Flexible open-pit mine design under uncertainty

Abstract

The risk associated with a mining project comes from the uncertainties involved in the industry. Mining companies endeavouring to maximize their return for shareholders make important strategic decisions which take years or even decades to “play out”. However, many mining companies feel comfortable with point estimates of all project parameters but realize that no parameter value is known with certainty. A model that incorporates uncertainties and is able to adapt will help deliver a design with a better riskreturn profile. In this paper, a new methodology is developed in order to have a design that is flexible and able to adapt with change. Following recent research on decision making methods in mine planning, this paper develops a mixed integer programming model that determines the optimal design for simulated stochastic parameters. The paper shows how to incorporate optionality (flexibility) in relation to mine, stockpile, plant and capacity constraint options. Obtained results are promising and are helping decision makers to think in terms of value, risk and frequency of execution.