New approach to flexible open pit

optimisation and scheduling

M. Armstrong* and A. Galli
This paper proposes a dynamic procedure for pit optimisation as the resources become better
known and as commodity prices and costs evolve over time. Mining sequences are defined as the
quantities to be extracted from each macroblock (rather than small blocks) in each time period.
Feasible mining sequences are mining sequences that respect the accessibility constraints, and
also the geometric constraints on the amounts that can be extracted from any one block over time,
or from all the active blocks at a given time. Having defined feasible mining sequences, their
mathematical properties (closure and convexity under certain operations) were studied. Feasible
mining sequences are generated randomly. Then a two-step procedure is used to find the best
one (or the best few) using three economic criteria. The procedure was tested on a synthetic gold
mine based on the characteristics of the Essakane mine in Burkina Faso. The results were
encouraging.
Keywords: Dynamic pit optimisation, Feasible mining sequences, Sequencing

Introduction different (but fixed) values of the commodity price and

Traditionally pit optimisation and scheduling are carried
out assuming that the resources, the commodity prices
and production costs are all known. Once the pit
contour and the mining schedule have been determined,
geostatistical simulations can be used to assess the
impact of the uncertainty in the resources on the pit
design and the schedule, and likewise stochastic simula-
tions can be used to test its robustness to fluctuations in
costs and prices. However, it would be more interesting
to have a dynamic procedure for optimising the pit as
the resources become better known and as economic
factors such as commodity prices and costs evolve over
time. This paper presents a novel approach for doing
this.
In the standard approach the deposit is divided into
millions of small blocks. The Lerchs–Grossman algo-
rithm is used to construct a nested set of pit shells; the
one which optimises the net present value (NPV) is
usually selected and the scheduling is carried out on this
pit, usually by mixed integer programming. An alter-
native to the Lerchs–Grossman algorithm was proposed
by Matheron (1975a, 1975b, 1975c) and implemented by
Dagdalen and Francois-Bongarçon (1982), François-
Bongarçon and Guibal (1982, 1984) and Coleou (1987).
Matheron tackled the problem from a different point of
view. He considered that the economic parameters
should be kept separate from the grades. The family of
nested pits generated by his method corresponds to
Cerna, Mines-Paristech, 60 Boulevard Saint-Michel, 75272 Paris, France
*Corresponding author, email margaret.armstrong@mines-paristech.fr
the costs.
In practice neither the grades nor the economic
variables are known. Two broad approaches have been
proposed for using geostatistical simulations to take
account of the uncertainty on the resources. Dowd
(1994), Rossi and van Brunt (1997) and Thwaites (1998)
generated several conditional simulations of the orebody
and optimised the pit for each one. When it became
possible to generate far more simulations, Dimitrako-
poulos et al. (2002) proposed generating the pit contour
using the kriged orebody model, then running the
economic analysis for each simulation (see also Kent
et al., 2007). The next step was to include the uncertainty
on the economic variables by stochastic simulations of
prices and costs (Nicolas et al., 2007; Armstrong et al.,
2009; Abdel Sabour and Dimitrakopoulos, 2009).
Recently two approaches for strategic pit optimisation
have been developed based on large blocks/panels rather
than millions of small blocks. Whittle and Whittle (2007)
explained that while small pit optimisation problems can
be solved by mixed integer programming, large ones defy
solution by that means. The Whittles’ new proce-
dure consists of randomly generating feasible mining
sequences and then using a search algorithm to find one
that optimises the NPV. Whittle (2009) explained that in
their new methodology, a sequence consists of panels to
be mined in a specified order. Each panel consists of
parcels which have a mine material type, a tonnage, a cost
of mining per tonne and one or more grade attributes, but
no specific location. In a similar vein, Menabde et al.
(2007) divided the deposit into large clumps of relatively
homogeneous material. They then optimised the mine
schedule (and the cut-off grade). Geostatistical simula-
tions were used to take account of the uncertainty on the

ß 2012 The Australasian Institute of Mining and Metallurgy

Published by Maney on behalf of the Institute of Materials, Minerals and Mining and The AusIMM
Received 23 January 2012; accepted 13 May 2012
132 DOI 10.1179/1743286312Y.0000000008 Mining Technology 2012 VOL 121 NO 3
 Armstrong and Galli
grades but the economic parameters were considered as
being known. They concluded that an interesting general-
isation would be to incorporate stochastic models for
prices.
This paper presents a new approach for optimising
and scheduling open pit mines which builds on previous
work, but which is radically different from it. Following
Menabde and the Whittles, it was decided to work with
large blocks called macroblocks. A random search
procedure is used to find feasible mining sequences that
achieve a close-to-optimal NPV as the Whittles do, but
in contrast to them grade attributes are not included in
the information associated with each macroblock.
The first step in this approach is to set up a population
of feasible sequences by a random construction proce-
dure. In the second stage uncertainty is introduced:
stochastic processes are used to simulate market variables
and geostatistical simulations are used to generate
possible realisations of the orebody. At that point the
destination of different macroblocks (treatment plant/
stockpile/waste dump) can be determined as a function of
the simulated grade attributes and the simulated prices
and a value criterion can be associated with each
sequence. This could be NPV, or the measure of upside
potential/downside risk proposed by Dimitrakopoulos
et al. (2007). A two-stage procedure is then used to select
firstly a subpopulation of more promising sequences
using simplified economic criteria and then the best
sequence is selected from that subpopulation using more
detailed criteria. As the second stage in the selection
procedure is more computer intensive than the first, the
two-stage procedure saves time.
The mathematical properties of these feasible mining
sequences turn out to be very interesting. First, they can
be characterised in a very succinct way by identifying the
break points in the sequences, that is, the times when the
various geometric accessibility constraints are first met
thereby allowing mining to start on other macroblocks.
Sequences with the same breakpoints can be improved
by operations similar to cross-over and mutation in
genetic algorithms. Second, it is shown that these
sequences form branching families. This opens up the
possibility of using optimisation techniques such as
multistage programming with recourse to give decision
makers a dynamic procedure for optimising the pit as
the resources become better known and as economic
factors such as commodity prices and costs evolve over
time. An example of how multistage programming with
recourse can be applied in mining is given by Armstrong
et al. (2012).
This paper is structured as follows. In the next section
feasible mining sequences are defined and their proper-
ties are presented. The following section describes the
iterative procedure developed for generating them and
the two-step procedure for selecting the best one. The
next section presents tests that were carried out on a
synthetic gold mine. The discussion and conclusions
follow in the last section. In the Appendix a simple
example with only six macroblocks is presented to
illustrate the key concepts in the new method.
Mining sequences
The long term objective is to use multistage program-
ming with recourse to optimise the mine contour and the
mine plan, and later the choice of the cut-off grade, and
New approach to flexible open pit optimisation and scheduling
the size of the stockpile. In multistage programming care
is taken to separate the variables into state variables
such as commodity prices and in situ grades over which
the decision makers have no control*, and the others
which are under their control. This distinction is
maintained when defining mining sequences. These give
the quantity of material that the mine planner decides to
extract from each large block in each time period. In
contrast to the Whittles no assumptions are made about
the grades.
It is assumed that the deposit has been divided into
NB large blocks called macroblocks. These could
represent push-backs, for example. The material in each
macroblock can be divided into two categories (possibly
more): pure waste which is sent to the waste dump, and
potential ore which becomes ore if its grade is above the
cut-off grade at the time of mining. Let Tot(j) be the
total tonnage of material in the jth block. Macroblocks
are composed of a finite number of selective mining
units.
Definition of mining sequence Q
Let Q be a matrix of size NT6NB where NT is the
number of time periods. The quantity Q(k,j) is the
amount to be mined from the jth block in the kth time
period. Following Whittle and Whittle (2007), it is
assumed that if part of a block is extracted in a time
period, pure waste and potential ore are extracted pro
rata. Let the cumulative quantity extracted from block j
up to and including time k be SQ(k,j)
X
k
SQ (k,j)~ Q(l,j)
l~1
As the most important constraints on both open pit and
underground mining are accessibility (precedence) con-
straints, the next step is to define the accessibility matrix
A. This is a square NB6NB matrix which specifies the
order in which macroblocks may be mined

1 if block j2 can only be mined after block j1
A(j1 ,j2 )~
0 otherwise
Level 0 blocks are those which can be mined immedi-
ately, that is, for which
X
NB
A(j1 ,j2 )~0
j1 ~1
The remaining blocks can only be mined after the
geometric accessibility constraints have been met. If
there are NL0 Level 0 blocks then there are (NB2NL0)
higher level blocks.
The array AC takes the value zero only if the jth block
is accessible at time k
8
>
> P
NB
> A(l,j) if k~1
<
l~1
AC(k,j)~
>
> P ½Tot(l){SQ (k{1,l)Aðl,j Þ if kw1
NB
>
:
l~1
* While some very large mining companies have enough market power to
influence the prices of the commodities that they produce, most are price
takers. Therefore, in this paper it is assumed that prices are outside the
company’s control. Having said that, as one of the reviewers pointed out,
iron ore mines can influence prices by the way that ore is blended into
products.
Mining Technology 2012 VOL 121 NO 3 133
Armstrong and Galli New approach to flexible open pit optimisation and scheduling
Feasible mining sequences
In order to be a feasible mining sequence, a sequence Q
must satisfy four constraints. The first ensures that only
accessible blocks are mined. The second limits the total
amount that can be extracted from a given block while
the third limits the amount that can be extracted in a
given time period. The fourth constraint limits the
amount that can be extracted from one block in a single
time period
X
NB
AC(k,j)Qðk,j Þ~0 Vk
j~1
X
NT
Qðk,j ÞƒTot(j)
k~1
X
NB
0ƒ Q(k,j)ƒQM Vk k~1, . . . NT
j~1
0ƒQ(k,j)ƒQmaxð j Þ Vj j~1, . . . NB & Vk k~1, . . . NT
where Qmax(j) is the maximum that could be mined
from the jth block per time period and QM is the
maximum that can be extracted per time period. These
two parameters could vary over time. To illustrate the
new concepts developed here, a simple example with
only six macroblocks is presented in the Appendix.
Break points
The key times in a sequence are when one or more new
blocks can start to be mined because the accessibility
constraints are met for the first time. These times are
called break points (because mining in one set of blocks
breaks off, allowing access to others or ending the
extraction). As there are (NB–NL0) higher level blocks,
there are NBP((NB–NL0) break points. Let BP be the
column vector containing the NBP break points. Let
SQS be an array of size NBP6NB containing the
cumulative quantities mined from each block at the
break points. This is called the sequence summary.
Properties of feasible mining sequences
Let F (BP,SQS) be the set of feasible sequences having
the break points BP and the sequence summary SQS. It
is easy to prove that F (BP,SQS) is convex. Second if
Qmax(j) and QM are constant over time, F (BP,SQS) is
closed under certain types of row permutations. Let P
be a permutation that affects only the rows in Q up to
and including the first break point, or only the rows
between two break points. Let the QP be the array
consisting of the permuted rows and the rest of the
array. QP is also a feasible mining sequence and so
F (BP,SQS) is closed under this type of row permuta-
tions.
Subsequences of rows after one break point and up to
and including the next one can be handled indepen-
dently of previous subsequences provided that the
sequence summary SQS remains the same. This means
that subsequences can be mixed and matched. It is
planned to use this in future work to improve feasible
mining sequences.
Generating feasible mining sequences
An iterative procedure is used to generate a large
number of feasible mining sequences. Starting with the
first time period, the accessible blocks are identified.
134 Mining Technology 2012 VOL 121 NO 3
These are put into a random order. Taking each block
~
j in turn in the randomised order, the maximum amount
that can be extracted from that block at that time k is
computed
Max extractable~
2 3
    X
~ ~ ~
min4Qmax j ,Tot j {SQ (k{1, j ),QM{ Q(k,jj)5
~
jjv j
The first term is the maximum that can be extracted
from that block at any time, the second is the amount
left in the block and the third is the maximum that can
still be extracted at that time given what has been
allocated to be extracted from other blocks at that time.
A random number u is drawn between 0 and 1. Set
 
~
Q k, j ~max½u|Totð j Þ,Max extractable
and proceed to the next block in the randomised order.
When all accessible blocks have been considered or
when the maximum possible QM has been extracted
from that row, move on to the next one. If only a small
amount is left in a block (say 20% of the total), all of it is
extracted.
Selecting best sequence
A two-step procedure is used to select the best sequence,
that is, the one that maximises one or more economic
criteria (usually the NPV) subject to the uncertainty on
both the resources and the prices and costs. Typically
100 geostatistical simulations and 1000 stochastic
simulations of the commodity price are generated. It is
supposed that 5000 feasible mining sequences have been
generated. In the first step the best 500 sequences are
selected using a flat commodity price and a representa-
tive subset of the geostatistical simulations. The latter
can be selected by applying the scenario reduction
procedure developed by Armstrong et al. (2010),
Armstrong et al. (2011) and Armstrong et al. (2012b).
In the second step, the subset of the best 500 sequences is
tested more thoroughly. Three criteria are used: the
expected NPV; the probability that the NPV is negative;
and the percentage of years when the cashflow was
negative. These are computed for each of the top 500
sequences for all 100 geostatistical simulations and all
1000 stochastic simulations of prices, i.e. 100 000
combinations.
One reason for using a flat commodity price in the
first step was that most mining companies use a constant
price in feasibility studies, so this makes it possible to
compare the value obtained there with that in the
feasibility study.
Testing the method
A synthetic example was constructed to test the
proposed method. The key characteristics of the ore-
body and the economic parameters were set up to mimic
those of the Essakane Gold Mine in Burkina Faso,
because the updated feasibility study (IAMGOLD,
2009) for the mine was available on the internet. Over
the 9?5 year mine life its owners plan to mine 330 000 oz
of gold per year at a cut-off of 0?5 g t21. The capital
expenditure was planned to be about $450 million. After
analysing their figures, the fixed cost was set at $50
 Armstrong and Galli
1 Drill hole layout
million per year, and the variable costs at $1?20/t of
material extracted from the pit and $10/t for mining and
processing ore.
Orebody model
The mineralised zone is a rectangular block 10506
5006120 m deep. The grid consists of 110 drill holes on
a 100650 m grid as shown in Fig. 1. Each of the vertical
drill holes contains 12 sections 10 m long which have been
analysed for gold content. The ore in the central part has
higher grades. The data have an overall log normal type
distribution with a few high values.
Figure 2 presents a bird’s eye view of the lowest level
of the orebody (above) and a vertical cross-section
(below) showing the mineralised material and the
additional waste that has to be extracted to maintain
a 45u pit slope. The macroblocks are 1506100640 m
and contain 600 selective mining units (smus), each
10610610 m. The orebody contains a total of 197
macroblocks, 99 in the top level, 63 in the middle level
and 35 in the lowest level.
Stochastic model for price of gold
For simplicity’s sake a geometric Brown motion with an
initial price of $600 and a volatility of 20% was used.
Figure 3 shows 25 of the 1000 simulations of the gold
price.
Generating 5000 feasible mining sequences
The first step was to generate 5000 feasible mining
sequences. As there are a total of 197 macroblocks to be
mined over 10 years, the matrices Q and S will be
106197 in size. As the mining equipment is designed to
extract the equivalent of 12 000 smus per year, the value
of QM is set to 12 000. Because of the geometry of the
pit the 197 macroblocks are not all the same size. As
blocks are 40 m high, waste panels have to be 40 m wide
in order to respect the 45u stability angle. Three waste
block sizes need to be considered depending on whether
they are oriented EW or NS, or whether they are corner
blocks (see Fig. 2). The EW waste blocks are
150640640 m and have a volume equivalent to
240 smus, while the NS ones are 100640640 m and
are equivalent to 160 smus. Last, corner blocks are
40640640 m and contain 64 smus. These give us the
values of Tot(j) for the different macroblocks. For
simplicity Qmax(j) was set to be equal to Tot(j).
Selecting best of 5000 feasible mining
sequences
A two-stage procedure was used to select the best feasible
mining sequence. In the first step, the expected NPV was
computed for each of the 5000 feasible sequences using a
New approach to flexible open pit optimisation and scheduling
2 Bird’s eye view of lowest level of pit (above), and verti-
cal section show mineralised blocks plus waste that
must be extracted to ensure 45u slope on walls (below)
simplified approach: a flat gold price of $600/oz and a
subset of 12 simulations that is representative of the 100
geostatistical simulations. These were selected by apply-
ing the scenario reduction procedure developed by
Armstrong et al. (2010) and Armstrong et al. (2011b).
The user specifies how many simulations to retain (here
12) and the procedure selects them together with their
probabilities. Armstrong et al. (2011b) demonstrated that
the expected NPV computed using the representative
subset together with the weighting coefficients is very
close to the average NPV computed from the full set of
100 simulations. Figure 4 shows the 5000 values of the
expected NPV obtained using a gold price of $600 and
averaging over the 12 representative simulations. These
were arranged in descending order from left to right. The
top 500 sequences were selected for more detailed study.
In the second step three criteria were considered: the
expected NPV; the probability that the NPV was
negative; and the number of years when the cash flow
was negative. These were computed based on all 100
geostatistical simulations and all 1000 simulated price
paths for the gold price (that is, 100 geostatistical
simulations61000 price paths6500 feasible sequences).
Table 1 gives the values of these three criteria for the
best three sequences. In this case one sequence is better
than the others according to all three criteria, especially
the percentage of years with negative cash flows which
gives the management an idea of the risk involved.
Discussion and conclusions
The long term objective is to use multistage programming
with recourse in order to evaluate and optimise mining
projects subject to technical and financial uncertainty, that
is, uncertainty on the resources and the commodity prices
and costs. One of the underlying principles in multistage
programming is to separate state variables such as prices
and grades (which the decision maker cannot change)
from the control variables such as the amount to mine
from each macroblock in each time period, which are
under the management’s control. This is why mining
sequences were defined as being the quantities to be
extracted without including grade attributes. Feasible
mining sequences are mining sequences that respect the
accessibility constraints, and also the geometric con-
straints on the amounts that can be extracted from any
one block over time, or from all the active blocks at a
given time.
Having defined feasible mining sequences, their
mathematical properties were defined. It was found that
Mining Technology 2012 VOL 121 NO 3 135
Armstrong and Galli New approach to flexible open pit optimisation and scheduling

3 Twenty of 100 simulations of gold price over 10 year on weekly basis: model was geometric Brownian motion with
initial price of $600 (as in Essakane feasibility study) and volatility of 20%

trinomial trees used to model prices in finance and in

real options.
Further work is in progress to optimise the cut-off
grade as well as the order in which the macroblocks are
mined. Preliminary results indicate that mining should
stop if the price drops too low for too long. In that case
the macroblocks at the end of the sequence would
simply not be mined. In other words, the pit would be
smaller. Therefore, these new feasible mining sequences
provide a way of optimising the mining sequence and the
pit contour.
While this new method builds on existing work by
others, it is radically different in several regards and
notably because it separates the state variables from the
control variables. In our opinion this will open up the
way to optimising mining projects (underground as well
as open pit) while taking account of the inherent
4 Expected NPV computed in first step of selection pro-
uncertainty on the resources and on the economic
cess using flat gold price of $600 and subset of 12 of
variables.
100 geostatistical simulations: 5000 values have been
arranged in descending order from left to right Acknowledgement
This research was carried out as part of a Consortium on
natural breakpoints occur in the sequences when one set the Application of Real Options in Mining. The authors
of blocks have been completely mined out, thereby would like to thank the sponsors, Codelco (Santiago,
opening up access to others. It was discovered that Chile) and two multinational mining groups, for their
families of sequences exist, and that they are convex and support and encouragement during the consortium.
closed under certain types of row permutation opera-
tions. Convexity is an advantage when optimising. The
closure property opens up the possibility of mixing and
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with Whittle’, 119–128, 1997, Perth, WA, Whittle Programming Pty.
Thwaites, A. M. 1998. Assessment of geological uncertainty for a breakpoints are 4, 7 and 10 (when all the material has been
mining project, Proc. 27th Int. APCOM Symp., London, UK, removed). The vector of the break points (BP), together
April 1998, IMM, 396–404. with the sequence summary matrix SQS are given below
Whittle, G. 2007. Global asset optimisation orebody modelling and 2 3 2 3
strategic mine planning, Spectrum series, 2nd edn, Vol. 14, 331– 4 8 8 3 4 0 0
336, Melbourne, NSW, AusIMM. 6 7 6 7
BP~4 7 5 SQS~4 8 8 9 9 4 0 5
Whittle, J. 2009. The global optimiser works – what next?, in Orebody
modelling and strategic mine planning, 3–5, Perth, WA, AusIMM. 10 8 8 9 9 10 9
Whittle, J. and Whittle, G. 2007. Global long-term optimisation of very
large mining complexes, Proc. 33rd Int. APCOM Symp.,
Santiago, Chile, the University of Chile, 253–260.
Row permutations
Appendix Two more mining sequences, Q2 and Q3, are considered,
obtained by permuting rows 2 and 3 and then rows 4
and 5 respectively. Q2 is a feasible mining sequence but
Simplified example
Table 2 Values of parameters in simplified example
A case where there are six macroblocks is considered.
Blocks 1–4 are accessible immediately. Block 5 can only Macroblock j 1 2 3 4 5 6
be exploited after blocks 1 and 2 have been mined, while
block 6 can only be exploited after blocks 3 and 4. The Tot(j) 8 8 9 9 10 9
Qmax(j) 3 3 3 3 3 2
accessibility matrix A is

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Armstrong and Galli New approach to flexible open pit optimisation and scheduling

Q3 is not because it attempts to mine block 5 before is [8 8 3 4 0 0]. This would be the first row in the
blocks 1 and 2 have been fully mined out. Q2 permutes sequence summary SQS in both cases
rows within the same subsequence; Q3 attempts to 2 3 2 3
permute them across a break point. 2 2 1 0 0 0 2 2 1 1 0 0
61 2 1 2 0 07 62 2 1 1 0 07
6 7 6 7
Time Block no: Block no: 6 7 6 7
43 2 0 1 0 05 42 2 0 1 0 05
Period ½1 2 3 4 5 6 ½1 2 3 4 5 6 2 2 1 1 0 0 2 2 1 1 0 0
2 3 2 3 2 3
1 2 2 1 0 0 0 2 2 1 0 0 0
6 7 6 7 6 7 Next take a linear combination of these two sets of rows
6 2 7 63 2 0 1 0 07 61 2 1 2 0 07 (i.e. weighted average with weights a and b such that
6 7 6 7 6 7
6 7 6 7 6 7 azb51). The sequence summary corresponding to row
6 3 7 61 2 1 2 0 077 63 2 0 1 0 07
6 7 6 6 7 4 is still [8 8 3 4 0 0]. Therefore, the linear combination
6 7 6 7 6 7
6 4 7 62 2 1 1 0 07 60 0 2 2 1 07 belongs to the same family
6 7 6 7 6 7
6 7 6 7 6 7
6 5 7 60 0 2 2 1 07 62 2 1 1 0 07
6 7 6 7 6 7
6 7Q2 ~6 7Q3 ~6 7 2 3 2 3
6 6 7 60 0 2 1 2 07 60 0 2 1 2 07
6 7 6 7 6 7 2 2 1 0 0 0 2 2 1 1 0 0
6 7 6 7 6 7 6 7 6 7
6 7 7 60 0 2 2 1 077 60 0 2 2 1 07 61
6 7 6 6 7 6 2 1 2 0 077
62
6 2 1 1 0 077
6 7 6 7 6 7 a6 7zb6 7
6 8 7 60 0 0 0 2 377 60 0 0 0 2 37 63 7 62
6 7 6 6 7 4 2 0 1 0 05 4 2 0 1 0 075
6 7 6 7 6 7
6 9 7 60 0 0 0 2 37 60 0 0 0 2 37
4 5 4 5 4 5 2 2 1 1 0 0 2 2 1 1 0 0
10 0 0 0 0 2 3 0 0 0 0 2 3
2 3
2az2b 2az2b azb b 0 0
6 7
6 az2b 2az2b azb 2azb 0 07
Linear combinations 6 7
~6 7
This time only the first four rows are considered (i.e. 6 3az2b 2az2b 0 azb 0 07
4 5
rows in a subsequence between breakpoints) from two
2az2b 2az2b azb azb 0 0
feasible mining sequences from the same family
F (BP,SQS). In both cases the cumulative amount to This illustrates some of the interesting properties of
be extracted up to and including the fourth time period these families of feasible mining sequences.

138 Mining Technology 2012 VOL 121 NO 3