Cutoff grade optimization algorithm for open pit mining operations with consideration of dynamic metal price and cost escalation during mine life

摘要

The determination of optimum cutoff grade, which maximizes the Net Present Value (NPV) of a mining operation is influenced by the economic parameters (metal price, mining, and milling costs, etc.), the capacities of stages (mine, mill, and refinery) in the mining operation, and grade distribution of the deposit. The market trends play a major role in the change of economic parameters, hence, the metal price, and mining, milling, refining costs are subject to escalation during the mine life. The effect of these changes will be enormous on the cutoff grade policy of mining operations with long mine life, which is true for majority of the open pit mining operations the world over. The cutoff grade optimization algorithms have been developed in the past, which ignore the effect of economic parameters changes during the mine life. The cutoff grade optimization policy developed using these algorithms would not be realistic in case of escalation of economic parameters. Hence, an effort is made for the development of a new cutoff grade optimization algorithm, which considers dynamic metal prices and cost escalation during mine life. The benefits of methodology developed will be demonstrated through a case study.