Optimising Life of Mine Production Schedules in Multiple Open Pit Mining Operations A Study of Effects of Production Constraints on NPV

Abstract

Life of mine scheduling involves sequencing and timing of ore and waste movement during the life of a mine and therefore, has a significant effect on the cash flow of a mining operation. Mine planners often seek to optimise the production schedule with respect to maximise net present value (NPV) of the cash flows. The complexity of mine production scheduling in practice entails a computer solution using mathematical programming as the optimisation technique. Linear and mixed integer programming techniques have been used to optimise long-term production schedules but most of the computer programs based on these make overly simplifying assumptions and lack the flexibility to handle practical considerations of mine scheduling. MineMax™ scheduling software is applied to long term scheduling for a multiple open pit operation. The effects of constraining production and the number of pits on the NPV are analysed. The greater selectivity allowed by unconstrained mine production is offset by increased operational costs resulting in insignificant changes to the NPV. Constraining the number of active pits per period limits the mine planner's ability to find ore of a specified blend. Although it is desirable to produce at constant rate and to limit the number of active pits per period, this strategy places limitations on the grade of ore that can be mined and milled, hence having a detrimental effect on the NPV. This study shows that allowing both the production and number active pits to fluctuate within practical limits improves the NPV of the project.