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NAME: ____________________________________

STUDENT ID: _______________________________


SIGNATURE: _______________________________

Note: This exam paper is intended to demonstrate the type of questions that can
be expected to the students enrolled in the Mine Planning course in the formal exam
for the course.
THE UNIVERSITY OF NEW SOUTH WALES
The range of actualSCHOOL
questions, topics,
structure ENGINEERING
and number of questions in the exam
OF MINING
is likely to change from year to year.

SEMESTER 2, 2014
It is strongly recommended to students that they carefully read and follow the
MINE3230:
MINE
PLANNING
instructions that
appear on the actual
exam paper.

Final Examination
1. TIME ALLOWED 2 hours
2. READING TIME 10 minutes
3. THIS EXAMINATION PAPER HAS 9 PAGES
4. TOTAL NUMBER OF QUESTIONS: 5
5. EACH QUESTION HAS: 25 MARKS
6. TOTAL MARKS AVAILABLE: 100
7. ANSWER ANY FOUR OUT OF FIVE QUESTIONS.
8. CANDIDATES MAY BRING THEIR OWN CALCULATOR (UNSW APPROVED) AND
DRAWING INSTRUMENTS.
9. ANSWERS MUST BE WRITTEN IN INK, EXCEPT WHERE THEY ARE EXPRESSLY
REQUIRED. PENCILS MAY ONLY BE USED FOR DRAWING, SKETCHING OR
GRAPHICAL WORK.
10. ALL ASSUMPTIONS MUST BE STATED AND ALL CALCULATIONS HAVE TO BE SHOWN
IN THE ANSWER PAPER. MARKS WILL BE DEDUCTED FOR NOT SHOWING
CALCULATIONS.
11. IF YOU BELIEVE THAT A PARAMETER OR AN IMPORTANT PIECE OF INFORMATION
HAS BEEN INADVERTENTLY OMITTED BY THE EXAMINER, ASSUME A SUITABLE
VALUE, CLEARLY STATING IT, AND CONTINUE WITH THE SOLUTION.

Sample Exam Paper

1. Consider the grade block model (vertical section) shown in Figure 1 for a copper deposit
whose grades are expressed in per cent copper (%Cu). Additional information provided
for this mining project is as follows:

Rock contained in each block


= 1 million tonnes (1 Mt)
Open pit mining cost (ore)
= $7.6/tonne
Open pit mining cost (waste)
= $5.0/tonne
Underground mining cost
= $35/tonne
Processing cost
= $15/tonne of ore
Mill recovery
= 80%
Copper price
= $5,000/tonne of copper
Assume unconstrained mining and milling capacity.
Assume the open pit mining cost (ore & waste) increases by $1.5 for each lower level
depth.

Figure 1: Cross-section through an orebody showing grades (%Cu).

a. [Marks = 10] Calculate the value ($/tonne) of each block in the block grade model.
b. [Marks = 7] What is your estimate of the breakeven cut-off grade for this section?
c. [Marks = 8] Explain how you would determine the optimal exploitation strategy for
this deposit considering both open pit and underground options.

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Sample Exam Paper

2. Figure 2 shows a section view of an economic block model. Assume a 45 slope angle
and answer the following questions:

-3

-3

-3

-3

+3

-3

+7

-4

+10

-4

-3

-3

+11

-3

-3

Figure 2: A section of an economic block model.


a. [Marks = 5] Determine the ultimate pit limit using floating cone algorithm. Note:
show all steps.
b. [Marks = 7] Determine the ultimate pit limit using LG-2D algorithm. Note: show
all steps.
c. [Marks = 8] If mining capacity is 3 blocks per year and the processing capacity is
1 ore block per year, what is the best block-by-block and year-by-year production
plan? Note: show all steps.
d. [Marks = 5] Using production plan from (c), determine the discounted value
(NPV) of future cash flows, if the discount rate is 12%.

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Sample Exam Paper

3. An iron ore mining company with two mining operations (East Mine & West Mine) needs
to schedule production for the next period across the two operations with the objective of
maximising its profit margin. The company generates a margin of $130 and $100 per
tonne from the East and West mines respectively. It has water, power and diesel available
for consumption of 55,000,000 litres, 20,000,000 kilowatts and 45,000,000 litres
respectively over the next scheduling period. A production limit of 80,000 tonne and
90,000 tonne of iron ore from the East Mine and West Mine respectively applies over the
next scheduling period. To aid the process of determining the optimal solution a graphical
representation of the constraints has been generated (showing the Feasible Region) as
shown in Figure 3.
a. [Marks = 2] State the decision variables and the equation for objective function.
b. [Marks = 2] How much water (in litres) is consumed during the production of
each tonne of iron ore from the West Mine? Note: show your calculation.
c. [Marks = 2] How much diesel (in litres) is consumed during the production of
each tonne of iron ore from the West Mine? Note: show your calculation.
d. [Marks = 5] State the equations for all applicable constraints.
e. [Marks = 2] What is the value of the optimal solution to this problem and how
many tonnes will be produced from each mine? Also, indicate the binding
constraints.
f. [Marks = 6] What is the allowable change (increase or decrease) in the profit
margin from the West Mine before it changes the current optimal basis/solution?
g. [Marks = 6] The company has been given the option of being able to gain access
to an additional 5,000,000 litres of water for a single (one-time) payment of
$800,000 for the next scheduling period. This payment guarantees to keep the
ongoing price of water the same as it previously was, which therefore does not
affect the ongoing margin received from iron ore produced from either operation.
The additional 5,000,000 litre of water would thus bring total water availability to
60,000,000 litres. If all other parameters remain the same, should the company
take up the offer of an increased water allocation of 5,000,000 litres for a single
(one-time) payment of $800,000 for the next scheduling period? Justify your
answer.

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Sample Exam Paper

Figure 3: Graphical representation of the constraints.

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Sample Exam Paper

4. Table 1 presents the grade-tonnage curve and corresponding (function of gl) quantity of
ore, quantity of waste, average grade of ore, ratio of quantity of ore per unit of material
mined (mc), ratio of recoverable metal per unit of material mined (mr), and the ratio of
recoverable metal per unit of ore (cr). If mining capacity (M) = 3600 tonnes of material
per year, processing capacity (C) = 2600 tonnes of ore per year, and marketing/refining
capacity (R) = 1300 tonnes of metal per year, then:
a. [Marks = 12] Determine balancing (mine-process, mine-refinery, processrefinery) cut-off grades.
, process limiting
, and refinery limiting
b. [Marks = 5] If mine limiting
cut-off grades are 0.15%, 0.18% and 0.28%, respectively, then find the
optimum cut-off grade
.
c. [Marks = 8] Based on the optimum cut-off grade G obtained in (b), determine
the average grade of ore corresponding to this optimum cut-off grade.
Table 1: Grade-tonnage curve and corresponding
,
,
,
,
,
.
Grade Interval
(Cu %)

Quantity
of
Material
(tonnes)

Quantity
of Ore
(tonnes)

Quantity
of Waste
(tonnes)

Average
Grade
(%)

Ratio
mc

Ratio
mr

Ratio
cr

0.00

0.10

1000

0.00

7300

0.48

1.00

0.41

0.41

0.10

0.20

900

0.10

6300

1000

0.55

0.86

0.40

0.46

0.20

0.30

800

0.20

5400

1900

0.61

0.74

0.39

0.52

0.30

0.40

700

0.30

4600

2700

0.68

0.63

0.36

0.57

0.40

0.50

600

0.40

3900

3400

0.73

0.53

0.33

0.62

0.50

0.60

500

0.50

3300

4000

0.79

0.45

0.30

0.67

0.60

0.70

400

0.60

2800

4500

0.83

0.38

0.27

0.70

0.70

0.80

700

0.70

2400

4900

0.86

0.33

0.24

0.73

0.80

0.90

800

0.80

1700

5600

0.90

0.23

0.18

0.77

0.90

1.00

900

0.90

900

6400

0.95

0.12

0.10

0.81

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Sample Exam Paper

5. A multi-mineral ore body consists of 2.6 million tonnes of ore at 2.7% of Cu and 3.00
grams per tonne Au. Long-term plans indicate the exploitation of the deposit through an
underground operation, where ore body will be mined over 5 years (Year 1 to 5).
Gold price with forward sale = 55% of gold production will be sold forward at a price of
A$50 per gram in year 1, with a 2% per year escalation thereafter.
Gold price with spot sale = 45% of gold will be sold at spot prices, averaging at A$40 per
gram.
Copper price = the company is hedging copper price at US$0.9 per lb, during the period
of the production. Also, to avoid uncertainty, the company has also hedged the exchange
rate at A$1 = US$1.03 for the life of operation.
Metallurgical recoveries = 85% Cu and 75% Au;
Concentrate grade = 35% Cu;
The company sells copper concentrate (which also contains Au) at smelter deductions of
25% of the value from concentrate sales.
a. [Marks = 15] If 1 tonne = 2204.62 lb, determine the Net Smelter Return (NSR) and
revenue (A$) in Year 1. As a guide, you may use the following table: (Write your
answer on the answer booklet).
Parameter
Year
Ore production (tonnes)
Average grade - Cu (%)
Metal recovery Cu (%)
Average grade Au (grams per tonne)
Metal recovery Au (%)
Quantity of Cu in concentrate (tonnes)
Concentrate grade (%)
Quantity of Cu concentrate (tonnes)

Quantity of Au in concentrate (grams)


Au grade in concentrate (grams/tonne of
concentrate)
Metal Value
Copper price (US$/tonne)
Exchange rate (A$1 = US$1.03)
Copper price (A$/tonne)
Cu value (A$/tonne of concentrate)

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Value
1

Sample Exam Paper


Parameter

Value

Au price forward (A$/grams)


Au value (forward 55%, A$/tonne of
concentrate)

Au price spot (A$/grams)


Au value (spot 45%, A$/tonne of
concentrate)

Total value (A$/tonne of concentrate)


Metal Deduction and Charges
Smelter deductions (A$/tonne of
concentrate)
Total deductions and charges
NSR (A$/tonne of concentrate)
Revenue (A$)

b. [Marks = 10] The company is expecting a capital investment on mining and


processing equipment at $15 million, $6 million, $5 million, and $3 million from year
1 to 4, respectively. If depreciable life is 5 years, then using the diminishing value
method determine the depreciation schedule from year 1 to 5. You must ensure
recovery of the remaining depreciable value in year 5. Note: the equipment is
expected to go into service beginning of year 1.

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Sample Exam Paper

Relevant Formulae

qw
Qm Qc 1
Qc(1 SR )
qo

g mc

g mr

Qc

C
mc(g)
M

g
mc(g) mc(g )
g g

Qm
(1 SR )

gr

Qr (Qc)(g )( y)

R
mr(g )
g
M
mr(g) mr(g )
g g

gm

c
(p r ) y

f dV
C
gc
(p r ) y
c

R
cr (g )
g cr C
g
cr (g) cr (g )
g g

1
1

~ (g , g , g )
G mc m
m
c
mc
~ (g , g , g )
G mr m
m
r
mr

~ (g , g , g )
G cr m
c
r
cr

~ (G , G , G )
Gm
mc
mr
cr

END OF EXAM PAPER

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f dV
p r
y
R