A New Methodology Based on Hill of Value for Ore Reserve Selection in Long-Term Planning for Block Caving Mining, Metallurgy and Exploration

The underground mining evolution for block cave mines in Chile and worldwide has made important strides in the last decades. Nonetheless, reserves determination in the initial stages of these types of projects—mainly for long-term planning—is not studied in as much detail as it should be, especially regarding the impact on the final value of the enterprise. Today, the first estimation of the size of a block cave mine, typically expressed in tons, tends to determine very large footprints and ore bodies. The resulting large-scale mine is obtained by applying the marginal cut-off grade (COG) to determine reserves. Yet, in many cases, it is possible to obtain an equal or higher benefit, extracting fewer reserves in less time, with a smaller active area, which significantly reduces the project’s uncertainty. To explore scenarios obtained by applying a higher marginal COG in the initial phases of the project, the Hill of Value methodology is used to estimate the net present value (NPV) in relation to the production rate and the COG. However, the application of this methodology considers certain simplifications that generate results which are not completely satisfactory in specific cases. This paper suggests an improvement of this method to obtain more reliable results regarding determination of a COG profile that will optimize the NPVof a block-cave project. The methodology was developed and applied in a massive polymetallic deposit with zinc, lead, and silver mineralization, corresponding to a real block caving project. The methodology provides NPV results that differ by approximately 15% in comparison to the real mine plan, while also being considerably simpler and faster to calculate. In summary, the proposed methodology provides a reasonable and fast procedure to estimate higher than marginal COG that increases the NPV of block cave mine projects.