Strategic mining options optimization: Open pit mining, underground mining or both

Abstract

Near-surface deposits that extend to considerable depths are often amenable to both open pit mining and/or underground mining. This paper investigates the strategy of mining options for an orebody using a Mixed Integer Linear Programming (MILP) optimization framework. The MILP formulation maximizes the Net Present Value (NPV) of the reserve when extracted with (i) open pit mining, (ii) underground mining, and (iii) concurrent open pit and underground mining. Comparatively, implementing open pit mining generates a higher NPV than underground mining. However considering the investment required for these mining options, underground mining generates a better return on investment than open pit mining. Also, in the concurrent open pit and underground mining scenario, the optimizer prefers extracting blocks using open pit mining. Although the underground mine could access ore sooner, the mining cost differential for open pit mining is more than compensated for by the discounting benefits associated with earlier underground mining.