Center of Excellence of the Americas, Dassault Systèmes, Chile

May 2016

Impact of the starting point and of the direction of

open pit exploitation on the mining plan
Cristian J. Poblete, María A. González, Joaquín A. Romero, Daniel L. Fuentes

ABSTRACT
When an open pit mining project is assessed based on the net present value, the decisions
made to optimize that indicator have a greater impact on the initial periods due to the discount
rate; therefore, the decision about where to start the exploitation and the sequence orientation is
essential to maximize the performance of the strategic mine plan.
The traditional approach through nested pits consists of an exploitation sequence which is
generated from factors that are applied on the revenue; applying those factors according to price
ranges, determines the sizes of the nested pits.
There is an alternative approach which considers the application of an additional factor related to
the starting point of the exploitation and to the sequence direction; this is the approach which
has been used in this paper, as basis of the evaluation of the value in each point.
By conducting a thorough search of possible starting points, it is possible to generate a surface
of values based on the coordinates of each point and thereby identify areas that would generate
a better performance of the mine plan. Furthermore, it is also possible to obtain a map of
directions of the exploitation progress that maximizes the value for each point, which represents
a guide to select and to generate mining phases.
The aim of this paper is to assess the impact of applying a starting point search, of determining
the exploitation orientation and of selecting a high-performance location, over the value of a
mineral deposit. The results which were obtained can be summarized in net present value
improvement, earlier return on investment and better performance of the strategic mine plan.

INTRODUCTION
The traditional process of Strategic Mine Planning seeks to define the mining operation purpose
and the guidelines to achieve it. The most frequent aim is to maximize the net present value
(NPV), which consists of the progressive discount over time of the cash flows by applying a
discount rate that is assigned based on the profitability requirements and on the risk of the
project (Kear, 2006; Smith, 2012).
Ideally, NPV maximization is achieved by direct sequencing of blocks to be mined, considering
geometric, rock mechanics, technical and operational constrains; however, after many decades
of efforts to solve optimization problems for direct sequencing, the traditional methodology,
which was proposed by Lerchs and Grossmann (1965) and commercially implemented by
Whittle Programming Pty. Ltd. in the mid-80s (Alford & Whittle, 1986), remains the most
commonly used to address the mine planning issue. For further details about other methods to
solve the problem of mine planning, the reader may consult the document Long-term open pit
mine production planning: a review of models and algorithms (Osanloo, Gholamnejad, & Karimi,
2008).
 Center of Excellence of the Americas, Dassault Systèmes, Chile
May 2016

The exploitation sequence is defined by a set of phases which delimit the open pit depth and
also are intermediate pit-shells to reach the final open pit; therefore, the phase selection has a
great impact on the NPV. The purpose of this article is to propose a search procedure and a
selection of phases as of the definition of a starting point for the exploitation and of a sequence
orientation, which will generate a more stable mine plan that considers strategic aspects, in
order to improve the value and cash flow results.

METHODOLOGY
Prior to methodology description, it will be explained two procedures which permit to generate
intermediate pit-shells, namely traditional and alternative methodologies, the latter being the
basis of this study that incorporates the exploitation direction in mining phase generation.

Traditional methodology
The traditional mine planning methodology separately addresses the spatial and temporal
aspects. Whittle (1989) explains the cause to use this approach: “The pit outline with the highest
value cannot be determined until the block values are known. The block (present) values are not
known until the mining sequence is determined; and the mining sequence cannot be determined
unless the pit outline is available”.
The final economic pit-shell definition is based on Optimum Design of Open-Pit Mines (Lerchs &
Grossmann, 1965). The method consists in the maximum closure search of a directional graph
that includes the precedence constraints between each of the blocks to be extracted; the sub-
graph of maximum closure corresponds to the outline of greater undiscounted economic benefit.
The resolution methodology of the graph has been improved through time; for further
information, it is recommended to consult the work of Hochbaum (1997): A new-old algorithm for
minimum cut and maximum flow in closure graphs.
A distinctive feature of the method proposed by Lerchs and Grossmann is that it can be
parameterized by a modifier factor of the block economic value, which can modify the cost (cost
factor) or the price of the elements of interest (revenue factor). This setting permits the
generation of nested pits, which size is proportional to the block economic value after the
application of cost and/or revenue factors. Both Lerchs and Grossmann as Coleou (1989) point
out the use of intermediate pit-shells as pushbacks, which are the basis of the mining scheduling
and of the mine plan generation.
Without delving into the field of mine plan optimization algorithms, it is possible to generate
preliminary production plans by direct sequencing of the nested pits using the methods named
best case, worst case and fixed lead scheduling: best-case scheduling assumes a pit-by-pit
exploitation, which usually is not operationally feasible; worst case scheduling assumes a bench-
by-bench exploitation of the optimal pit, which is rather a pessimistic and operationally not
frequent scenario; finally, fixed lead scheduling represents an intermediate solution that
implements a delay in the exploitation of a fixed number of benches between consecutive nested
pits, which is manually set by the scheduler (library help of GEOVIA Whittle™).
As Hanson, Hodson & Mullins (2001) pointed out, there are different criteria that planning
engineers use to select the final pit and the intermediate phases, which will be the basis of the
scheduling and of the production plan. According to the literature, the traditional mine planning
methodology has not addressed the generation of nested pits or of preliminary initial phases,
 Center of Excellence of the Americas, Dassault Systèmes, Chile
May 2016

which determine most of the NPV of a mining project, because of the first periods are the most
relevant ones on the discounted cash flow analysis.

Alternative methodology
The methodology proposed in this paper is based on the modification of the Lerchs and
Grossmann methodology by incorporating a starting point and a direction for the mining
exploitation, features that can be incorporated into the strategic mine planning software GEOVIA
WhittleTM by modifying the value of the revenue factor, in order to include spatial considerations
to the creation of nested pits and, therefore, to the mining sequence, as shown in the figure.

Figure 1 Generation diagram of directional pits

Modifications performed to the block value are based on the relative location of the exploitation
starting point (selected by the mining planner) with respect to the block model origin and of the
blocks with respect to selected starting point. In general terms, the expressions which are
configured indicate that, from the starting point and considering a mining direction with a
tolerance of ± 90 degrees, the revenue obtained from blocks is radially decreased in the defined
orientation from the selected point onwards. Specific details of the expressions used to add the
starting point and the mining direction to the generation of nested pits, may be consulted in the
software library help of GEOVIA Whittle™.

Comparison of methodologies of generation of intermediate pits

As a comparison of both methodologies, groups of nested pits can be represented, where it is
possible noting that the final value of the sequence for a set of pits without preferential direction
does not guarantee obtaining a better value, because the pit-shell generation based on a
revenue factor does not consider the time effect on the sequence nor the spatial growth of
phases that assure the mineral availability for all periods, as shown in the figure.
 Center of Excellence of the Americas, Dassault Systèmes, Chile
May 2016

Figure 2 Comparison of sequences of directional intermediate pits

Process Automation
Usually, it is not possible to previously know the best exploitation starting point and the best
mining direction; because of that, it has been performed an iteration process of Whittle runs that
allows the assessment of eight mining directions based on cardinal points (N, NE, E, SE, S, SW,
W, NW) for a regular point grid located on the topography of the block model. This represents
the generation of thousands of scenarios, exercise that is possible in an affordable
computational time (a few hours) from the automation of a workflow in SIMULIA Isight TM
software, which comprises the intensive execution of GEOVIA WhittleTM software.

Workflow methodology of selection of phases

The automated workflow will allow generating pit-by-pit resulting vectors for all combinations of
starting points and of mining directions that create one or more nested pits.
These resulting vectors contain the generation of pit-shells for each direction, which are
summarized in the following indicators: ore and waste tonnages; stripping ratio; mean grades;
best case, worst case and fixed lead case NPVs, among other data that will be useful to define
the scenario that maximizes the value horizon of the mining project. It is also considered the
application of basic statistics on resulting vectors, such as minimum and maximum values,
means, medians, quartiles and standard deviations, which allow the definition of isovalue maps
or surfaces of those statistical values on the analyzed surface of the block model. These maps
allow the assessment of robustness criteria based on the philosophy of Taguchi (Dean & Unal,
1991), where it will be preferred to choose points that maximize the value in low variability areas.
Once the point and the direction are selected, the best combination of pushbacks is chosen in
order to select a set of phases which permits the generation of a preliminary optimized plan.
 Center of Excellence of the Americas, Dassault Systèmes, Chile
May 2016

Figure 3 Methodology of workflow of starting point selection and of intermediate pit direction

Strengths of the methodology

The phase selection methodology proposed in this paper uses the generation of intermediate
pits from a start point and a direction, which intends to cover some points of weakness of the
traditional methodology, as follows: In the first place, the traditional methodology generates
nested pits from revenue factors that prioritize high-grade ore at low depths at various locations,
producing small pits which do not permit an operational feasible scale. This is known as the gap
problem. Adding a mining direction diminishes this problem, as material is being mined
regarding direction rather than proximity to the topography. As shown in the example of the eight
directions, it is possible to find a set of pits that improve the mine plan outcome. Besides, the
generation of increasing sizes in a marginal increment of controlled stripping ratio minimizes the
impact on cash flow as result of progress between phases.
 Center of Excellence of the Americas, Dassault Systèmes, Chile
May 2016

In addition, defining the best start of an exploitation has strategic considerations, because key
features of an operation can be evaluated and controlled, such as: the best plant location, the
main waste dumps, accesses, closeness to urban centers and thus to consider environmental
impacts of the operation, for example: particulate matter, vibration and/or noise, or the conditions
that can make the exploitation easier, given the topography characteristics. The methodology
suggested by this work covers this weakness allowing to visualize not only the best starting area
but also to consider any (restricted) location on the topography and its effect on hauling
distances.
Finally, when semi-concentric nested pits are generated, the exploitation progress between
phases requires several production headings in different directions; it is also required to have
control of the minimum widths to deepen the exploitation in an operationally feasible way; this is
usually taken into consideration in design stages (Caccetta & Hill, 2003), which ends in the
modification of the optimal phases to generate operational mining phases and thus economic
value is lost. Generation of directional phases reduces value loss, since the orientation of the
operation is consistent with the direction of progress between phases and, consequently,
produces shorter distances between exploitation headings, which can mean a cost reduction
and/or the simplification of the operation.

RESULTS
The results of this methodology have been evaluated with information from a real copper skarn
deposit, whose mineralization characteristics make complex the selection of pits by the
traditional methodology, because the deposit presents areas of high and low grades at different
depths and locations, which generates scenarios of several non-operational pits and abrupt
jumps of phases which affect the plan performance that is reflected in cash flow.
The exercise included 200 points in eight directions, which generated 1600 scenarios, allowing
the capture of the best direction for each point and thus the present value obtained from the plan
schedule with that set of pits. With the obtained results, value surfaces were generated that
allowed to observe two zones in which the value of the plans is maximized. Then, the
robustness of the zones was evaluated by choosing a point that maximizes the results and that
presents low variability.
As shown in figure 4, there are two high value zones regarding maximum attainable NPV.
However, regarding average NPV for every nested pit, the northern high value zone was
selected. As the referred figure shows, in the selected zone the optimal mining direction is from
west to east. From the chosen point, a selection that combines the best set of phases is applied
and a production plan is run.
The results of this plan are shown in figure 5, in which the optimized scenario with the starting
point, mining direction and chosen phases shows a plan with higher initial mean grades and less
use of stockpile for initial periods than a traditional mine plan produced using non-directional pit
shells (but the same final pit) and identical mining and processing rates. Increased cash flows in
initial periods due to higher average grade and reduced re-handling costs account for an
improvement of 7.2% respect to the NPV.
It is worth noting that the proposed methodology presents a steady growth of the cash flow,
which guarantees access to working capital, anticipating the investment return and reducing the
option of losing liquidity. This effect is the result of the selection of phases with a controlled
 Center of Excellence of the Americas, Dassault Systèmes, Chile
May 2016

stripping ratio, which is a quality that belongs to the generation of intermediate pits with
directional growth.

Figure 4 Graphs of NPV isovalue and directions of exploitation by assessed point

Figure 5 Comparison of production plans

Figure 6 Comparison between cash flows and accumulated discounted cash flows (DCF i.e. NPV)
 Center of Excellence of the Americas, Dassault Systèmes, Chile
May 2016

CONCLUSIONS
The impact of the selection of the exploitation starting point has operational implications,
including some strategic definitions such as minimization of hauling distances; plant, waste
dumps and access locations; proximity to populated areas; and environmental impact
minimization of the exploitation, among others.
Besides, assessment and search for a good starting point with directional phases has proven a
positive effect not only on a plan implementation and its result reflected in the NPV, which is a
measurable characteristic, but also on a qualitative improvement in cash flow performance,
generating a growing trend, which favors the anticipation of the investment return that
guarantees the working capital and thereby minimizes the risk of liquidity lack.
This work shows the use of commercial tools which permit to perform studies that some years
ago were not possible in reasonable computational times. The incorporation of these
technologies allows carrying out advanced analysis and incorporating robustness to the
definitions of strategic mine planning.

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Whittle's library help: Nodes and menu commands > Nodes > Analyses > Spider Graph > Schedule tab. GEOVIA
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