Strategic Mine Planning SurpacWhittle

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Strategic Mine Planning in

Whittle and Surpac

August 2010

v20

Strategic Mine Planning

in Whittle 4.5 and Surpac v6.3

August 2012

Gemcom Software International Inc. Tel +1 604.684.6550 1066 West Hastings Street, Suite 1100 Fax +1 604.684.3541 Vancouver, BC Canada V6E 3X1 www.gemcomsupport.com

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This software and documentation is proprietary to Gemcom Software Australia Pty Ltd.

Gemcom Software Australia Pty Ltd publishes this documentation for the sole use of Surpac and Whittle licenses. Without written permission you may not sell, reproduce, store in a retrieval system, or transmit any part of the documentation. For such permission, or to obtain extra copies please contact your local Gemcom Software Office.

Gemcom Software Australia Pty Ltd Level 8 190 St Georges Terrace Perth, Western Australia 6000 Telephone: (08) 94201327

While every precaution has been taken in the preparation of this manual, we assume no responsibility for errors or omissions. Neither is any liability assumed for damage resulting from the use of the information contained herein.

All brand and product names are trademarks or registered trademarks of their respective companies.

About This Manual

This manual has been designed to provide a practical guide to the many uses of the software. The applications contained within this manual are by no means exhaustive as the possible uses of the software are only limited by the user’s imagination. However, it will give new users a starting point and existing users a good overview by demonstrating how to use many of the functions in Whittle and Surpac. If you have any difficulties or questions while working through this manual feel free to contact your local Gemcom Software Office.

Contributors

Darrienne Thobaven James Willoughby

Gemcom Software Australia Perth, Western Australia

Product Surpac v6.3 Whittle v4.5

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Page 3 of 308

Introduction ... 5

Requirements ... 5 Objectives ... 5 Workflow ... 5

A theoretical discussion ... 6

Overview ... 6 Course Overview ... 6 Strategic Planning ... 11 Situation Analysis ... 13 Decision-making Behaviour ... 16

Theory of Pit Optimisation ... 23

Mine Planning ... 24

Resource and Reserves ... 27

Inputs ... 29

Pit Optimisation ... 32

Optimisation Algorithms ... 36

Slopes ... 38

Block Value Calculation ... 41

Commodity Price ... 47

Whittle Concepts ... 49

Block Model Dimensions ... 53

Slopes and Structure Arcs ... 57

Mining Recovery and Dilution ... 61

Costs ... 63

Pit Shells ... 69

Ore Selection Methods ... 72

Course Workflow ... 76

Exercise 1 – Mod and par file creation in Surpac ... 82

Overview ... 82 Requirements ... 82 Getting started ... 82 Rock Code ... 98 Gold Grade ... 102 Density ... 107 Assessment ... 109 Slopes in Whittle ... 110

Adding Slopes to the Surpac Block Model ... 113

Costs in Whittle ... 115

Adding Costs to the Surpac Block Model ... 138

MCAFs ... 140

PCAFs ... 142

Exporting the Mod and Par files ... 144

Assessment ... 151

Exercise 2 – Creating and selecting optimal shells in Whittle ... 152

A Quick Tour of Whittle ... 152

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Table of Contents

Page 4 of 308

Important directories ... 158

Preferences... 162

System limits ... 163

Version and Licence options... 164

Creating the bg project ... 166

The Project Node ... 171

Validating the Import ... 171

Grade/Tonnage Graph ... 179 Block Size ... 181 Reblock ... 182 Slopes ... 185 Pit Shells ... 197 Operational Scenario ... 215 Spider Graph ... 216 Assessment ... 221

Sequencing and Scheduling ... 222

Pit by Pit Graph ... 225

Grade Tonnage Graph ... 230

Schedule Graph ... 232

Assessment ... 237

Milawa ... 238

Reporting ... 257

Report templates ... 265

Value Calculation Block Size ... 268

Exporting Data to Surpac ... 270

DXF File Export ... 270

Res File Export ... 273

Reporting from an Imported Res File in Surpac ... 279

Msq File Export ... 281

Reporting from an Imported Msq File in Surpac ... 286

Pit Design... 288

Import Surfaces Node ... 289

PIL Export to Whittle ... 294

Review Exercise ... 304

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Page 5 of 308

Introduction

Pit optimisation allows you to produce a model for pit design based on a block model with real world constraints. This document introduces the theory behind the strategic mine planning process and provides detailed examples using the block modelling and Whittle interface functions in Surpac, and the Foundation, Multi-Analysis, Advanced Analysis and Milawa modules of Whittle.

Requirements

Before proceeding with this training guide, you need:

 Surpac v6.3 installed

 the data set accompanying this tutorial. The data includes the following files: o topo2007.str o topo2007.dtm o pit4.str o pit4.dtm o pit7.str o pit7.dtm o bg_id2_070313.mdl

 a basic knowledge of Surpac string files and editing tools

 to have completed the Introduction to Surpac manual

 to have completed the Block Modelling tutorial

 Whittle v4.5 installed

 some working experience of open-cut mining

 some exposure to mine planning concepts, for example through interaction with planning engineers

Objectives

The objective of this tutorial is to give you the skills to complete an optimised mining study using an existing block model and other known inputs.

Workflow

The process described in this tutorial is outlined below:

 validate the required geological parameters in the block model

 add cost and slope information to the model

 generate reports to allow validation of the export process and for comparison purposes

 export a mod and par file

 have a quick tour of Whittle using a different data set

 import the mod and par file and validate the data

 reblock and extend the model

 add slopes

 optimise and produce pit shells

 define the operational scenario

 analyse pits using graphs and spider diagrams and choose a final pit

 export the results

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A theoretical discussion Overview

Page 6 of 308

A theoretical discussion

Overview

Before you start to use the software, the theory behind mine planning and pit optimisation is discussed below.

Course Overview

Surpac and Whittle

Strategic Mine Planning

[email protected]

Phone: 1800 GEMCOM

Important Things First!

Exits

Toilets

Drinks

Breaks/Lunch

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A theoretical discussion Course Overview

Page 7 of 308

Course Goals

For given resource block model and input parameters,

know how to generate optimal shells and their reports

Able to complete an uncomplicated mine planning

study using Surpac and Whittle

Know steps involved in strategic mine planning

process

Know tools available in Surpac and Whittle

Attendance Requirements

Ability to create and edit block model

Working experience of open cut mining

Exposure to mine planning concepts (have spent time with

the planning engineers)

(No previous Whittle experience

)

Access to block modelling software, and foundation, multi

-analysis, advanced analysis and Milawa module in Whittle

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The Company

Gemcom is largest mine planning software company

in world

Major offices in Vancouver, Perth, and Brisbane and,

as of July 2012, part of Dassault Systèmes, a world

leader in 3D design software

Gemcom products include Gems, Whittle, Surpac,

Minex, Insite, and Hub

Originally 4 companies with head offices in different

locations

Total of 360 employees in 20 office locations

Course Overview

theory of strategic mine planning and optimisation

define input parameters

create and validate optimisation block model (Surpac)

produce optimal shells (Whittle)

choose shells for further work (Whittle)

import results to enable pit

design (Surpac

)

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Page 10 of 308

Surpac and Whittle

Strategic Mine Planning

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A theoretical discussion Strategic Planning Page 11 of 308

Strategic Planning

Situation Analysis

Economic Evaluation

Decision-Making Behavior

Overview

What is strategic mine planning?

Strategic mine planning:

A combination of science and art.

It has at its core all the geological and engineering essentials

associated with extracting minerals from the earth: the

science

It also embrace all aspects of strategic business planning:

the art

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A theoretical discussion Strategic Planning

Page 12 of 308

Business Plan Components

Vision and Mission

Values

Sustainable Competitive Advantage

Strategic Thrust

(cost, differentiation, niche)

Value Proposition

Objectives

(major milestones)

Strategies

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A theoretical discussion Situation Analysis

Page 13 of 308

Situation Analysis

Size and structure of the markets

Strengths, Weaknesses, Opportunities, Threats (SWOT)

Forces driving change

Critical success factors (CSFs)

Competitor Analysis

Size and structure of the markets

Commodities Market (Income)

Share Market (Value)

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Economic evaluation

You can

’

t manage what you can

’

t measure

How can you measure the value of a project?

–

Simple Cash flow analysis

–

Discounted Cash flow analysis (that is, NPV)

NPV Analysis

Advantages of net present value (NPV) analysis include:

Simple to calculate

Takes into account risk

Allows comparison of project with different risk profiles

Independent of inflation

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NPV Analysis

Disadvantages of NPV Analysis include:

Does not take into account a project manager’s ability to

adapt to future changes as they occur.

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A theoretical discussion Decision-making Behaviour

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Decision-making Behaviour

The first and immutable objective of a public mining

company is to develop the shareholder value

What are the corporate objectives?

Corporate Objectives

1. Lowest quartile of the cost curve?

2. Develop world class deposits?

3. Hedge to protect investors of price market fluctuation?

4. Not hedge to expose investors to the market?

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Decision-making

behaviour

N

eutral to risk

A

verse to risk

S

ating the market’s thirst (maximum reserves)

C

ost positioning

O

ther…

Decision

-

making behaviour

N

eutral to risk

–

Maximize NPV

–

Risk-adjusted discount rate takes into account

opportunity cost and additional risk

–

Add positive

NPV projects to your portfolio

–

When choosing mutually exclusive projects, choose

the one with the highest NPV

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Decision-making behaviour

A

verse to risk

– Choose shorter mine life, smaller pits, flatter slopes

– Conservatism can lead to better chance of project

recovery.

– Results in lower NPV

Decision-making behaviour

S

ating the markets thirst for:

– Earnings per share.

– Cash Flow.

– Dividend Yield.

– Commodity and Reserve Exposure.

– Market Value.

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Decision-making behaviour

Maximisation of reserves

– Increase the metric by which the share market will

assess your value.

– Possibly sacrifice NPV.

– Increases propensity for share price to increase,

leading to increase in shareholder wealth.

– Increase access to hedging and loans.

Other decision-making behaviour

Avoid short term loss.

Reconcile interests of employees, community, CEO etc.

Visions, and Missions.

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Which behaviour does your company use?

How would this affect your work?

N

eutral

A

verse

S

ating the market

C

ost positioning

O

ther

Decision-making behaviour

Undesirable Behavior

– Mining to a prescribed cut-off.

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NPV Curve

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A theoretical discussion Decision-making Behaviour Page 22 of 308 0 500 1000 1500 2000 2500 3000 3500 1 4 7 10 13 16 19 22 25 28 31 34 37 0 50 100 150 200 250 300 NPV $m Cost of Production $/oz Maximum NPV Of the mine

Pit number

If the corporate objectives are to produce below $225/oz. The capacity of the mine can be increased by sacrificing NPV NPV for the Selected pit Decrease NPV Increase reserves

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A theoretical discussion Theory of Pit Optimisation

Page 23 of 308

Theory of Pit Optimisation

Surpac and Whittle

Strategic Mine Planning

Theory of Pit Optimisation

Principles of

Pit

Optimisation

Strategic

Mining

Software

Exploration

Project

Scoping

Corporate

Objectives

Sensitivity

Analysis

Risk

Analysis

Scheduling

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A theoretical discussion Mine Planning

Page 24 of 308

Mine Planning



Mine Planning



What is Pit Optimisation?



Optimisation Algorithms



Slopes



Block Value Calculation



Commodity Price



Whittle Concepts



Block Model Dimensions



Structure Arcs and Slopes



Costs



Generation of Pit Shells



Ore Selection Method

Overview

Mine Planning

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What is mine planning?

• Working out where, when, how and how

much to mine

• Iterative process

• Affected by corporate objectives,

decision-making behaviour of company

• Can reduce risk i.e. planning for change

creates robust pits that give you greater

ability to deal with fluctuating markets

Mine planning can ...

Identify the feasible domain

Identify the most profitable plan under different constraints

Rapidly evaluate many different alternatives

Help evaluate a wide range of consequences

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What are some examples of mine planning

studies?

Types of mine planning

Reserve definition

Scoping study

Prefeasibility study

Feasibility study

Bankable feasibility study (BFS)

One-off question

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A theoretical discussion Resource and Reserves

Page 27 of 308

Resource and Reserves

Resources and Reserves –

The Traditional View

Ore Body Model

Ultimate Pit Design

Long-term Schedule

Cut-off Schedule

Short-term Schedule

Resources

Reser

ves

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A theoretical discussion Resource and Reserves

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JORC Code(2004) - Mineral Resource

Resources require economic evaluation!

JORC Code(2004) - Ore Reserve

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A theoretical discussion Inputs

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Inputs

Ore Reserve Development Stages

Data collection and geologic interpretation

Geological block model construction

Mining dilution incorporation

Pit optimisation

Pit scheduling

Final design

Final schedule

Tabulation of reserve estimates

Faults Jointing

& Bedding

Mineralization Limits & Types

Lithology Power Costs Inflation Labour Costs Contractor Costs Capital Costs Commodity Prices Mother Nature Geological Uncertainty Constantly changing as more information is collected Human Nature Economic Uncertainty Dynamic and constantly changing

Mining Factors

Interest Rates Complex

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A theoretical discussion Inputs Page 30 of 308

Constantly

changing as

more

information

is collected

Geological uncertainty

Mineralisation limits

Mineralisation grades

Faults

Jointing and bedding

Lithology

Hydrology

Topography

Economic uncertainty

Interest rates

Inflation

Power costs

Capital costs

Commodity prices

Contractor costs

Labour costs

Dynamic

and

constantly

changing

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A theoretical discussion Inputs

Page 31 of 308

Technical parameters

Slope angles

Tonnage & grade model

Dilution

Mining recovery

Milling recovery

Rock properties, continuity, & bulk density

Mining methods

Production Rates

Economic parameters

Discount rate

Mining costs

Processing & overhead costs

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A theoretical discussion Pit Optimisation

Page 32 of 308

Pit Optimisation

Quick Review

True or false: Reserves (not resources) involve economic

evaluation

What do all parameters have in common?

Name 3 types of mine planning study.

What is Pit Optimisation?

Answers some of the questions - how big and where

to mine?

Maximises cash flow

Provides nested shells - mine schedule

– Where to start

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With fixed prices, costs and slopes:

the optimal outline is fixed

Definition of Optimal Outline

AIR WASTE MINERAL

NPV

Pit size

Strategy 1 Potential value improvement Selected Pit size Strategy 2 Extra value foregone

What is Optimum?

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A theoretical discussion Pit Optimisation Page 34 of 308 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 0 2,000 4,000 6,000 8,000 10,000 12,000 Pit Tonnes P it V a lu e A B

Project Sensitivity

What Affects the Optimal Outline?

In general:

–

If the price increases, the pit gets bigger

–

If the costs increase, the pit gets smaller

–

If the slopes increase, the pit gets deeper

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Page 35 of 308

Small Pit Larger Pit

Price

Costs

Slopes

Pit Size

What Affects the Optimal Outline?

Fix these and

you Fix the

Optimal

Outline!

Quick Review

Draw typical NPV vs pit size graph

Where does the highest NPV pit sit?

Where does the least sensitive pit sit?

Name 3 factors that affect the optimal pit?

Which factor is most likely to affect the pit

the most?

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A theoretical discussion Optimisation Algorithms Page 36 of 308

Optimisation Algorithms

Floating Cone

and

Lerchs-Grossman

Floating Cone Method

Position an inverted cone, with the required slopes, on each

block that has a positive value

If the total value of all blocks in the cone is positive,

“

mine

”

those blocks

Repeat these steps until no cone has a positive value

There are two problems

–

could mine too little or too much.

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A theoretical discussion Optimisation Algorithms

Page 37 of 308

Three Dimensional L-G

Works with block values

Works with block mining precedences

Guarantees to find the three-dimensional outline with

the highest possible value

Quick Review

What are the two main types of optimisation algorithms?

Which one does Whittle use?

Which one is guaranteed to give the highest possible

value?

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A theoretical discussion Slopes

Page 38 of 308

Slopes

What is an ARC?

An arc is a relationship between

two blocks. An arc from block A to

block B indicates that, if A is to be

mined, then B must be mined to

expose A. The reverse is not true.

If B is to be mined, block A may or

may not be mined.

Used to control pit slopes

A

B

C

If A is mined

so is C

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A theoretical discussion Slopes Page 39 of 308

Arc Relationships

If A is to be mined, B

must be mined to

expose A

The reverse is not true

If B is to be mined, A

may or may not be

mined

A

B

Arc from

A to B

Slope accuracy depends on No. benches

used for arc generation

Desired Slope

Bench

e

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A theoretical discussion Slopes

Page 40 of 308

Summary

Whittle uses arcs to represent slopes

Exact slope accuracy is unlikely

Accuracy is controlled by the number of benches used in

arc generation

Slope Accuracy

Slope accuracy is controlled by the number of

benches used in arc generation for a given block

size

Exact slope accuracy is very unlikely because only

whole blocks are mined

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A theoretical discussion Block Value Calculation

Page 41 of 308

Block Value Calculation

Block Value Calculations

Profit =

Revenue

-

Costs

Value =

[

(OreGradeRecovery* (Price

-

CostS

))

--

(Ore*

CostP

)

]

-

Rock*

CostM

)

Ore =

Ore = oreoretonnestonnes CostP

CostP= cost of processing= cost of processing CostM

CostM= cost of mining= cost of mining Rock = total tonnes

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Page 42 of 308

In other words…

Revenues

can be calculated from:

–

Ore tonnages

–

Grades

–

Recoveries

–

Product price

Costs

can be calculated from:

–

Mining cost

–

Milling cost

–

Overheads

Block Value =

Revenue

-

Costs

What is Value?

Which Truck is Worth the Most?

1. 50 tonnes of 2g/t Gold

2. 100 tonnes of 1 g/t Gold

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A theoretical discussion Block Value Calculation Page 43 of 308

Costs

Revenue

50 tonnes of 2g/t Gold

= [(2 * 50 * 92.5% * $12.30/g ) - (50 * $15)] - (50 * $1.20)

[

(1137.75)

- (750)] - (60)

$327.75

Costs

Revenue

100 tonnes

of 1 g/t Gold

[(1*100 * 92.5%* $12.30/g) - (100 * $15)]- (100 * $1.20)

[

(1137.75)

- (1500)]- (120)

-$242.25

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But wait!

If we just call this truck load waste

We only pay $120 to mine it.

We would be

$122.25

better off

Revenue from Copper

Revenue from gold

Costs

150 Tonnes of 0.5% Copper & 0.25 g/t Gold

=

[(0.25150 50%*

12.30 + 0.5%150 75%*

2094

)

- (150 * 8)]- (150 * 1.20)

[

(230.625)+ (1177.875)

-

(1200) ]- (180)

1408.50

-

1380

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When does the truck go to the waste dump?

Whenever the cost of processing is higher than the

revenue, we should treat the truck load as waste

Value =

[

(OreGradeRecovery* Price)

-

(Ore*CostP)

]

- Rock*CostM

The Section in square Brackets must => 0

In other words…

The block will be mined regardless of the destination and

CostM will be incurred either way.

The decision of whether the truck is ore or waste (i.e. the cut

off grade) is made at the top of the pit.

The cut off grade is independent of mining cost – a marginal

cut off grade.

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A theoretical discussion Block Value Calculation Page 46 of 308

Marginal Cut-off

Price

*

Recovery

CostP

Grade

Marginal



This marginal cut-off condition will change

whenever Processing costs, Recoveries or Prices

change!

Summary

Block Value =

Revenue

-

Costs

•

• Cut off grade is dependent on

Cut off grade is dependent on

CostP

,

metallurgical recovery and price.

•

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A theoretical discussion Commodity Price

Page 47 of 308

Commodity Price

What commodity price do we realize?

Profit = [

(OreGradeRecovery* (Price-CostS))

-

(Ore*CostP)

]

-

(Rock*CostM)

Price

-

Selling Cost

Refining Refining Royalty Royalty Insurance Insurance Market Market

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A theoretical discussion Commodity Price

Page 48 of 308

Commodity Price

Predictions are often not right

"Wall Street indices predicted nine out of the last five

recessions ! "

- Paul A. Samuelson in Newsweek, Science and Stocks, 19

Sep. 1966.

Commodity Price

Price most powerful influence on profit.

Future prices influenced by:

– Historic/Statistical (trend, cyclical, random).

– Forces driving change (in market analysis context).

Strategic responses:

– Forecast future prices.

– Plan to accommodate future uncertainty.

– Decision points, mine life considerations.

– Price control (hedging, become a price-setter

).

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A theoretical discussion Whittle Concepts

Page 49 of 308

Whittle Concepts

Whittle Block Model (mod file)

19 36 1 1 1.000 1.000 2160. 19 36 1 1 1.000 1.000 2160. 19 36 1 SULF 2160. 159. 769. 19 36 1 SULF 2160. 159. 769. 20 36 1 1 1.000 1.000 2160. 20 36 1 1 1.000 1.000 2160. 20 36 1 SULF 2160. 97. 305. 20 36 1 SULF 2160. 97. 305.

I J K No parcels MCAF PCAF tonnes

Block line

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Whittle Framework Origin

Gemcom Gemcom Medsystem Medsystem Datamine Datamine Vulcan Vulcan Whittle (Block 1,1,1) Whittle (Block 1,1,1)

Whittle

vs

Surpac

Whittle works in IJK which is number of blocks in

x,y,z

Surpac works in N,E,RL which is coordinates in y, x, z

Whittle does not store grade

–

only contained metal

Surpac has user blocks and (smaller) sub-blocks

Whittle has blocks and parcels

MCAF and PCAF and slope attached to blocks, ROCK and

grades attached to parcels

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What’s a “Parcel”?

Part of a block for which rocktype, tonnage, and metal

content are known

The total tonnage of the parcels may be the same or less

than the block tonnage

If the parcel tonnage is less than the block tonnage, the

remaining tonnage is undefined waste (unknown rocktype)

If a block has no parcels, the total tonnage of the block is

undefined waste

Neither the position of a parcel within a block, nor it’s shape

is defined UNLIKE sub-blocks in Surpac

Parcels

Profit =(Ore*Grade*Recovery* (Price-CostS)) -(Ore*CostP) ] - Rock*CostM)

A B C1 C2 C3 Ore A

Ore A Tonnes ATonnes A Metal AMetal A

Ore B

Ore B Tonnes BTonnes B Metal BMetal B

Ore C

Ore C₁₁ Tonnes CTonnes C₁₁ Metal CMetal C₁₁

Ore C

Ore C₂2 Tonnes CTonnes C22 Metal CMetal C22

Ore C

Ore C₃3 Tonnes CTonnes C33 Metal CMetal C33

+ + Undefined Waste Undefined Waste Metal A Metal A Metal B Metal B Metal C Metal C₁₁ Metal C Metal C₂₂ Metal C Metal C₃₃ Tonnes A Tonnes A Tonnes B Tonnes B Tonnes C Tonnes C₁₁ Tonnes C Tonnes C₂₂ Tonnes C Tonnes C₃₃ Tonnes A Tonnes A Tonnes B Tonnes B Tonnes C Tonnes C₁₁ Tonnes C Tonnes C₂₂ Tonnes C Tonnes C₃₃ + + Undefined Undefined Waste Waste

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Parcels

In the previous diagram, each parcel is evaluated separately

to determine destination

Each parcel within a block can go to a DIFFERENT

destination i.e. ore and waste in the same block

Parcel size is important for selective mining issues

Summary

Whittle works in I,J,K not N,E,RL

Whittle stores contained metal, not grades

Whittle has blocks and parcels similar to Surpac blocks and

sub

-

blocks

Unlike Surpac, the location and shape of each parcel is unknown

And the sum of parcel tonnage may be less than block tonnage

(the rest is undefined waste

)

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A theoretical discussion Block Model Dimensions

Page 53 of 308

Block Model Dimensions

Different Block Dimension for Different Purposes

Geology - outlining the orebody

Mining - calculating values

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Page 54 of 308

Dimensions of a Block - Geology

•

Often depends on method of interpolation

•

1/d

n

interpolation often results in small block size

•

Kriged model often results in larger block size

Dimensions of a Block - Mining

Minimum block size is SMU size (smallest mining unit)

– reblock geological blocks to SMU size (consider parcel size)

Equipment size

– minimum working space

– multiple SMU’s in equipment size block

– use template in Minimum Mining Width

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Dimensions of a Block - Sensitivity

Analysis

Geological model often contains millions of blocks

Coarser approximation of grade distribution (100,000

blocks) sufficient for sensitivity analysis

Framework Expansion – Easy to add blocks

in Whittle

X offset X offset Z offset Z offset Original Model Original Model Expanded Model Expanded Model

Additional waste blocks

Extended topography

Sub

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Adjusting Framework

Blocks that are added contain all of the information of

the last block in the mod file EXCEPT metal content

which is zero.

It is possible to increase and decrease block size and

framework

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A theoretical discussion Slopes and Structure Arcs

Page 57 of 308

Slopes and Structure Arcs

Slopes

Rectangular regions (Whittle)

Rock codes (Mod file – Character attribute in Surpac)

Zone Numbers (Mod file – Integer attribute in Surpac)

Profile Number File (Text file containing I, J, K, Number)

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One method – bearing and slope

44 335 38 260 42 180 46 135 38 77 42 20 Slope Angle Bearing

If using bearing, be careful….

55 55 60 60 60 60 45 45 •

•Slope is defined at four azimuth pointsSlope is defined at four azimuth points

•

•Between points the slope is interpolatedBetween points the slope is interpolated ••Slope is defined at six azimuth pointsSlope is defined at six azimuth points •

•Between differing points the slope is interpolatedBetween differing points the slope is interpolated •

•Between similar points the slope is constantBetween similar points the slope is constant 60 60 55 55 55 55 45 45 45 45 60 60 Constant Constant Slope Slope Constant Constant Slope Slope

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Page 59 of 308

Slope Bearings

It is very important to note that

bearings are given instead of wall

positions. Any walls at right angles to the bearings, in a particular slope region, will have the given slope applied.

In the diagram, the slope

specified for a bearing of 45 degrees would be used by the program in the positions indicated by the arrows.

Slope Considerations

Rule of thumb bench search for arc generation in each

sub-region

– (max(x,y) x 8) / z

Whittle uses overall slopes which need to include

allowance for the ramp

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Summary

Four possible slope methods

Remember Whittle uses bearings not wall positions.

Remember slopes are smoothed between bearings

Use overall slopes and make allowance for ramps

Whittle employs rule of thumb to calculate number of

benches for arc generation

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A theoretical discussion Mining Recovery and Dilution

Page 61 of 308

Mining Recovery and Dilution

Mining Dilution and Mining Recovery

Mining Dilution

Whittle defines dilution as extra waste taken to the mill

Ore tonnes are increased while metal is the same so

grade decreases.

For a dilution of 5% on 100t @ 2 g/t, the resulting ore is

100x1.05 t for 200g (grade = 200/105 g/t)

=105t @1.90g/t

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A theoretical discussion Mining Recovery and Dilution

Page 62 of 308

Mining Recovery

Whittle defines mining recovery as ore taken to the waste

dump

Ore tonnes and metal are decreased so that grade is the

same

For a recovery of 5% on 100t @ 2 g/t, the resulting ore is

100x0.95 t for 0.95x200g

=95t @2g/t

Mining Recovery and Dilution

ORE ORE Dilution Dilution Mining Recovery Mining Recovery (extraction loss) (extraction loss) MINING LIMIT MINING LIMIT

Profit =

[

(OreGradeRecovery* (Price-CostS))

-

(Ore*CostP)

] -

R

ock*CostM)

x Mining Recovery

x Mining Recovery x Mining Recoveryx Mining Recovery

x Dilution

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A theoretical discussion Costs Page 63 of 308

Costs

Calculating Costs

$/unit of product

Selling costs

$/tonne processed

Processing cost

$/tonne mined

Mining cost

Units

Types of Costs

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A theoretical discussion Costs

Page 64 of 308

Block Value - Rule 1

The value must be calculated on the assumption that

the block has already been uncovered

– Make no allowance for stripping

Block Value

-

Rule 2

The value must be calculated on the

assumption that the block will be mined

–

If block contains some ore that can be profitably

processed it should be included in the value of the block

-

even if the total value of the block is negative.

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Block Value - Rule 3

Any expenditure that would stop if mining stopped

must be included in the cost of mining, processing

or selling.

– The converse is also true

No bias. Loading any cost estimate just to be

conservative must be avoided

Use sensitivity runs to determine the impact of cost

variations.

If you use bias you will end up with a smaller pit and a

lower NPV.

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The Block Value Formula

VALUE = (METAL x RECOVERY x PRICE – ORE x COSTP) – ROCK x COSTM

METAL = units of product eg ore tonnes x grade

RECOVERY = Proportion of metal recovered from processing

PRICE = the price per unit of product sold

ORE = tonnes of ore in a parcel

COSTP = the extra cost of mining a parcel as ore and processing it

ROCK = total amount of rock (ore and waste) in a block

COSTM = the cost of mining a tonne of waste

Why Time Costs Must be Included

When Whittle adds a block

to the pit outline, it

effectively extends the life

of the mine.

Any extra costs which

result from extending the

life of the mine must be

paid for.

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Sharing Time Related Costs

How costs are shared will depend on whether

production is limited by:

– Mining

– Processing, or

– Marketing

Reference Block

Reference Block :

•

• Used to calculate

Used to calculate

CAFs

•

• Represents the base case

Represents the base case

scenario for mining

•

• Typically positioned at the

Typically positioned at the

top of the pit

•

• Does not have to

Does not have to

physically exist

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Reference Block and Positional Cost Adjustment

Factors

Positional Cost Adjustment

Factor:

•

• Increased mining cost

Increased mining cost

with depth

•

• Variable mining cost for

Variable mining cost for

ore and waste (equipment)

•

• Variable processing costs

Variable processing costs

•

• Applied either in Whittle

Applied either in Whittle

or Surpac

Profit =

[

(OreGradeRecovery* (Price-CostS))

-

(Ore*CostP)

] -

R

ock*CostM)

x PCAF

x PCAF x MCAFx MCAF

Summary

Cost must be in units of relevant activity

Any cost that continues when the production stops should NOT

be included in the optimisation

Do NOT add a stripping allowance or be conservative with the

parameters

CAFs are calculated from a reference block

The reference block does not have to exist but should give

CAFs >=1.

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A theoretical discussion Pit Shells

Page 69 of 308

Pit Shells

Generation Of Pit Shells

Revenue Factors

A simple way of scaling values to provide a range of pit shells

which are optimal for different prices

If the base price (RF=1) of gold is $800/oz

RF = 0.5 has a gold price of $400/0z

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Parametric Pit Shells

Plan

Higher RF pit shells show

possible future expansions

Inner pit shells show where

it is best to begin mining

Intermediate pit shells

show possible practical

pushbacks

Pits near RF of 1 are

used for sensitivity and

risk analysis

Deriving Nested Pit Shells

•

• A range of revenue factors

A range of revenue factors

yields nested shells

•

• A revenue factor of

A revenue factor of

1

1 corresponds to the

corresponds to the

commodity price in the

parameter file

Revenue =

[

(OreGradeRecovery* (Price-CostS))

-

(Ore*CostP)

]

-(Rock*CostM)

x Revenue Factor

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Summary

Nested pits are generated by the revenue factors

Revenue factor is used to scale the commodity price

Inner pits used for cutback

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A theoretical discussion Ore Selection Methods

Page 72 of 308

Ore Selection Methods

Two main methods are cut-off or cashflow

In simple situations they will give the same result.

If expressions using cut-off grade variables are included

then you MUST use cashflow

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CUT–OFF = PROCESSING COST/RECOVERY *

PRICE

Often used since the cut-off grade is printed in the report.

BEWARE – the reported cut-off grade is only valid for blocks

with PCAF=1

The cut-off grade is different for every block with a different

PCAF.

Ore Selection by Cut Off – Single Element

Ore Selection Methods

Ore selection by cut

-

off:

– Selection is done by comparing the grades of the material with pre-calculated processing cut-offs

– If it does not satisfy the cut offs, it is treated as waste

Ore selection by cash flow:

– Selection is done by comparing the cash flow which would be produced by processing it and the cash flow which would be produced by mining it as waste.

– If the cash flow from processing it is higher, the material is treated as ore. If not, it is treated as waste.

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Profit =

[

(OreGradeRecovery* (Price

-

CostS

)

-

(Ore*

CostP

)

]

--

Rock*

CostM

)

If in doubt, use cashflow.

Ore Selection by Cash Flow

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A theoretical discussion Ore Selection Methods Page 75 of 308 Economic Model Finance Finance •

• Commodity Commodity Price(sPrice(s))

•

• Discount RateDiscount Rate

•

• Corporate ObjectivesCorporate Objectives

Mining

•

•CostsCosts

•

•Ore SelectionOre Selection

•

•Dilution & RecoveryDilution & Recovery

Metallurgy Metallurgy • •RecoveryRecovery • •CostsCosts •

•Processing RatesProcessing Rates

•

•CutCut--off Gradesoff Grades

Geotech

•

•Slope StabilitySlope Stability

Geology Geology • •TonnesTonnes • •GradeGrade • •RocktypesRocktypes

Input

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A theoretical discussion Course Workflow

Page 76 of 308

Course Workflow

Surpac and Whittle

Strategic Mine Planning

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A Simple Mining Study

Start with geological block model including grade/s, sg,

rock codes

(mdl in Surpac)

Ensure rock code is correct for optimisation purpose

Ensure all blocks have grades, sg and rock code

(reports

and visual constraints)

Ensure no negative grades or sg

(reports, assign value)

Ensure AIR definition is correct

(topo dtm)

Ensure AIR blocks have sg=0, grades=0

(reports, assign

value)

Process Overview

In Surpac

Validate geological parameters

Add cost & slope info Generate reports for validation

Export block model

In Whittle

Import model and validate Reblock & extend framework Add slopes

Optimise

Define operational scenario Analyse pits using graphs, schedules & spider diagrams Select pits

Export res or msq or pit shells In Surpac

Import res or msq or dxf Design pits

Export pit design

In Whittle

import pit design Scheduling & analyses

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A Simple Mining Study

Define & allocate costs

Add mcaf attribute and fill

(add attribute, assign value)

Add

pcaf and fill

(add attribute, assign value)

Finalise slopes

Add zone attribute and fill

(add attribute, assign value)

Create bm reports for validation

(bm report)

Export block model

(mod and par file created)

A Simple Mining Study

Create new project

Import model into Whittle

(Block Model Node)

– Check Model Validity

Reblock model & extend

(ReBlock Node - mod)

Pit slopes

(Slope Sets Node - stu)

– Check slope errors

Define costs and generate shells

(Pit Shell Node -res)

– Mining

– Processing

– Selling

– Prices

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A Simple Mining Study

Add limits and $

(Operational Scenario node)

Add spider graph

(Spider Graph Node)

– What is project sensitive to?

Add pit by pit graph

(Pit by Pit Graph Node)

– Which is optimum pit?

Add a schedule graph

(Schedule Graph Node)

– Refine choice of ultimate pit

– Choose cutbacks

Export pit shells

( res file from Pit Shells Node or msq

file from schedule graph )

Import res or msq file into Surpac

(create mdl file)

A Simple Mining Study

Prepare data for design

(slice

bm

)

Design pit

Assign cutback numbers to block model

(assign value)

Create pit design

Import pit design into Whittle

Continue schedules and reports

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Advanced Analysis

Schedule

– Best Case (inner shell out)

– Worst Case (top down)

– Specified (using pushbacks)

Detailed Cash flow

– DCF (Discounted Cash Flow Analysis)

– NPV (Net Present Value =



Discounted Cash flows)

– Adjustment for Time Costs

– Variables changing with Time

– IRR (Internal Rate of Return)

Sensitivity

– Spider Diagram

– Advanced sensitivities

– (Custom Graphs & Advanced Analysis)

Advanced Optimizations

Cut-off Optimization

– Stockpiles

Milawa (mining sequence and pushback choice)

– Best NPV mode

– Balanced mode

Blend Optimization

– Bulk Mineral

– Extractive Process

Practical Pushbacks (Minimum Mining Width AND mining

sequence AND pushback choice)

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Other Tools

Reblocking Tools

– Parcels

– Combining & Splitting Blocks

– Calculating MCAFs & PCAFS

(Cost Adjustment Factors for each block)

Block Value Calculation

– For Checking

Variables

– Expression

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Exercise 1 – Mod and par file creation in Surpac Overview

Page 82 of 308

Exercise 1 – Mod and par file creation in Surpac

Overview

Using a typical set of data, including a geological block model and other inputs, you will create a validated Surpac block model that contains an mcaf, pcaf, and a zone number. You will export the Surpac block model to produce a mod and par file ready to use in Whittle.

Requirements

The data files required for this exercise are: bg_id2_070313.mdl, topo2007.dtm, topo2007.str

Getting started

Please note: This manual uses version 6.3 of Surpac.

Because this type of work is repetitive and can generate large numbers of files, it is vital to have a structured file naming convention. For this course the data structure consists of several folders, named according to data function, beneath a root folder of c:\training\data as shown in the following image:

1. In Windows Explorer, create a separate directory for the training data and beneath this directory create a new directory called 1_originaldata and several others as shown above. Copy the data files into the 1_originaldata directory.

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Exercise 1 – Mod and par file creation in Surpac Getting started

Page 83 of 308

2. Before you start Surpac, right-click on the Surpac icon on the desktop. Change the Start in directory to the one that you have just created.

3. Start Surpac.

4. Make it so that only the Main Menu and Block Model Menu are displayed by placing the mouse pointer over a space on a menu or toolbar and right-clicking on the names of the menus you want to show. Also display the Block Model Toolbar in the same way.

Note: Any instructions in this tutorial about accessing block model functions in this tutorial, refer to either the Block Model menu, or the Block Model toolbar.

5. In the Navigator, right-click the training folder, and choose Set as work directory.

6. Under 1_originaldata, drag the block model file bg_id2_070313.mdl from the Navigator into Graphics.

The block model is displayed in the Status bar at the bottom of the Surpac window as shown below:

7. Choose Block model > Summary.

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One of the important features of the block model to note is the number of user blocks in each direction – 160 in Northing, 100 in Easting, and 75 in RL giving a total number of user blocks of 1.2 million. Whittle has a limitation of 99999 blocks in any direction, but this block model does not have to be modified for this limitation.

In addition, you can see from the list of attributes that three attributes exist which define gold grade, and an additional three attributes could define the rock type – litho, rock and weathering. An attribute called sg exists for specific gravity, that is density. sg is a mandatory attribute. You can also see that some attributes have a background value of -99.

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The attributes are as follows:

Attribute name Type Decimals Background

Au_cut20 Real 2 -99

Au_cut15 Real 2 -99

au_uncut Real 2 -99

ave_dis Real 3 -99

count Integer 0

Litho Character Sed

min_dist_samp Real 3 -99

Mined Character N

Num_samp Integer -99

Pass Integer 0

Rescat Character UNCLASS

rock Character

sg Real 2 1.8

Weathering Character fresh

Only one attribute for grade is exported to Whittle so it is necessary to ask the person supplying the geological data which gold grade is relevant. For this exercise, the au_cut15 attribute is the appropriate attribute.

Often you have a situation where the original data is the resource block model which should not be modified. Therefore the next step is to make a copy of the block model to preserve the original data.

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9. In the Navigator, highlight the 2_optimisation_bm directory, right-click, and choose Set as work directory.

10. Choose Block model > Save As, delete the Model name, and type bg_opt_070322 to indicate that this model is created for the purposes of optimisation.

11. Click Apply.

The three attributes needed for optimisation which you could source from the geological block model are: 1. grade attribute (in this case, au_cut15)

2. density (the sg attribute) 3. rock code

You could also generate a geotechnical attribute that defines slope types from the geological block model.

Next you will investigate the model for a possible rock code and also a geotechnical code. The rock code you choose depends on what data is required for later reporting purposes and also how the mining costs, processing costs, and metallurgical recoveries are defined.

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Cost Value Unit Comment

Administration 1.5 million $ pa Head office

Personnel 0.5 million $ pa Manager, eng, geo, surv, etc Consumables 150,000 $ pa Computers, vehicles, aerial survey

Ore Haulage 3.00 $/t hauled Contractor costing

Overall Slopes in Degrees

Lithology 400 RL – 320 RL < 320 RL Ultramafics 38 (1) 42 (4)

Sediments 40 (2) 48 (5)

Porphyry 44 (3) 55 (6)

Metallurgical Recovery

Weathering attribute Recovery

Mining Cost ($/BCM) Waste

RL from RL to RL centre L&H D&B Dewater Presplit Rock Bolt Rehab Total

400 380 390 1.31 0.30 0.00 0.00 0.00 0.08 1.69 380 360 370 1.82 0.15 0.04 0.00 0.00 0.08 2.08 360 340 350 2.32 0.52 0.04 0.00 0.00 0.08 2.95 340 320 330 2.72 0.96 0.06 0.00 0.00 0.08 3.82 320 300 310 3.29 1.56 0.06 0.05 0.06 0.08 5.09 300 280 290 3.64 2.10 0.06 0.05 0.06 0.08 5.98 280 260 270 4.29 2.40 0.06 0.05 0.06 0.08 6.93 260 240 250 4.44 2.88 0.06 0.05 0.06 0.08 7.56 240 220 230 4.69 3.22 0.06 0.05 0.06 0.08 8.15

Processing Cost ($/t ore) Porphyry Only

Admin Haulage Personnel ConsumablesProcess L&H add GC Total

Hcap 1.88 3.00 0.63 0.19 9.00 0.05 2.05 16.79

Oxide 1.88 3.00 0.63 0.19 9.00 0.20 0.50 15.39

Tran 1.88 3.00 0.63 0.19 10.25 0.27 0.45 16.66

Fresh 1.88 3.00 0.63 0.19 10.50 0.30 0.41 16.90

Ultramafics and Sediments

Admin Haulage Personnel ConsumablesProcess L&H add GC Total

Hcap 1.88 3.00 0.63 0.19 9.00 0.05 0.00 14.74

Oxide 1.88 3.00 0.63 0.19 9.00 0.20 0.00 14.89

Tran 1.88 3.00 0.63 0.19 10.25 0.27 0.00 16.21

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Exercise 1 – Mod and par file creation in Surpac Getting started Page 88 of 308 Hardcap 94% Oxide 94% Transition 94% Fresh 90%

In this exercise, mining and processing costs have been defined by RL, weathering and lithology. You will use attributes to hold the mining and processing costs. The metallurgical recoveries are listed by weathering type, and schedules are required by weathering as well. The geotechnical zones are defined by RL and lithological code. Next you will investigate the block model for relevant data.

10. Choose Display > Display block model to display the entire block model. The following form appears:

11. Fill in the form as displayed in the previous image, and click Apply to draw the model with block faces.

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Support desk tip

When I try to display my large block model (for example 300 MB), Surpac stops with a Smartheap Library – Out of Memory messages. What can I do?

There are two things you can do to deal with large block models running out of memory. Firstly go to Customise > Default Preferences. In the left hand pane, choose System Options, and in the right panel the last option is Java Virtual Machine. Change the Maximum heap size to 512. Secondly, the option in the Draw Block Model form to use Point Cloud instead of Blocks uses much less memory and is sometimes the difference between being able to display the model or not.

The model is centred in Graphics because the Rescale option is selected.

To get a better indication of where the ore deposit is located in the block model, you can add a graphical constraint to display only the blocks where the gold value is greater than zero.

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12. Choose Constraints > New graphical constraint. 13. Enter the information as shown, and then click Apply.

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Note: For all functions that you can run either from the menu or from a toolbar, the first instance in this document will refer to the menu command, and the subsequent instances will refer to the toolbar button. For example, you can access the graphical constraint function from the toolbar button as shown below:

14. Rotate the constrained block model to gain familiarity with the deposit.

Next you will run a block model report to investigate the values in the weathering attribute. 15. Choose Block model > Report.