location;
regional degree of dispersion of demand; contingent and segments of consumers; perspectives of
seasonal fluctuating demand, economic cycles, replacements, etc. Also according the authors, due
to such peculiarities, accomplishment of market analysis may get restricted to a local level or be
extended regionally, instead. Still, this analysis may require either be deepened or simplified so that
it provides the entrepreneur a general picture of the market from the present and future
dimensions. This strategy must be implemented in such a way to subsidize strategic decisions and
assess markets behaviour and structure to identify perspectives of changes, under the influence of
conditioning factors.
Preliminary to market analysis and comprehension, it is crucial to be acquainted with the extraction
costs. Besides the extension and complexity of data survey of the companies analysed, empirical
values were used as a starting point, taking as reference some premises and assumptions and the
cost models developed by Stebbins & Leinart (2011).
Finally, yet importantly, a strategic plan is defined based on the analysis previously developed and
on costs established considering the mine life and economic parameters.

METHODOLOGY

Market Analysis
Calaes & Netto (2012) report that to fully provide the entrepreneur a global picture and estimation
of market behaviour and structure; from the suppliers side, one should approach production
evolution, behaviour and structure. From the demands side, in addition to evolution and
behaviour analysis, it is significant to analyse regional and sectorial distribution. Market projections
within a certain horizon should be carried out in accordance with offer and demand projections.
Thus, demand forecast is based on current market economic conditions in a relatively dynamic area
during a determined budget period. Market demand for aggregates is closely tied to economic
conditions in the construction industry (Smith, 1991).
Due to the broad range of uncontrollable variables, forecasts are never completely reliable. Some of
the tools currently used in forecasting process to improve accuracy are:
Details of the regulatory boards and government agencies with information of the amount and
value of crushed stone produced by the same state.
Potential construction investments.
Study of aggregates market. The use of historical data, current production and future forecasts.

74
 Analysis of plans for infrastructure projects. Agencies usually have master plans for at least five
years of construction projects.
Some aggregate producers associations develop historical series from volumes of aggregates
used in conjunction with collection of fees.

Cost analysis
As stated by Stebbins & Leinart (2011), costs vary from one mine to another. Although it is
interesting to be acquainted of the costs associated with the operation, it is also important to
understand how to estimate costs of a specific project in a way that the unique development and
operating parameters and subsequent costs of each deposit are considered.

Cost components
While expenses at a mine can be categorized as either capital costs or operating costs, both are
comprised almost entirely of labour, supply, and equipment components. Whether building a
processing plant, constructing a tailings impoundment, or mining an ore deposit, evaluators find
that most of the money spent on the project goes to either the workers (labourers, skilled
tradesmen, equipment operators, supervisors, technicians, managers, etc.), the supply vendors (to
purchase wood, drill bits, concrete, steel, explosives, tires, diesel, etc.), or to equipment
manufacturers (to purchase machines or replacement parts) (Stebbins & Leinart, 2011).

Planning
Project's life of most aggregate extractions are rather long, usually over thirty years. Several factors
affecting operation such as technological advances, regulatory changes and economic fluctuations,
can dramatically affect the planning process. Production planning can be divided into long-term,
medium term and short-term planning. A long-term planning is periodically updated to reflect
these changes. Although this updating could be performed on yearly basis, it is usually performed
every three to five years (Archibald, 1991). Short-term planning (or tactical), on the other hand, is
more focused on fulfilling an objective, and is carried out on a time scale that varies from daily
plans to a several months-production planning (Wetherelt & Wielen, 2011).
Based on these principles, pit optimization and planning software were developed and included in
comercial packages to help production planning. In many cases, production planning is not simply
a case of determining a sequence of mining for the ore body. Rather, it should be a cost-benefit
analysis and not only the extraction of ore, because it is also about the perspective infrastructure
development and installation needs to guarantee the ore extraction (Hall, 2009).

75
RESULTS AND DISCUSSION

Market Analysis
According to the Institute of Economic Research from the University of So Paulo (FIPE) apud
Ferreira & Junior (2012) and Calaes & Amaral (2012), the average consumption of aggregates in
Brazil is summarized in Table 1.

Table 1 Aggregate usage indicators

Infrastructure Unit Consumption of aggregates(t)

Subway Km 50.000
Paved highway Km 9.800
Roads with 10 m wide Km 3.000
Buildings 1.000 m 1.360
Popular housing 50 m 68

Source: FIPE/USP, apud Ferreira & Junior, 2012 and Calaes & Amaral, 2012

According to Coelho (2012), based on National Mining Plan 2030 (PNM-2030), aggregates growth
projection used a rate of 5.6% per year until 2022, considering this expected growth in
infrastructure, housing and sanitation and a lower rate of 4.6% per year for the period from 2023 to
2030. Following these estimates, the gravel production for construction applications will increase
from 217 million tons in 2008 to 318 million tons in 2015.

Table 2 The aggregates production forecast 2015/2022/2030

Aggregate Un. 2008 Rate 2015 Rate 2022 Rate 2030

Gravel Mt 217 5.6% 318 5.6% 465 4.6% 667

Source: Coelho (2012)

Location of a quarry is primarily determined by local geological conditions and several

environmental aspects mandatory to get a permit. The distance from the market is relevant due to
transportation cost, whether by road, rail, barge, or ship; ranging from high to very high in
comparison to the product value. Most quarries usually serve a market within a radius of
approximately 50 km (Brown (2011)).
The limiting radius for product distribution was set of approximately 30 km, provided that the
production and consumption of aggregates is local; transportation cost is a major factor restricting
product distribution. Besides; the region analysed in this study (Santa Cruz do Sul, State of Rio
Grande do Sul, Brazil) is a small sized city compared to metropolitan areas. Santa Cruz do Sul pole
is comprised of several surrounding cities, but the major producers are Santa Cruz do Sul and Vera
Cruz, which are responsible for over 90% of regional production, as shown in Table 3.

76
 Table 3 Historical production of basalt aggregates (t)

City 2012 2011 2010 2009 2008 2007

Santa Cruz do Sul 193,265 296,758 137,006 143,978 47,379 47,988
Candelria 0 3,968 3,600 1,980 253 11,418
Venncio Aires 4,106 4,284 3,581 8,045 6,102 0
Vera Cruz 111,230 148,508 75,626 69,275 56,761 32,112
Total 308,601 453,519 219,816 223,279 111,197 91,714

Source: National Department of Mineral Production DNPM

With a projected growth of 5.6% in the year 2012 the expected production would be 138,000 tons,
but in fact the 2012's production was 308,607 tons. This variation shows that production may vary
significantly due to regional investments. In this particular case the increase was due to the
construction of a highway in the region, causing such unexpected fact.
From the initial estimate of 5.6% increase per year, and considering the current value of production
for the year 2012, it was estimated the production for the period comprised by National Mining
Plan 2030. Table 4 presents a production forecast based on the indexes suggested by the long-term
strategic plan developed by the National Department of Mineral Production (DNPM). Based on this
estimate, the forecast achieves a production of 363,000 tons in the year 2015, 532,000 tons in 2022
and 762,000 tons in 2030.

Table 4 Regional production of aggregates forecast

Aggregate Un. 2012 2015 Rate 2022 Rate 2030 Rate

Gravel t 308,000 363,000 5,6% 532,000 5,6% 762,000 4,6%

By performing price analysis of aggregates for construction industry, especially Gravel 01, the main
product sold in the region, it is displayed in Table 5 the prices of aggregate over the past three
years, and its variation. The information was taken from the regions construction association.

Table 5 Gravel 01 price variation in the region

Price Gravel 01 Year Value (R$/t) Rate Year Value (R$/t) Rate Year Value (R$/t)
Base case price 2010 22.50 8.3% 2011 24.37 5.7% 2012 25.77

According to Whittle (2011), price is the most important variable that affects critical decisions on
mine planning. It is directly related with the optimal production rate, the final pit size and the
desired degree of operational flexibility. However, according to the author, price is the most
difficult variable to predict. Several different forecasts may reasonably be made to future pricing,
but all of them have in common the high possibility of error. Due to this fact, a mine should not rely
on just a single price forecast. Three scenarios are presented in Table 6 considering price variation.
Considering Brazilian economic stability, and observing inflation rate over the last years, the

77
 inflation adjustment factor was established at 5.00% per year for a base case selling price forecast;
an increase to 10.00% per year for the optimistic price forecast scenario, and 2.50% per year for a
pessimistic price forecast scenario.

Table 6 Expected price variation within the period 2012/2015/2022/2030

Price Gravel 01 Year Value(R$/t) Year Value(R$/t) Year Value(R$/t) Year Value(R$/t)
Base case price forecast 2012 25.77 2015 29.83 2022 41.98 2030 62.02
Optimistic price forecast 2012 25.77 2015 34.30 2022 66.84 2030 143.28
Pessimistic price forecast 2012 25.77 2015 27.75 2022 32.99 2030 40.19

Cost models
Stebbins and Leinart (2011) suggest that when evaluators have limited information about the
deposit they may use models to determine the order-of-magnitude for the estimates. Moreover,
these models can be used to provide information about the nature of mining costs in general. The
impact of changes in operating parameters can be easily understood when presented in a format
that compares the costs associated with setting directly to each other. Cost models can be used to
perform comparative approaches, consisting in a compilation of cost estimates, along with the
parameters under which these estimates are based.
These models are theoretical and are not representative of any existing mine. Costs associated with
each model account for all pertinent labour, material, supply, operating expenses and equipment
used at the mine site. Costs of supervision, administration and project management are also
included. Expenses associated with the development of pre-production, purchase and installation
of equipment and construction of facilities are included as well. The models were constructed with
Sherpa Cost Estimating Software for surface mines (Stebbins 2009).
Thus, Leinart & Stebbins (2011) present three cost models that evaluators can use to make
preliminary estimates for their projects. The cost models include surface mines considering
productions of 1,000, 10,000 and 80,000 t/day. For this case study, the model used considers a
mining rate of 1,000 t/day with a stripping ratio 1:1.

Table 7 Operating costs for 1000 t/day ore and 1000 t/day waste

Operating costs R$(2012)/t ore Operating costs R$(2012)/t ore Operating costs R$(2012)/t ore
Supplies/materials 8.45 Equip. operation 3.35 Sundry items 2.59
Labour 9.72 Administration 4.42 Total operating costs 28.53

Some observations should be made about the operational costs as the models used are calculated
based on 1,000 tons per day of ore production and 1,000 ton per day of waste. However, the
operation analyzed is characterized by very low waste removal. Based on this information and the
variation of cost models for different stripping ratios, it is estimated that the cost range would be
about 30%. Table 8 presents the cost after adjustment.

78
 Table 8 Updated Operating costs

Operating costs R$(2012)/t ore Operating costs R$(2012)/t ore Operating costs R$(2012)/t ore
Supplies/materials 5.91 Equip. operation 2.34 Sundry items 1.81
Labour 6.80 Administration 3.09 Total operating costs 19.95

According to Whittle (2011) all costs need to be rendered in a structure suitable for cash flow
modeling in one or more optimization systems. Three scenarios are presented in Table 9
considering price variation. Some costs are market based, and the concepts and models described
for forecasting prices may equally be applied to the forecasting of market-based costs.
Thereby an average inflation of 5.00% per year for a base case cost forecast, an increase of 10.00%
per year for the pessimistic cost forecast scenario, and 2.50% per year for an optimistic cost forecast
scenario.

Table 9 Expected cost variation within the period 2012/2015/2022/2030

Cost Gravel 01 Year Value(R$/t) Year Value(R$/t) Year Value(R$/t) Year Value(R$/t)
Base case cost forecast 2012 19.95 2015 23.09 2022 32.50 2030 48.01
Pessimistic cost forecast 2012 19.95 2015 26.55 2022 51.75 2030 110.92
Optimistic cost forecast 2012 19.95 2015 21.48 2022 25.54 2030 31.12

Planning
The information required for a plan is related to existing resources, including reports, maps, data
surveys and block models for the area of interest (Whittle, 2011). Based on existing documentation,
such as drilling, surveys and geological studies, the estimated ore resources for the study area is
approximately 5.2 Mt. The operational daily production is approximately 1,400 tons. Given the
expected total production required in the region analysed by the year 2030 is about 9.8 million tons,
and mine life expectation is 13.7 years, It is necessary to search and develop new areas, as the
company is currently responsible for about 90% of local production and the remaining resources
will not meet all the necessary volume estimated to reach the year 2030. The financial analysis was
developed based on the following assumptions: Income Tax (IT) 30%, discount rate (i) 10%, Current
Price (2012) R 25.77/t, the actual costs (2012) R 19.95/t, and variation of prices and costs in
accordance with the estimates previously reported. Following, cash flow with the information
obtained during the study, according to the displayed in Table 10 for the base case; in Table 11 for
the optimistic case; and in Table 12 for the pessimistic case.

Table 10 Cash flow with an annual price and cost average variation of 5%

Year Production (t) Revenue (R$) Costs (R$) Flow(BIT) I.T.(Income Tax) Flow (AIT)
2013 293,295 7,936,129 6,143,802 1,792,327 537,698 1,254,629
2015 327,064 9,756,974 7,553,420 2,203,554 661,066 1,542,487
2022 478,939 20,104,241 15,563,819 4,540,422 1,362,126 3,178,295

79
 2025 381,007 18,514,341 14,332,988 4,181,352 1,254,405 2,926,947
VPL 21,597,290 VPL 15,118,103

Table 11 Cash flow with an annual price variation of 10 % and annual cost variation of 2.5%

Year Production (t) Revenue (R$) Costs (R$) Flow(BIT) I.T.(Income Tax) Flow (AIT)
2013 293,295 8,314,040 5,997,521 2,316,519 694,955 1,621,563
2015 327,064 11,218,255 7,026,634 4,191,621 1,257,486 2,934,134
2022 478,939 32,012,644 12,230,996 19,781,648 5,934,494 13,847,153
2025 381,007 33,896,298 10,478,186 23,418,112 7,025,433 16,392,678
VPL 71,132,669 VPL 49,792,868

Table 12 Cash flow with a price annual variation of 2.5% and cost annual variation of 10%

Year Production (t) Revenue (R$) Costs (R$) Flow(BIT) I.T.(Income Tax) Flow (AIT)
2013 293,295 7,747,173 6,436,364 1,310,809 393,242 917,566
2015 327,064 9,076,509 8,684,679 391,829 117,548 274,280
2022 478,939 15,799,136 24,782,780 -8,983,644 -2,695,093 -6,288,550
2025 381,007 13,534,980 26,241,022 -12,706,042 -3,811,812 -8,894,229
VPL -22,527,258 VPL -15,769,081

Having information about the mine life, data related to the prices, costs and prospects for
production, it becomes possible to generate cash flow and financially evaluate the project.

CONCLUSIONS
As observed throughout the study, basic procedures such as simplified market analysis, estimate of
basic costs compared to existing mines and planning in arrangement with economic analysis,
provide essential data for survival and sustainable development of mining aggregates projects.
Having accompanied the work developed in several companies as well as reading the literature on
the subject, evidently even those simple studies are not part of administration and management of
aggregates units, which may lead many of them to foreclosure and abandonment due to financial
difficulties and mismanagement.
By producing significant increase due to the growing demand as well as development of major
conglomerates specialized in this mining segment, qualification of management and administrative
staff will become essential to monitor the sectors growth. The only way to keep on business is
understanding the strategy necessary to provide market needs, keep control of costs and
mannagement. Otherwise the small and medium units will permanently disappear or be acquired
by larger companies that strategically have been spreading its tentacles all over the country.

80
The current scenario of aggregates industry has been demanding greater professionalism. Further
analysis is needed, especially economic and operational, studies of different scenarios, assessment
of uncertainties. These procedures should be a routine procedure in this industry in order to make
businesses competitive and increase the profits of each one.

REFERENCES
Brown, I. (2011) Quarrying, In SME Mining Engineering Handbook, 3nd ed., Edited by P. Darling. Littleton, CO:
SME.
DNPM (n.d.) Relatrio de arrecadao da CFEM, accessed on 10th of February 2013, <
http://www.dnpm.gov.br/conteudo.asp?IDSecao=555>.

Dunn, J.R. (1991) Geology and Exploration, In The Aggregate Handbook, Edited by Richard D. Barksdale.
Arlington, Va: National Stone, Sand and Gravel Association.

Hall, B.E. (2009) Short-term gain for long-term pain: How focusing on tactical issues can destroy long-term
value, J. S. Afr. Inst. Min. Metall., 109:147156.

Smith, L.J. (1991) Marketplace, In The Aggregate Handbook, Edited by Richard D. Barksdale. Arlington, Va:
National Stone, Sand and Gravel Association.

Stebbins, S.A. & Leinart, J.B. (2011) Cost Estimating for surface mines, In SME Mining Engineering Handbook,
3nd ed. Edited by P. Darling. Littleton, CO: SME.

Wetherelt, A. & van der Wielen, K.P. (2011) Introduction to Open-Pit Mining, In SME Mining Engineering
Handbook, 3nd ed. Edited by P. Darling. Littleton, CO: SME.

Whittle, D. (2011) Open-Pit Planning and Design, In SME Mining Engineering Handbook, 3nd ed. Edited by P.
Darling. Littleton, CO: SME.

81
Integrated production capacity for
the system crusher platform:
Truck Fleet

The current scenario for the massive open pit mining methods presents a Marco Cornejo and Juan Pablo
Cataldo. Hatch, Chile
progressive decrease in ore grade; so, to maintain or increase the amount of
fine copper over time, it is necessary to send out greater amounts of ore to
the plant.
One of the mining system components that is critical to the loading and
transport operation is dumping the ore into the primary crusher, specifically
the hauling process at the crusher platform. It is critical due to the configuration
of the roads (junctions and hold points) in a reduced space, the interaction
between the haul trucks, the ore discharge operation (haul truck backing up,
simultaneous, discharge operation, rock breaker hammer operation), and on
the way out of the platform.
The main purpose of this study is to determine the configuration of the
crusher platform (platform design, discharge points, operation procedures),
and to determine the existing critical points that affect the performance of
the proposed feed rate.
A dynamic simulation model is used in this study to determine the max-
imum capacity of haul truck that can download at the primary crusher subject
to the crusher platform design, the flow of haul trucks per hour and the size
of the truck bodies.
The outcome of the analysis of the simulation model results allows us to
conclude that the crusher platform node is not a critical point affecting the
performance of the proposed feed rate, because there is an operational allow-
ance; recovering lost production when facing plant stoppages events or mine
failure to supply haul trucks. To achieve the maximum production it is important
to have available sufficient number of haul trucks, but this number of trucks
should not be exceeded because a higher amount of units will reduce the fleet
effectiveness due to congestion.

***

83
INTRODUCTION
The current scenario for the massive open pit mining methods presents a progressive decrease in
ore grade; so, to maintain or increase the amount of fine copper over time, it is necessary to send
out greater amounts of ore to the plant (Moss 2011).
The long-term mining plan should generate the best sequence of resource development to
maximize the business value, incorporating all the necessary equipment to achieve the proposed
production target. The increase in the number and size of the material hauling equipment
circulating in the mining system; which leads to increased interaction at the material loading and
unloading points, at the transport roads and junctions, among others. This discontinuous process
should feed the comminution and benefit processes, performance of which is based on the
operational continuity.
One of the mining system components that is critical to the loading and transport operation is
dumping the ore into the primary crusher, specifically the hauling process at the crusher platform.
It is critical due to the configuration of the roads (cross and hold points) in a reduced space, the
interaction between the haul trucks, the ore discharge operation (haul truck backing up,
simultaneous discharge operation, rock breaker hammer operation), and on the way out of the
platform. This system is a point of interest to the mining and process areas because the design must
respond to fluctuation in the ore feed due to mining process variability; incorporating clearances to
the crushing system that are able to recover short term productions caused by ore production
failures.
A dynamic simulation model is used in this study to determine the maximum capacity of haul
truck that can download at the primary crusher, subject to the crusher platform design, the flow of
haul trucks per hour and the size of the truck bins.
The main purpose of this study is to determine the configuration of the crusher platform (platform
design, discharge points, operation procedures), and to determine the existing critical points that
affect the performance of the proposed feed rate (98 ktpd). As a result of this analysis,
improvements to the crusher platform configuration are proposed, subject to the road and junction
design, haul truck unloading logistics and traffic signaling.

METHODOLOGY
Through the development of a dynamic simulation model, this study evaluates the potentially
critical points in the design and operation of a crushing platform (a single crusher), subject to the
road and junction designs, haul truck unloading logistics and traffic signaling and ore feed
fluctuations. Based on the results, the maximum productivity is analyzed for one day of operation,
depending on time variable of the haul trucks arriving at the crusher and identifying potentially
critical points in the design; for which improvements are proposed that reduce production losses
due to the equipment interaction.
This study involves the arrival of the haul trucks at the crushing platform, unloading of the mineral
ore into the crusher and exit from the platform; depending on the different haul truck flows (per
hour), transport routes and traffic regulations.

84
The proposed methodology develops the following issues: (i) platform design definition; (ii)
definition of operating procedures and parameters; (iii) construction of the simulation model; (iv)
results for maximum productivity; and (v) conclusion and recommendations.

Crusher Platform Design

The crusher platform design analyzed is currently used in several mining sites, whether in
operation and/or ongoing projects (Hatch 2013). The main system components identified are shown
in Figure 1: on haul truck access point, one cone crusher with two ore download points, one
receiving hopper, one rock breaker hammer and one exit point from the platform.

Figure 1 View of the crushing platform

In order to locate the crusher discharge point at a surface level so belt conveyor to the process plant
can transport the crushed ore, the proposed design considers that the platform is located over
backfill material (Figure 2).

Figure 2 Cross section of crusher platform

Crusher Platform Operations Parameters

Transport Logistics
Once the platform has been designed, the transport logistics within the platform are defined
considering the following restrictions and depending on the haul truck size:

85
 Haul truck size: 14 meters long, 8 meters wide, with minimum turning radius of 14 meters.
Minimum separation distance between trucks is 15 meters.
With these restrictions, it is possible to define the haul truck traffic logistics, as shown in Figure 3.

Figure 3 Logistics of haul truck traffic on the platform

The traffic logistics begins at the loaded haul trucks entrance at Point E, which move on an
ascending sloped road towards point R1. They then proceed to the N1 junction, where the loaded
haul trucks have right of way over the empty trucks coming from the discharge point D2. At the
point of decision N2, there is a priority allocation of trucks towards point P1, where on section N2-
P1 there should always be one (1) haul truck more than in section N2-P2. This condition is because
the exit of the trucks from point D1 does not interfere with loaded trucks incoming traffic.
After passing the waiting points P1 and P2, the haul trucks advance to the N4 and N3 points,
respectively, where they will park back end first to download at points D1 and D2, following the
FIFO premise (First In-First Out). Simultaneous discharge of two trucks is considered.
Each unloading point has its own exit route; the haul trucks unloading at point D1 must pass
through Stop 1, where thy must wait for the trucks circulating by section N1-N5. For truck coming
from D2, they should wait at Pare 2 for the trucks circulating on section R1-N1; both roads lead to
node N5, where they depart from the platform towards point S.

Operational Parameters
The equipment operational information considered in the simulation model is obtained from
catalogs and on site data. Primary consideration is given to the following:
Haul truck average speed on the crushing platform is 20 km/hr. and for back end parking is 8
km/hr.
229 tonnes (Fleet N1) and 345 tonnes (Fleet N2) effective capacity haul trucks are used in the
simulation. The amount of transported material is incorporated as a random variable of the
actual body capacity, subject to a triangular distribution, with a minimum/maximum variation
of 20% to the mean.

86
 The distance between points is given by the platform design.
The back end parking and waiting times are a result of the simulations. Both parameters
depend on the frequency of incoming haul trucks to the crusher, and the crusher and rock
breaking hammer performances. The unloading time is entered as a random variable that
depends on the triangular distribution of mean of 0.5 minutes, varying the minimum and
maximum in 25% with respect to the mean.
The crusher performance is incorporated as a random variable that depends on a triangular
distribution of mean for 5,300 tons, varying the minimum in 20% with a maximum of 6,300
tons.
The crusher can receive two haul trucks unloading simultaneously, where the capacity of the
receiving hopper is 480 tons.
There is a 6,000 t/h capacity rock breaking hammer.
Haul truck failures Operative Reserve, as well as the crusher stoppages were not considered in
this analysis.

Dynamic Simulation Model

Dynamic simulation is a valid methodology for evaluating complex systems since, unlike
spreadsheets or linear programming, it captures the dynamic effects of system interactions, process
variations, random failures, competence of resources and space, logistical constraints, process
limitations and other phenomena observed in real systems. It also allows the What If analysis and
testing scenarios which are easily carried out; allowing identification of improvements for the
operational configurations and strategies prior to Project implementation and commissioning
(Hindle 2011).
This applies to processes with multiple systems with variable reliability and where everyone
competes to reach the maximum capacity. Analyzing the cumulative impact of failures and random
events throughout the system components is not possible without a detailed dynamic simulation
model (White 2009).
The use of dynamic simulations allows us to visualize interactions over time that are caused by the
simultaneity of systems and processes such as equipment failure, upstream and downstream
disturbances and system bottlenecks that can be easily identified allowing optimized solutions and
robustly supported decision making not based on experience or simple exploratory analysis.
Finally, a simulation model provides a risk free environment for the many hypotheses and
scenarios, assessing the risk in decision making by means of a sensitivity analysis of the
components where the input parameters are unreliable, or where historical information is limited or
unavailable, such as for greenfield projects. It is also a useful tool for analyzing business cases in
which there is a need to test new methodologies or modifications to existing processes, since it
allows evaluating scenarios and determining whether these improvements are valid to continue to
the next engineering phases.
The model implemented for the development of this study was done using the Arena multipurpose
simulation tool that allows implementing discrete events and simultaneous analysis of multiple
scenarios.

87
 Figure 4 Implementation of the Arena simulation model software

Eight simulation scenarios were defined (Table 1), where the amount of haul trucks varies. 10 one
week duration replications were performed for each scenario. The obtained results are the daily
mean of one week runs of the model; the results presented are the average of all the replications.

Table 1 Simulation Scenarios

Case Case Case Case Case Case Case Case
Simulation Scenarios
1 2 3 4 5 6 7 8
Haul Trucks to Crusher (Min) truck/h 10 12 14 16 18 20 22 24
Haul Trucks to Crusher (Max) truck/h 15 17 19 21 23 25 27 29

RESULTS AND DISCUSSIONS

The results were analyzed per haul truck fleet, emphasizing the case that is considered optimal
since it is the point where waiting lines and times increase affecting the truck fleet productivity.
The main results obtained for Fleet N 1 (229 tons) are:

88
 Daily Production Crusher Utilization
140 100%
90%
120
80%
100 70%
Tons (ktpd)

Utilization (%)
80 60%
50%
60
40%

40 30%
20%
20
10%
0 0%
Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8 Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8
min Ave max min Ave max

Cycle Time Queues Time (Entry)

70 4.0

60 3.5

3.0
Time (minutes)

Time (minutes)
50
2.5
40
2.0
30
1.5
20
1.0
10 0.5

0 0.0
Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8 Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8
min Ave max P1 P2

Total Queues Time (Entry) Queues Time (Entry Case 6)

600 35 7,000
Number of Trucks per Hour (#)

30 6,000
500

Tons per Hour (tph)

25 5,000
Time (minutes)

400
20 4,000

300 15 3,000

200 10 2,000

5 1,000
100
0 0
0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8 Hour per Day (h)
P1 P2 Tons per Hour Entry Truck Exit Truck

Figure 5 Main results obtained for Fleet N 1

For the best case (case 6) with a frequency of 20 trucks per hour, an average of 109 ktpd is
achieved, with an average of 479 trucks per day.
Collapse of the crusher platform begins with a frequency of 22 haul trucks per hour, which is
observed as an increase of queue times at the critical points previously defined. The pre
saturation limit is 18 trucks per hour and the limit considered optimal is of 20 trucks per
hour.
The average utilization of the crusher is 74.0%.
The average cycle time in total (from the trucks entrance to its exit from the crusher platform) is
7.2 minutes.

89
 At the waiting point P1 and during 29% of the day, there is a haul truck waiting to unload at
point D1. For the waiting point D2, there is a truck waiting to unload at point D2 during 17% of
the day.
Since point D1 on Node 2 has priority to unload and considering the FIFO condition at the
unloading points, the amount of loads dumped in point D1 is 71% and 29% at point D2.
The main results obtained for Fleet N 2 (345 tons) are:

Daily Production Crusher Utilization

160 100%

140 90%
80%
120
70%
Tons (ktpd)

Utilization (%)
100
60%
80 50%

60 40%
30%
40
20%
20
10%
0 0%
Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8 Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8
min Ave max min Ave max

Cycle Time Queues Time (Entry)

2,500 7.0

6.0
2,000
Time (minutes)

5.0
Time (minutes)

1,500
4.0

3.0
1,000

2.0
500
1.0

0 0.0
Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8 Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8
min Ave max P1 P2

Total Queues Time (Entry) Queues Time (Entry Case 4)

1,600 30 7,000
Number of Trucks per Hour (#)

1,400 25 6,000

Tons per Hour (tph)

1,200 5,000
Time (minutes)

20
1,000 4,000
15
800 3,000
600 10
2,000
400 5 1,000
200
0 0
0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8 Hour per Day (h)
P1 P2 Tons per Hour Entry Truck Exit Truck

Figure 6 Main results for Fleet N2

For the best case (case 4) with a frequency of 16 trucks per hour, an average of 134 ktpd is
achieved, with an average of 393 trucks per day.

90
 Collapse of the crusher platform begins with a frequency of 18 trucks, which is observed as an
increase of queue times at the critical points previously defined. The pre saturation limit is 15
trucks per hour and the limit considered optimal is of 16 trucks per hour.
In this case the effective bin increases to 345 (t), so the crusher utilization increases to a 91.1%;
considering the a 10% of discrete probability of occurrence of the rock breaking hammer.
The total cycle time is 26 minutes.
At the waiting point P1 and during 71% of the day, there is a haul truck waiting to unload at
point D1. For the waiting point P2, there is a truck waiting to unload at point D2 during 62% of
the day.
Even though point D1 on Node 2 has priority to unload and considering the FIFO condition at
the unloading points, there is a greater unloading uniformity; since the FIFO condition prevails,
the amount of loads dumped in point D1 is 56% and 44% at point D2.
For this bin size simultaneous discharge is not possible due to the capacity of the receiving
hopper (480 t).

CONCLUSIONS
The crusher design must consider the truck size of the hauling fleet because if the capacity of the
receiving hopper is limited (480 tonnes), it is not possible to unload two trucks simultaneously even
when the design supports this operation. As a result of this implementation, longer waiting times
and loss of availability of Fleet N 2 are observed.
The construction of the platform over landfill involves higher costs and construction and operation
complications on the platform since this design limits the entrance and exit to one sector. If the
crushing operation is performed entirely underground, there is greater flexibility for the layout of
the entrances and exits roads, according to the operational needs.
The simulation model results allow concluding that the crusher platform node is not a bottleneck
that significantly affects the performance of the 98 ktpd production plan because there is a 1,000-
1,500 tones per hour operational clearance of the crusher; this allows recovering production losses
caused by events such as plant stoppages or mine failure to dispatch haul trucks. However, in order
to achieve the maximum production of 6,300 tpd, it is important to have available sufficient number
of haul trucks, depending on the truck fleet being analyzed (25 trucks for Fleet N 1 and 19 trucks
for Fleet N 2).

REFERENCES
Hindle, K., Limmer, V. (2010) Understanding Underground Ore Handling and Shifting Bottleneck
Identification Using Discrete-Event Simulation, Internal Publication by HATCH.

Moss, A. (2011) An Introduction to Block and Panel Caving, BMO Capital Markets 2011 Global Metals &
Mining Conference.

White, P., Ingalls, R. (2009) Introduction to Simulation, Proceedings of the 2009 Winter Simulation Conference
M. D. Rossetti, R. R. Hill, B. Johansson, A. Dunkin, and R. G. Ingalls, eds. 2009, pp. 1223.

91
Mine planning progress:
Coroccohuayco project

Coroccohuayco project is located 8km southeast from Xstrata Tintaya mining Carlos Pineda and Robert
Copacondori. Xstrata Copper, Peru
camp in the Province of Espinar in the Department of Cusco southeast Peru.
The project is a Cu-Au porphyry-skarn type deposit that has been explored at
various times from 1970 to the present days.
The project is currently undergoing early conceptual engineering studies
of this initiative which is at the exploration stage. The main goal is to identify
viable alternatives to Coroccohuayco operations.
The research methodology essentially entails: (i) Exploration; (ii) data
acquisition; (iii) deposit geology; (iii) geological modeling; (iv) mineral re-
source estimation; (v) general design criteria; (vi) mine design; (vii) mineral
resource; (viii) schedules.
This article presents the mine planning progress of Coroccohuayco, study-
ing the alternative operations at a rate of 40ktpd ore treatment with construc-
tion of a new treatment plant, this alternative is the stand alone option. The
start could be between 2016 and 2018.

***

93
INTRODUCTION
Xstrata Tintaya S.A., maintains steady growth by investing in mineral resources management,
occupational health and safety, environmental, social responsibility also in developing mining
projects.
The strategic objective of "maximizing the value of our physical assets," mine operations beginning
from conceptualization Antapaccay evaluated a number of alternatives, selecting integration
Tintaya-Antapaccay in which Antapaccay takes advantage of mineral resources, infrastructure and
experience making this project feasible.
The Coroccohuayco project is located 8 km southeast of the Xstrata Tintaya mining camp in the
Province of Espinar in the Department of Cusco in southeast Peru at UTM coordinates 256,561.66E,
834,5126.80N (WGS84 System/Zone 19) at an elevation of 4,000 to 4,100 m.a.s.l. The surface area of
the Xstrata Tintaya S.A. property covers 401 hectares, 8,044 square meters of this were purchased
from the Huano-Huano community. This community is now subdivided into two groups, Huano-
Huano and Pacopata.
This article presents the mine planning progress of Coroccohuayco project at conceptual level, this
contains the part of geology, the alternatives evaluation of mining methods and location plant and
finally the mining plan of best alternative to operate Coroccohuayco according to NPV. This article
based on the conceptual study by AMEC was completed in Dec. 2011.

METHODOLOGY
The methodology starts with exploration making drilling campaigns, the database used for the
estimation of these resources comprises 343 drill holes for a total of 130,000 m, based on the results
of the QA-QC program carried out during the drilling campaign for oxides and sulphides, it was
concluded that the reliability of the grades for the entire population of samples tested is good. The
deposit geology characteristics were determined by lithostratigraphy, intrusive phases, structural
geology, alteration and mineralization.
Geological modelling considers lithological model, mineralogical zone modelling and definition of
estimation domains. The visual validation of the Coroccohuayco geological model by reviewing
cross sections, long sections and bench plan interpretations with drill hole data colour coded by
copper grades and the original logged lithology.
Mineral Resource Estimation the input data is the October 2011 model was estimated from 5 m
composites coded by lithology and mineralogy. The block model characteristics is a partial block
model based on 20 m x 20 m x 15 m blocks, each block can contain up to nine lithologies with
associated volume, grade fields and density.
The mining limits and the mine design are based on the following site description, resource
description, geotechnical parameters, hydrological considerations and economic criteria. Finally the
mine plan considers mining production rate, design parameters, equipment requirements and
selection, ore and waste determination, mineable resource model, mine layout, mine production
sequence and schedule moreover overburden and waste disposal.

94
GEOLOGY
The Coroccohuayco project is a Cu-Au porphyry-skarn type deposit, this project is located in the
south-eastern Peru, on the southeast edge of the Andahuaylas-Yauri batholiths strip which is
characterized by the presence of clastic and limestone rocks, aged between the Upper Jurassic and
Cretaceous periods, forming deposits of skarn mineralization and copper porphyries.
Geologically it consists of a thick Cretaceous sedimentary sequence folded during the Andean
deformations widely intruded by stocks, sills and dikes from the Andahuaylas-Yauri batholiths,
covered by lacustrine and volcanic Cenozoic and Quaternary deposits. Figure 1 shows the
geographical location map.

Figure 1 Geographical location map of Coroccohuayco

Mineralogical zone model

The mineralogical zones were defined from the drill hole assays using the Ratox ratio as a
parameter to distinguish the various mineralogical zones as it is done for Xstrata Tintaya mine. The
Ratox ratio is the ratio of oxide copper (CuOx) over total copper (CuT). This parameter allows
discrimination between primary and secondary sulphide areas, copper oxides and zones of higher
oxidation. The boundaries of mineralogical units are defined using the Ratox thresholds are
presented in Table 1.

95
 Table 1 Definition of mineralization

Description Plant location Ratox ranges

Alluvial and moraine Fill
Leached Excavation
Oxides Oxides >0.35
Mixed complex Sulphides 0.25-0.35
Mixed sulphide Sulphides 0.10-0.25
Sulphide Sulphide <0.10

For oxides, in addition to the Ratox information, the contours of oxide minerals such as tenorite,
and cuprite were taken into account.

MINING
This section outlines the parameters and procedures used to design the different options for mining
the Coroccohuayco deposit and to establish a mining schedule for each option. The mine plan and
cost analysis are based on the measured and indicated mineral resources estimation. There are six
mine production options depending on the mining method selected and plant location which are
presented in Table 2.
Table 2 Alternative of mining method and plant location

Option Mining method Plant location

0 Tintaya minimal changes
0-A Open pit -16ktpd Tintaya
0-C Underground-16ktpd Tintaya
1 Open pit-40ktpd
1-A New plant at Coroccohuayco
1-C Tintaya modified
2 Underground-24ktpd
2-A New plant at Coroccohuayco
2-C Tintaya modified

Alternative evaluations
For the open pit option contains a total 223 Mt of ore at 0.95% Cu and 0.12 g/t Au, with a strip ratio
of 4.52. The mine design is sensitive to the changes of the angle of inclination. The mine life is
estimated to be 17 years processing 40ktpd and 40 years processing 16ktpd. The throughput of
plant reaches to third year of mine production. For the underground option contains a total 120 Mt
of ore at 1.17% Cu and 0.14 g/t Au, 250m depth below the surface mining method confirming the

96
block caving. The mine life is estimated to be 17 years processing 24ktpd and 23 years processing
16ktpd. The throughput of plant reaches to third year of mine production at 16ktph and fifth year of
mine production at 24ktpd. The mine plan has been show an increasing tendency at copper grade.
For the alternative evaluations are performed with different analysis including the risk analysis in
qualitative and quantitative the factors considered are environment, financial, external relations,
human resources, infrastructure, legal, plant and process, mining and geology, health and safety
and socioeconomic for each alternative of mining method and plant location as shown the Figure 2.
While in Figure 3 shows the alternative evaluations according to the concept of geology, mining,
plant, infrastructure, overall higher risk, start of production and throughput of plant for each
alternative of mining method and plant location.

Figure 2 Risk analysis

97
 Alternative 16 ktpd 24 ktpd 40 ktpd
OP UG UG OP
Concept
Tintaya Corocc. Tintaya Corocc. Tintaya
The block model has noimportant anomalies and the
Geology
interpretation is consistent with the mineral.
Mining Ore 120 Mt ; 1,17% Cu y 0,14 g/t 223 Mt ; 0,95% Cu
Life of mine 40 23 17
Plant process & The metallurgical design data is adequate. The mining
metallurgy plans show increasing trend of grade.
220 kV- Conveyo 220 kV-
Infrastructure Conveyor Conveyor Conveyor
piping r piping
0.90% 0.50% 1.40% 2.50% 2.30% 4.60%
Much
Overall risk Far
Lowest Low Highest High more
below
high
Program start of
Jun-18 Abril-2020 Jun-18
production
throughput of
2020 2022 2024 2020
plant (100%)

Figure 3 Alternative evaluations

Financially, the options are more attractive and better according to NPV at 12% for each alternative
is determined by approved factor, these results are presented in Table 3. The mining methods with
Tintaya minimal changes have been discarded because are not viably financial.

Table 3 Results of the technical and financial analysis

NPV approved
Option Mining method Plant location Condition
factor
0 Tintaya minimal changes
0-A Open pit -16ktpd Tintaya (6.86) Discarded
0-C Underground-16ktpd Tintaya 0.16 Discarded
1 Open pit-40ktpd
1-A New plant at Coroccohuayco 1.00 Approved
1-C Tintaya modified 0.35 Approved

98
 2 Underground-24ktpd
2-A New plant at Coroccohuayco 0.21 Approved
2-C Tintaya modified 0.99 Approved

COROCCOHUAYCO OPERATIONS
The alternative open pit mine and plant located at Coroccohuayco is the "stand alone" option with
construction of a new treatment plant at Coroccohuayco, using the method of surface mining at a
rate of 40ktpd treatment because is the option with higher NPV .

Economic value of the block

For valorisation of a block the material was considered to be ore if the total revenue of the block
exceeded the ore-based costs processing, G&A, sustaining capital allowance. The revenue was
based on net copper and gold price after selling cost charges. The value of the block should be
calculated assuming that the block is to be discovered and exploited. The economic destinies are the
plant if revenue is greater than or equal to the cost of mining and revenue and dump if revenue is
less than the cost of mining.
Total Revenue = (Cu * Recovery * 2204.6lb/1t * Realized Cu Price) + (Au * Recovery * 0.03215oz/1gr *
Realized Au Price)
For calculating the economic value of the block, considered the characteristic of block, revenue
factor of 1.00, measured and indicated resources, average mining cost for open pit of US$1.71/t
mined, and average processing cost of US$6.11/t milled. Moreover of the following parameters with
respect to copper and gold are presented in Table 4.

Table 4 Economic parameters

Parameters Copper Gold

Price US$2.00/lb US$850/oz
Metal recovery 83.7% 65%
Selling cost US$0.60/lb US$141/oz

Mineral resource
Based on the breakeven cut-off grade criteria, the pit shell contains 223 Mt of ore at 0.95% Cu, 0.11
g/t Au, with a strip ratio of 4.62. Table 5 shows the mineral resources by classification. This material
represents upside potential, as it could possibly be upgraded by further resource definition drilling.

Table 5 Open Pit Mineral Resource

Resource class Ore Cu Au Strip ratio
Measured 567 0.907 0.109 -

99
 Indicated 222,515 0.946 0.116 -
Total M+I 223,082 0.946 0.116 4.52
Waste 1,007,346

Pit limit analysis results

The economic parameters, metal prices and costs, as well as the metallurgical recoveries used in
determining the economic pit. Sixty-one nested LG shells were generated from revenue factor (RF)
0.31 to 1.0 in incremental steps of 0.013 using the Whittle software. The results are shown in
Figure 4. The RF 1.00 shell was selected to guide the ultimate pit design because it maximized pit
resources and project cash flow. The RF 1.00 shell contains 290 Mt of ore at 0.79% Cu, 0.095 g/t Au,
and a strip ratio of 3.63.

Sensitivity analysis
The sensitivity analyses on the Whittle results by varying the mining costs, processing costs, metal
selling cost and the global pit slope angle. The range of variation was 10% with the exception of
the pit slope variable which was varied by 4. The design appears to be relatively insensitive to
fluctuations in these variables.

Pit Phases and Phase Ranking

The pit final limit has been divided into six phases shown in Figure 5, based on copper grade, strip
ratio, access considerations and operational constraints. After deciding on the phase sequencing
and designing the operational pits, an economic analysis was performed to examine the final
economic benefits of each phase and the overall pit.

Figure 4 Whittle nested shells

100
 Phase 0 Phase 1 Phase 2

Phase 3 Phase 4 Phase 5

Figure 5 Mine phases design

Overburden and waste disposal

At this stage of the study all waste rock in the block model was treated as one type of material with
no characterization into non-acid-generating (NAG) or potentially acid generating (PAG). All waste
from the pit will be placed in one dump area on the east side of the pit. With a total of 1,083 Mt of
waste from the pit, the dump must provide a volume of 570 Mm3 based on a density of 1.9 t/m3.

RESULTS AND DISCUSSION

The operation the mina estimated to be 17 years, this deposit contains a total 223 Mt of ore at 0.95%
Cu and 0.12 g/t Au with a strip ratio of 4.52.The mine design is sensitive to the changes of the angle
of inclination.
When production starts at Coroccohuayco in 2017, the first year of the mining activity will focus on
providing the initial access and pre-stripping as well as developing mine access roads suitable for
large mining equipment and facing-up the initial pit phases into productive set ups.
The plant process 40ktp, the mill feed material will be available in the last month of the first year
and initial production will start. During the first three years, production will see a ramp-up to full
production. Mine production sequence and Schedule is incorporated the concept of obtaining the
actual effect VPN. The results of pit phase ranking and the volumetric summary are shown in Table
6.

101
 Table 6 Mine Production Sequence and Schedule

Pushback Waste Ore CuT Au Strip Cu contained Cost

phase kt kt % g/t ratio Mlb $/lb Cu
Ph0 16,085 3,812 1.086 0.122 4.22 91.27 0.63
Ph1 221,278 42,257 1.080 0.125 5.24 1,006.12 0.70
Ph2 113,503 28,414 0.987 0.125 3.99 618.41 0.67
Ph3 151,670 39,079 0.860 0.113 3.88 740.93 0.76
Ph4 216,456 65,044 0.758 0.104 3.33 1,086.24 0.81
Ph5 288,354 44,476 1.130 0.123 6.48 1,108.08 0.76
Total 1,007,346 223,082 0.946 0.116 4.516 4,651.06 0.75

CONCLUSIONS
Different scenarios have been evaluated for the start of operations, considering the works to be
performed and permits required.
Of the four Coroccohuayco operations options approved are going to stage trade off, the most
profitable alternative is 40.000 tpd, open pit mine and plant located at Coroccohuayco.
Mine planning for Xstrata Tintaya S.A. is an engineering process that transforms the mineral
resource in the best productive business and mine plan is a promise productive, based on
consistent assumptions.
For economic value of the block the cut-off and economic values of the blocks are estimated
without considering the effect of the VPN, subsequently the mining sequence is incorporated
the concept of obtaining the actual effect VPN.

ACKNOWLEDGEMENTS
Any alternative must optimize planning sequence MINING ANNUAL ensuring greater
economic return to conditions.
The source of water supply and geotechnical parameters must be defined in further studies.
Consider that electrical power for the project in Coroccohuayco considers 220 kV and Tintaya
consider 138 kV.

REFERENCES
AMEC (2011) ' Xstrata Copper Coroccohuayco Scoping Study Report'.

102