Post-Pit Optimization Strategic Alignment

"Successful development of projects or life-of-mine strategies requires an understanding of the relative sensitivity of value drivers such as grade, tonnage, energy costs, direct operational costs, and recoveries. For example, the results could vary significantly depending on the grade strategy, given a specific orebody amenable to open pitting.Pit optimization is a very powerful tool widely used in the industry to determine the pit shell with the most attractive value potential. Based on the input parameters utilized, the pit optimization process determines the stripping ratio, mineable reserves, and pit shape, and effectively calculates a cut-off grade, assumed to be the optimal cut-off grade.Once the initial pit optimization process is completed, the need may arise to align the optimization results with the company strategy by further optimizing other criteria, such as maximizing short-term cash flow. This paper describes and discusses the selection of an alternative cutoff grade as a strategic intervention. It involves changing the cut-off grade, effectively increasing the head grade to gain a strategic advantage aligned with the company strategy, with a clear understanding of the financial value impact. With this knowledge, it is clear that pitoptimization establishes the basis for future analysis and refinement.IntroductionIt is common for companies to select the optimal pit shell defining the mineral reserve without much further consideration. However, companies may consider various strategies to optimize the long-term value of the project or to optimize the short-term cash flow. Analysis of the entire life-of-mine value estimation process shows that the selection of a cut-off grade and other parameters should be based on careful analysis. Determining the optimal cut-off grade of ore at a different period during the life of mine to maximize the value is often one of the most difficult challenges for a company.A cut-off grade is the lowest grade that mining activities will target. As a result the average mining grade, which drives the value of a project, will always be higher than the cutoff grade applied.According to Bascetin and Nieto (2007) cut-off optimization is still not widely practised. Cut-off grade optimization is an effort to maximize the value of a project by understanding the capacity constraints in the mine, mill, and the market. At any point during the life of mine, any or all of the limitations on tonnage mined, tonnage milled, and product sold may be constraining the system. To ensure cut-off optimization is done correctly, the capacity constraints must be independent of the cut-off grade."