Comparison of NPVS & DBS

A Case Study in the Application of SimSched DBS

18th Sept 2017

Topics Covered
• Background to Case Study
• Optimisation Parameters
• Pit Design & Reserves
• Stage Design Concepts
• Schedule drivers
• Operational constraints
• Comparison of NPVS & DBS
• Main Objectives
• Optimisation methodology
• Results
• Conclusions
Case Study: Optimisation Parameters
Units Value Comments
Mining Cost US$/t 2.0/2.25 Oxide = 2.0, Fresh = 2.25
Depth Increment US$/t/10m 0.03
Milling Cost US$/t ore 10.52
G&A US$/t ore 1.0
Process Recovery % 90.0
Royalty % 4%
Freight & Refining US$/Oz 6.50
Community Charge US$/Oz 6.25
Payable Gold % 99.9
Inter-ramp Slope Angle Degrees 45/55 Oxide = 42 to 45, Fresh = 52 to 55
 Case Study: Final Pit Designs

• One large open pit but with two distinct zones (East & West)
• Bulk mining approach – simple ore body, simple mining operation
Pit Design Reserves (Revenue Factor 0.84)
Initial Pushback Concept (FS Study)
 Case Study: Main Drivers to Pit Sequence
• Grade of East Pit is significantly higher than West Pit Pit (1.33 vs 1.04)
• Strip ratio for East Pit is higher than West Pit (4.6 vs 3.6)
• East Pit dips to the east at around 35 degrees, which results in a
moderate increase in strip ratio with depth.
• West Pit is a relatively flat lying orebody with a less defined structure
• West Pit has been mined previously near surface, consequently has a
low initial stripping ratio.
• Oxide from the East Pit will be stockpiled for future use
• High grading policy to be used to maximise initial revenue
Case Study: Schedule Summary
 Initial 15 Mt pre-strip

 6.5 Mtpa mill ore feed

 Ore feed up to 1.6g/t+ in years 2-4, thereafter declining

 Mining 55 Mtpa total rock to year 4, thereafter 25 Mtpa

 Ore types: oxide, Sulphide upper and lower

 Low grade stockpile augments ore feed year 5+

 11 year mine life

Case Study: Main Objectives
• Determine optimal pit limit @ 1200 US$/Oz
• Determine optimal cut-off grade policy
• Apply Constraints
• Maximum mining rate of 60 Mtpa
• Sustain Mill throughput of 6.5 Mtpa
• Limit sinking rate to 9 benches/year
• Maintain a minimum expansion width of 50m
• Define suitable expansion stages
Objectives in Comparing NPVS & DBS
Optimisation software packages such as Whittle and NPVS dominate the market at
the moment and have become industry standards for project evaluation.
However, it has been recognised for a long time (40+ years) that the reliance on the
Lerch-Grossman (LG) algorithm for pit optimisation has a number of serious flaws.
These have largely been overcome in SimSched DBS by adopting an entirely new
mathematical solution.
This study attempts to quantify the differences between NPVS and DBS by way of a
case study. This case study has been selected as it highlights a number of
operational issues such as mining width, sinking rate and cut-off grade
optimisation.
The Standard LG Approach;
Pit Optimisers such as NPVS that use the Lech-Grossman algorithm to
determine the pit limit and mining sequence typically follow a series of steps
that consist of;

• Pit limit optimisation (LG)

• Pushback design (PB)
• Scheduling (SCH)
• Cut-off optimisation (MFO)

This can potentially lead to sub-optimal solutions as the schedule is driven by

the stage designs, which are in turn driven by the LG solution. Since the LG
solution is limited to the optimisation of block value it is very difficult to deal
with operational issues such as blending and stockpiling at the optimisation
stage.
SimSched DBS Approach;

The approach adopted by SimSched DBS is to solve the schedule optimisation problem in a single
step and hence produce more realistic solutions. This removes the need to generate suboptimal
stage designs (pushbacks) or post process the schedule to optimise the cut-off grade strategy.
As per seen previously , there are a number of features in DBS that are significant (not discussed in
detail in this study) such as;
• Surface Base Algorithm – Avoids slope errors
• Applying geometric constraints
• Applying operational constraints, such as blending

By comparing the results from NPVS and DBS in terms of project value (NPVS) and practicality of the
mining sequence it is hoped that the value the integrated approach adopted by DBS can be
assessed.
 500
NPVS Results
NPVS Results – Base Case with 9 Bench Sinking Rate and 50m Cut-width
1,000 Pit Limit
Ore Waste NPV @ 8% selected at a
450 900
Revenue factor
400 800
of 0.84

350 700
Total Rock tonnes (millions )

300 600

NPV
250 500

200 400

150 300

100 200

50 100

0 -

Revenue Factor
NPVS Sensitivity Analysis – Stages & Sink Limit
Bench Optimisation Results Percentage Gain/Loss
Max Sinking Cut-Back LG PB SCH MFO
Case Pushbacks Limit Width NPV8 NPV8 NPV8 NPV8 PB % SCH % MFO %

9PB Pit50 W50 9 9 50 880 723 697 727 -18% -4% 4%

11PB Pit50 W50 11 9 50 880 744 716 716 -15% -4% 0%
13PB Pit50 W50 13 9 50 880 687 669 681 -22% -3% 2%
21PB Pit50 W50 13 9 50 880 687 669 681 -22% -3% 2%

9PB Pit50 W50 9 11 50 880 723 703 730 -18% -3% 4%

11PB Pit50 W50 11 11 50 880 744 721 746 -15% -3% 3%
13PB Pit50 W50 13 11 50 880 687 667 698 -22% -3% 5%
21PB Pit50 W50 21 11 50 880 687 667 698 -22% -3% 5%

9PB Pit50 W50 9 13 50 880 723 708 735 -18% -2% 4%

11PB Pit50 W50 11 13 50 880 744 727 749 -15% -2% 3%
13PB Pit50 W50 13 13 50 880 687 671 681 -22% -2% 1%
21PB Pit50 W50 21 13 50 880 687 671 681 -22% -2% 1%
NPVS Sensitivity Analysis – Stages & Sink Limit
Bench Optimisation Results Percentage Gain/Loss
Max Sinking Cut-Back LG PB SCH MFO
Case Pushbacks Limit Width NPV8 NPV8 NPV8 NPV8 PB % SCH % MFO %
9PB Pit50 W30 9 9 30 880 721
11PB Pit50 W30 11 9 30 880 775
13PB Pit50 W30 13 9 30 880 719 693 724 -18% -4% 4%
21PB Pit50 W30 21 9 30 880 740 707 775 -16% -4% 10%

9PB Pit50 W30 9 11 30 880 721 697 742 -18% -3% 6%

11PB Pit50 W30 11 11 30 880 775 747 775 -12% -4% 4%
13PB Pit50 W30 13 11 30 880 719 701 721 -18% -3% 3%
21PB Pit50 W30 21 11 30 880 740 714 764 -16% -4% 7%

9PB Pit50 W30 9 13 30 880 721 701 739 -18% -3% 5%

11PB Pit50 W30 11 13 30 880 775 750 783 -12% -3% 4%
13PB Pit50 W30 13 13 30 880 719 705 722 -18% -2% 2%
21PB Pit50 W30 21 13 30 880 740 724 736 -16% -2% 2%

No Solution Found
Conclusions from NPVS Runs
• The formation of the pushbacks (stages) reduces the theoretical maximum NPV from the LG
Solution by 18 to 20 %. Note that the pushbacks are valued by assuming just in time mining.
• Scheduling of the pushbacks with the sinking rate constraint in the Scheduler (SCH) typically
reduces the NPV by a further 2 to 4%. Other scheduling constraints (objectives), such as strip
ratio, can also be defined if required. The Objective function can be NPV or one of the specified
Objectives.
• Optimising the cut-off grade in MFO (ie using stockpiles) can increase the NPV by 2 to 10%.
Highest gains are seen with more pushbacks and a smaller cut-back width.
• For the Base Case (9 bench sinking limit and 50m cut-width) the maximum NPV was 727. By
increasing the number of pushbacks to 11, and increasing the sinking rate to 13 benches/year, it
is possible to raise the NPV to 749.
• NOTE: Increasing the number of pushbacks can have a negative impact on NPV due to the
influence of the sinking rate limit. There is no advantage in increasing the number of pushbacks
beyond 13 with a 50m cut-width
Conclusions from NPVS Runs (continued)
• Reducing the cut-width to 30m means that with a 9 bench sinking limit solutions cannot
be found unless there are 13 or more pushbacks. This clearly indicates that the sinking
rate constraint is dominating the solution and in fact in some cases the production
target cannot be met and a no solution found will be found.
• The maximum NPV of 783 was achieved with 11 pushbacks and a sinking rate of 13
benches/year. This NPV is still approximately 100 less than the LG solution but
demonstrates the principles behind the constraints of sinking rate and cut-width.
Comparative Results Using SimSchedDBS
Bench Optimisation Results Gain/Loss NPVS Gain/Loss
Sinking Cut-Back Pit Base No Stocks Stocks
DBS Scenario Limit Width Width NPV8 NPV8 % NPV8 %
8/4 9 50 50 710 749 5% 727 3%
10/6 11 50 50 723 757 5% 746 1%
11/7 13 50 50 734 766 4% 749 2%

Bench Optimisation Results Gain/Loss NPVS Gain/Loss

Sinking Cut-Back No Stocks Stocks
DBS Scenario Limit Width NPV8 NPV8 % NPV8 %
9/5 9 30 50 718 753 5% 707 7%
14/12 11 30 50 726 760 5% 775 -2%
15/13 13 30 50 732 764 4% 783 -2%
Conclusions from DBS Scenarios
• The addition of stockpiling increases the NPV8 by around 4%. This is very similar to the
results achieved with NPVS
• Increasing the maximum vertical sinking rate limit from 90m/year to 130m/year
increases the NPV by 3.4%. Again this is very similar to the result achieved with NPVS.
• Decreasing the cut-width from 50m to 30m increases the NPV by 1.1%. This parameter is
not regarded as significant in this test as decreasing the cut-width causes issues with
sinking rate.
Mining Sequence – Is it Practical?
• The sequential methodology of NPVS means that the schedule is based on a set of
pushbacks that have been partially conditioned for practicality. This includes controlling
cut-width, slope angles, as well as pushback size and controls that seek to eliminate
isolated blocks. The final (engineered) pushbacks can usually be adapted without
excessive modification.
• The methodology of DBS eliminates the need for pushbacks and is designed to produce
pit surfaces for each scheduling period that obey the mining constraints. The question of
whether pushbacks are still required has yet to be resolved. It is possible they could be
reverse engineered from the period surfaces?
• A subsequent presentation will cover this question of whether you can practically design
a mine from period surfaces only.
Example of a DBS Mining Sequence

2 1

1
2

3
3 4
2
Comparison of Mining Sequences

DBS
NPVS
 DBS Schedule

NPVS Schedule
Conclusions
• The overall pit size is very similar between NPVS and DBS. The DBS pit is however slightly
smaller with the pit depth reduced due to controls on pit base size.
• The evaluated project value at an 8% discount factor was within 3% when you compare
schedules. Note that you have to be careful when comparing due to how discounting is
applied in NPVS and there was also an issue at the time with reclaiming stockpiles in DBS
where they were only reclaimed after the mine was depleted.
• DBS Schedule allows the West Pit to be mined earlier which reduces the initial pre-strip
by around 10 Mt and also reduces the amount of material that is stockpiled.
• Both solutions require further manual adjustment due to isolated “fragments” that are
not practical to mine.
What Value Does DBS Add?
• The step wise solution of Whittle and NPVS can result in a significant loss in value due
to sub-optimal expansion stages (pushbacks) and excessive stockpiling after the
application of cut-off grade optimisation.
• These issues are resolved when using DBS by circumnavigating the need to design
stages and the inclusion of the time value of money and stockpiling in the Direct Block
Scheduling logic.
• DBS provides additional constraints at the pit optimisation stage such as minimum pit
bottom dimensions and blending. These will necessarily lead to alternative scheduling
solutions that are likely to increase project value.
• Running DBS alongside other solutions (Whittle, NPVS etc) provides a check method
and may highlight opportunities where there are differences.
Vision for DBS
• Simple import tools for model setup (regularised or sub-cell models)
• Intuitive interactive tools for data manipulation
• Semi-automated/intelligent tools for clean-up of DBS period stages
• Reverse engineering of mining stages
• Built in tools to deal with modelling dilution
• Integration with ramp optimisation tools (eg Minemap)
• Seamless integration with downstream scheduling tools