Stochastic optimisation model for open pit mine planning: application and risk analysis at copper deposit

Abstract

Life of mine (LOM) production scheduling is a critically important part of open pit mining ventures and deals with the efficient management of cash flows in the order of hundreds of millions of dollars. A LOM production schedule determines the quantity and quality of ore and waste materials to be mined over time, so as to maximise the net present value (NPV) of the mine. Life of mine production scheduling is an intricate and complex problem to address and it is adversely affected by geological risk, which can, however, be accounted for and managed while constructing production schedules. In the present study, the LOM scheduling process of a disseminated copper deposit demonstrates the intricacies of a new scheduling approach based on the technique of simulated annealing and stochastically simulated representations of the copper orebody. The study documents the benefits of incorporating geological uncertainty in the mine scheduling process through the proposed approach. The stochastic approach is found to generate a LOM schedule with a NPV 26% higher than that of the conventional schedule. Risk analysis results show that the stochastic schedule has low chances to significantly deviate from targets; the probability that the conventional schedule will deviate from production targets is high. In addition, comparisons show that the conventional scheduling approach overestimates ore tonnages and underestimates the NPV of the mine design. The findings of this study suggest that LOM schedules that incorporate geological uncertainty lead to more informed investment decisions and improved mining practices.