Incorporating optimal sequence of pushbacks into

final pit selection

Fabian Miranda1*, Cristian Poblete2 and Maria Angelica Gonzalez3
1. Dassault Systèmes GEOVIA, Santiago, Chile
2. Dassault Systèmes GEOVIA, Santiago, Chile
3. Dassault Systèmes GEOVIA, Santiago, Chile

ABSTRACT
The purpose of strategic mine planning is to define the mining business. This definition includes
determining the limit of mining reserves, lifecycle of the mine, production capacity and optimal
extraction plan, among others.
The traditional definition of the limit of an open pit extractable mining resource does not typically
considers aspects as optimal extraction sequence, cut-off grade strategies or variable mine
capacities, limiting the solution to a small number of cases.
This article proposes to consider the problem from another approach, by incorporating analysis of
several scenarios that include optimal sequence of pushbacks in addition to operational restrictions,
use of stocks, cut-off grades and different mine capacities to the final open pit selection.
The main purpose of this work is to create a methodology that allows the inclusion of extraction-
sequences that maximize the value while selecting the final pit, through the optimization of
selection of pushbacks with operational considerations.
The procedure consists of determining the optimal extraction plan for each possible final pit, given
a set of pit-shells obtained by revenue factor or directional pit methodologies. Each possible pit is
assessed under different operational scenarios resulting from the combination of different cut-off
grades, mine production capacities and amount of pushbacks, in order to finally choose the final pit
that provides the mine plan with the best and more robust NPV.
The obtained results allowed visualizing that the best envelope definition, according to the NPV
result of an optimized mine plan, was obtained for a mine capacity of 70 Mt/y and from final pits
with lower tonnages than those obtained with Revenue Factor 1.
This work intends to make the selection of economic envelope more realistic, robust and value
maximizing, with the purpose of providing a better overall view of the business and its information
to support the decision making process

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INTRODUCTION
Strategic mine planning is responsible for aligning the strategic objectives of the company to the
planning process. These strategic objectives may vary depending on the company, but normally, for
a mining project, the objective is to obtain the best economic result from a particular mineral
resource. The most common approach to achieve this objective corresponds to the maximization of
the net present value (NPV), which consists of the progressive temporary discount of cash flows by
applying a discount rate allocated based on the profitability requirements and the risk associated
with the project. (Kear, 2006; Smith, 2012).

Up to now, the best way to ensure NPV maximization in long-term mine planning, is by direct
sequencing of the blocks to be mined, given the operational, geomechanics and geometric
constraints.
The traditional approach, which is still the most used nowadays, divides the solution in consecutive
stages instead of addressing the whole problem; it firstly addresses the spatial aspect, which
includes final pit determination and preliminary phase sequence, and then solves the time issue
associated with mined block scheduling.
According to Dagdelen (2001), the division of the problem is, precisely, what does not guarantee
that the maximum project NPV be reached, because the most frequently used methods to solve the
spatial portion of the problem are based on the use of undiscounted benefits of the blocks to be
extracted, not taking into account the value of money over time. In addition, another disadvantage
of the division of the problem in spatial and time dimensions is the use of non-optimal and
operatively non-feasible sequences in the final pit determination, as is the case of Skin Analysis
methodology proposed by Hanson et al. (2001).
For all the reasons exposed above, the objective of this study is to propose a work methodology that
solves the spatial problem of mine planning from another approach, by means of integrating the
optimal sequence of preliminary phases in the final pit selection. This, considering operational
constraints and evaluation according to NPV and other indicators obtained from an optimized
mining plan which includes multiple design scenarios resulting from the parameter variation
usually considered as fixed, such as mine capacities and an input-to-process criteria applied to cut-
off grades, which will notably increase the number of possible outcomes, in order to make the best
possible strategic decisions.

METHODOLOGY
Prior to the description of the proposed methodology, it is necessary to describe what is considered
as traditional methodology of final pit selection and pushback optimum sequencing. This approach
is necessary in order to compare both ways of solving the problem.

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Traditional methodology
The basis for the final pit selection and pushback sequence in the traditional approach is based on
the methodology of Lerchs and Grossmann (1965) published in the article Optimum Design of Open-
Pit Mines which was commercial implemented by Whittle Programming Pty Ltd. in the mid-1980s
(Alford & Whittle, 1986).
By using a modifier factor to the price of the elements of interest, named revenue factor, different
nested envelopes are obtained which are proportional in size to the economic value of the blocks
after the application of the modifier factor. Authors such as Coleou (1989) and even Lerchs and
Grossmann emphasize the importance of using intermediate envelopes or pushbacks as basis of
mining sequencing and production planning.
From the obtained nested envelopes, it is selected which of them will be either considered as final
pit or as pushbacks as base of the extraction sequence, due to the infeasibility of a sequence of the
type of nested pit by pit. This selection is closely linked to the strategic criteria of the owner
company.
According to Hanson et al. (2001), it is precisely in this selection process that there are different
criteria that mine planning engineers use. For example, one of the criteria for determining the final
pit is simply choosing the pit which revenue factor is 1, what is the same as choosing the nested pit
that maximizes the resources to be extracted today. Another option is to define a percentage of NPV
capture, such as 90%. In this last method, the final pit chosen is the one with a NPV value of 90%
when compared to the final pit that has the maximum NPV. Other methodologies include defining
an upper limit to marginal costs per ton of ore.

Alternative methodology
The methodology proposed in this article is inspired by the constant efforts to improve the strategic
mine planning cycle through the use of tools that allow the generation of work processes that
incorporate the ability to analyze a mine planning problem in a multidimensional way, in order to
make more informed strategic decisions. Based on the work developed by Poblete et al. (2016a),
where a methodology for robust selection of production scales was developed, this work seeks to
incorporate production scales (mine capacity and cut-off grade) in the optimized selection of
pushbacks and of final pit.
The alternative methodology is presented below:
1. Definition of nested pits by modifying the traditional Lerchs and Grossmann algorithm. This
modification consists of restricting the generation of nested pits not only to the marginal cut-off
grade, but also to implement steadily increases of cut-off grades from the marginal cut-off grade.
Thus, different sets of nested pits will be generated for each defined cut-off grade.

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2. Establish a sub-set of nested envelopes for each cut-off grade which was applied in step 1, as
possible final pits. It is recommended that this selection be aligned with the strategic criteria of the
shareholders of the project, such as, for example, NPV maximization, maximizing the size of the
deposit, a predefined life-of-mine, etc.
3. Determine the set of mining design scenarios under which the envelopes chosen in step 2 will be
evaluated. These scenarios include the variation of parameters that are traditionally considered as
fixed in the mine plan definition, such as mine capacity, the number of pushbacks to be selected
and, again, the application of different cut-off grades, but now with the aim of optimizing the
resulting NPV from the extraction sequence.
4. Once possible final pits and different design scenarios under which each pit will be evaluated,
the best set of pushbacks is selected by comparing the mine plans which were generated and
making operational considerations for each configuration. Operational considerations include
minimum expansion and bottom-pushback widths, in addition to setting a maximum sinking rate.
5. Once the previous selection has been performed and the results have been tabulated and saved,
the final pit, its pushbacks and the mine plan that best represent the defined strategic guidelines,
are chosen. At this stage, it can be considered indicators such as NPV, discounted payback, life-of-
mine (LOM), tons of ore to process, tons of metal produced, etc.
6. Finally, the selected scenarios can be subjected to a new optimization process, either by the
methodologies of cut-off grade (Lane, 1988) or Simultaneous Optimization (GEOVIA WhittleTM
module), that consider the value maximization both in the variation of grades as well as in
stockpiles and blends.

Strengths of the methodology

• Incorporate a cut-off grade criterion to the final pit and pushback selection, which will
mean an adjustment in the mineral resource classification. In this manner, smaller and
more efficient mines in the capture of their economic benefits will be obtained.
• The inclusion of more variables in the definition of the final economic envelope, allows
having a panoramic view of hundreds of optimal possible solutions for each scenario,
opening the option of making the best feasible strategic decision.
• Consider the effect of the schedule in the final pit selection, which allows aligning the
spatial definitions with the temporal ones.
• In contrast to the traditional case, where scenarios at the marginal cut-off grade are
assessed, the use of cut-off grades to define the mine plan adjusts the mineral resource
classification in order to prioritize the exploitation of the ore with better grades at the
beginning, for increasing profitability and make more efficient use of investment.

¡Error! No se encuentra el origen de la referencia. shows a comparative analysis of the two

methodologies presented to find the final economic envelope.

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Table 1 Comparison of two methodologies

Aspect Traditional Approach Proponed Approach

Pit-shell Use of marginal cut-off grade to define Use of a set of cut-off grades to define the
definition nested pit-shells nested pit-shells

Extraction Sequence optimization after choosing the It already considers an optimized sequence
sequence final pit

Operational scale Extraction sequence pit by pit Incorporate sinking rates and mining widths

Production scale Invariable mine capacity and marginal Variable mine capacity and stocks, and cut-
definition cut-off grade to define the mine plan off grade strategies to define the mine plan

CASE OF STUDY AND RESULTS

In order to assess the obtained results, the proposed methodology was applied to a real skarn-type
poly-metallic deposit of copper, gold and silver, which mineralization is not disseminated nor
exhibited on a regular shape, thus presenting a challenge to the pushback selection.

Characteristics of the test

Firstly, the test consisted first of generating nested envelopes at a marginal cut-off grade of 0.15% of
Cu equivalent and at five cut-off grade values between 0.25% and 0.65% of Cu, obtaining six sets of
nested pits with their associated tonnages. It is worth noting that the generation of envelopes
restricted by cut-off grade can be carried out by using the traditional Lerchs and Grossmann
algorithm or by applying the methodology of envelope generation based on exploitation starting
points and mining directions, proposed by Poblete et al. (2016). In this case study, the last one was
used.
For this exercise, it is defined as strategic guideline to consider final pits close to Revenue Factor 1.
In general, it is recommended to evaluate a variable number of envelopes for each set; in this case,
this number is 5. Thus, a total of 30 possible final pits are characterized by its tonnage.
Subsequently, design scenarios under which possible final pits were assessed, were determined. For
these scenarios, a fixed plant capacity of 15 Mt and five mine capacities were considered, ranging
from 30 to 70 Mt per year in 10 Mt increments and the same cut-off grade values used in envelope
generation. In this case, scenarios for four and five pushbacks were evaluated. Therefore, for each
possible final pit, 60 different operational scenarios given by the combination of the previous
parameters are tested. Considering 30 possible final pits, 1,800 different planning scenarios are
obtained. It should be noticed that the CAPEX considered per scenario is variable and depends on
the tonnage of the final envelope and of the mine production capacity, taking values from 1,420 to
1,720 MUS$.

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Process automation
GEOVIA WhittleTM and SIMULIA IsightTM software were used to perform the optimal selection of
pushbacks, considering operational restrictions for each of the previous scenarios. SIMULIA
IsightTM is an optimizer tool which allows the automation of a workflow that can contemplate the
iteration of GEOVIA WhittleTM runs, including capture and graphical analysis of the results. All this
is executed in reasonable computational times.

Results
The results obtained were stored in a table as shown in table 2, where the inputs and outputs of
each scenario are highlighted. Specifically, for each configuration of mine capacity, cutoff grade and
final pit tonnage, the net present value (NPV) of the mining plan, life of mine, period of recovery of
investment, among others, were obtained from the combination of pushbacks that maximizes the
NPV of the mine plan. The table with all the results has 1,800 rows, one for each scenario.

Table 2 Extract from the table where results were stored

Ore
Mine Cutoff Final Pit Tonnage
Run N° CAPEX LOM NPV Discounted Optimal
capacity grade Tonnage above
# Pushbacks [MUS$] [y] [MUS$] Payback [y] Pushbacks
[Mt/y] [%] [Mt.] cutoff
[Mt.]
1 30 0.65 4 1,420 514 20 1,165 8 8 13 15 18 134

2 30 0.55 4 1,420 514 20 1,156 8 8 11 14 18 140

3 30 0.45 4 1,420 514 20 1,176 8 8 13 15 18 152

4 30 0.35 4 1,420 514 20 1,179 8 8 13 15 18 166

Figures 1 and 2 show the surfaces of value (NPV), for mining capacities of 50 Mt/y and 60 Mt/y
respectively. Each graph represents 180 planning scenarios, consisting of 30 final pit sizes and 6
cutoff grades for Cu.

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 Figure 1 and 2 NPV Graph for 4 pushbacks and mining rate of 50 Mt/y and 60 Mt/y, respectively

From previous figures, it can be noticed that final pit sizes that show better NPV results are
between 557 Mt and 659 Mt. It is emphasized that the smallest size evaluated corresponds to a pit of
514 Mt and the largest size corresponds to the pit of Revenue factor 1, which size is 743 Mt. The
results obtained with 30 Mt/y and 40 Mt/y show lower values in NPV than those shown in the
figures 1 and 2, while at 70 Mt/y, NPV results were slightly higher than those shown in figure 2 at
60 Mt/y. In Table 3, the results of the best scenarios in NPV are shown, for the five mine capacities
evaluated. Again, it can be seen that the best economic values are obtained at intermediate final
envelope sizes, compared to the extreme sizes of 514 Mt and 743 Mt.

Table 3 Best scenarios in NPV for the five mine capacities evaluated

Ore
Mine Cutoff Final Pit Discounted Tonnage
N° CAPEX LOM NPV Optimal
Run # capacity grade Tonnage Payback above
Pushbacks [MUS$] [y] [MUS$] Pushbacks
[Mt/y] [%] [Mt.] [y] cutoff
[Mt]

10 30 0.35 4 1,445 562 22 1,258 8 8 14 18 21 181

38 40 0.55 4 1,491 562 20 1,814 6 8 14 18 21 150

74 50 0.55 4 1,554 597 21 2,165 6 8 12 17 22 134

109 60 0.65 4 1,610 617 22 2,313 6 8 14 18 23 123

139 70 0.65 4 1,646 597 21 2,352 5 8 14 17 22 104

Figure 3 show the results corresponding to a mine rate of 70 Mt/y for the different values of cutoff
grade of Cu considered. Stands out, the loss of economic value that occurs from the final pit sizes
greater than 659 Mt, especially in the scenarios with marginal cutoff grade (0.15% Cu).

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 Figure 3 Graph of NPV value by cutoff at mine capacity of 70 Mt/y for 4 pushbacks

The best operational scenario, which NPV value is 2,352 MMUS$, corresponds to a final pit of 597
Mt of material with a cutoff grade of 0.65% Cu and a mine production capacity of 70 Mt/year. In
contrast, the final pit at Revenue factor 1, which tonnage is 743 Mt of material, at the same mine
production capacity, the NPV value of this option is 978 MMUS$ for the marginal grade of 0.15%
Cu and 2,157 MMUS$ for a cutoff grade of 0.65% Cu, both less economic value than the best
operational scenario. The comparison of the previous cases is shown in table 4.

Table 4 Comparison of the cases which final pit envelope tonnage is 743 Mt and 597 Mt of material

Ore
Mine Cutoff Final Pit Tonnage
Run N° CAPEX LOM NPV Discounted Optimal
capacity grade Tonnage above
# Pushbacks [MUS$] [y] [MUS$] Payback [y] Pushbacks
[Mt/y] [%] [Mt.] cutoff
[Mt]
133 70 0.65 4 1,646 597 21 2,352 5 8 14 17 22 104

145 70 0.65 4 1,719 743 26 2,157 6 7 15 19 27 122

150 70 0.15 4 1,719 743 26 978 13 7 15 19 27 167

CONCLUSIONS
The methodology proposed in this article allows for obtaining results such as the mine size which
maximizes the value of the mining plan, mine capacity and optimal cut-off grade, in addition to
better selection of pushbacks with operational considerations. In summary, this approach provides
the opportunity to make the most value of the mineral resources of the deposit.
Specifically, this case study allowed for obtaining an economic envelope definition with a value
240% greater than the base case (final pit of revenue factor 1 and marginal grade), for a mine
capacity of 70 Mt/y and 4 pushbacks.
Finally, through the proposed pushback selection criteria, it is possible to obtain the definition of
mineral that leads to the best productive business of the resource, making the selection of the
economic envelope more realistic, robust and value maximizing.

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