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Cutoff grade optimization algorithm with stockpiling option for open pit
mining operations of two economic minerals

Article  in  International Journal of Surface Mining Reclamation and Environment · September 2005

DOI: 10.1080/13895260500258661

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International Journal of Surface Mining, Reclamation and Environment
Vol. 19, No. 3, September 2005, 176 – 187

Cutoff grade optimization algorithm with stockpiling

option for open pit mining operations of two
economic minerals

M. W. A. ASAD*

Department of Mining Engineering, NWFP University of Engineering

and Technology, Peshawar, Pakistan

Lane’s theory of cutoff grade optimization maximizes the Net Present Value
(NPV) of an open pit mining operation with a declining effect as the deposit
moves toward exhaustion. This declining effect of NPV defines dynamic cutoff
grades, i.e. higher cutoff grades in the early years of mine life and lower cutoff
grades in the later years. This phenomenon allows the creation of stockpiles with
material between the lowest (breakeven) and optimum cutoff grades for
processing during later years, when it becomes economical. As an extension to
Lane’s original theory of cutoff grades in deposits of two economic minerals, the
management, i.e. supplies of material from the mine to the stockpile and from
the stockpile to the processing plant, is addressed through the development of a
cutoff grade optimization algorithm with option to stockpile. The benefits of the
methodology are elaborated in a hypothetical case study.

Keywords: Optimization; Optimum cutoff grades; Net present value (NPV)

1. Introduction
Cutoff grade is defined as the grade, which discriminates between ore and waste (Dagdelen 1992).
The material in the deposit with grade higher than cutoff grade is ore, which is sent to the
processing plant; the material below the cutoff grade is sent to the waste dump (Dagdelen 1992,
1993). However, it is critical that the material classified as waste today could become economical
to be processed in future.
Cutoff grade optimization theory supports the ultimate objective of a mining operation through
maximizing the Net Present Value (NPV) (Dagdalen 1992). However, the NPV declines as the
material is mined, processed and refined year by year (Lane 1964, 1984, 1988, Dagdelen and
Mohammad 1997, Mohammad 1997). Since, the definition of cutoff grade in a given year is
dependent upon NPV, it also declines (i.e. cutoff grades are dynamic rather than static or
constant) throughout the life of the mine (Mohammad 2002, 2003). This inherent nature of cutoff
grade optimization theory leads to the provision of stockpiles of low-grade ore, i.e. material below

*Email: mwaasad@nwfpuet.edu.pk
International Journal of Surface Mining, Reclamation and Environment
ISSN 1389-5265 print/ISSN 1744-5000 online Ó 2005 Taylor & Francis
http://www.tandf.co.uk/journals
DOI: 10.1080/13895260500258661
 Cutoff grade optimization algorithm 177

optimum cutoff grade in the early years of mine life is processed later on when it becomes
economical (Lane 1988). This further enhances the NPV of a mining operation.
The management of stockpiles of low-grade ore is possible using the following two options
(Mohammad 1997, Mohammad and Khan 2004).

1. The stockpile is utilized parallel to the mining operation. This means that material is sent to
the processing plant either from the mine or stockpile. This decision is based on the overall
profitability of the operation.
2. The stockpile is utilized after the mine is exhausted. This simplifies the decision making,
since the stockpile acts as an additional pushback, where all available material is
economical to process. However, the high-grade material in the stockpile is utilized earlier
than the low-grade material.

In this study, the ease of operation for the second case becomes a reason of choice for the de-
velopment of the cutoff grade optimization algorithm with a stockpiling option for deposits of two
economic minerals. The case study of a hypothetical copper – gold deposit is presented, where the
effect of introducing a stockpiling option in mine planning is demonstrated with an increase in NPV.

2. Methodology
Cutoff grade optimization model considers an ideal open pit mining operation, consisting of mining,
processing and refining stages (Lane 1964). The refining stage is further divided into two refineries in
the deposits of two economic minerals with an additional refinery for the second mineral (Lane 1984).
The following notations are defined (Lane 1984, Mohammad 1997) for a better understanding
of the steps of algorithm.

i period (year) indicator

N mine life (years)
P profit ($/year)
M mining capacity (tons/year)
C milling (concentrating) capacity (tons/year)
R1 refining capacity of mineral 1 (tons or lb or oz of product 1/year)
R2 refining capacity of mineral 2 (tons or lb or oz of product 2/year)
S1 selling price of mineral 1 ($/ton or lb or oz of product 1)
S2 selling price of mineral 2 ($/ton or lb or oz of product 2)
r1 refining cost of mineral 1 ($/ton or lb or oz of product 1)
r2 refining cost of mineral 2 ($/ton or lb or oz of product 2)
m mining cost ($/ton of material mined)
c milling (concentrating) cost ($/ton of ore)
sh stockpile handling cost ($/ton of material moved)
f fixed costs ($/year)
y1 metallurgical recovery of mineral 1 (%)
y2 metallurgical recovery of mineral 2 (%)
d discount rate (%)
Qm tons of material mined (tons/year)
Qc tons of ore processed (tons/year)
Qr1 tons or lb or oz of mineral 1 refined (tons or lb or oz of product 1/year)
Qr2 tons or lb or oz of mineral 2 refined (tons or lb or oz of product 2/year)
178 M. W. A. Asad

2.1. Problem statement

The objective function in the cutoff grade optimization problem is to maximize the NPV of the
mining operation subject to mining, milling and refining capacity constraints, which can be
represented mathematically as follows:

X
N
Pi
Max NPV ¼ ð1Þ
i¼1 ð1 þ dÞi

Subject to:

Qm
M ð2Þ

Qc
C ð3Þ

Qr1
R1 ð4Þ

Qr2
R2 ð5Þ
here

Pi ¼ ðS1  r1 ÞQr1 þ ðS2  r2 ÞQr2  cQc  mQm  f ð6Þ

The cutoff grade of both mineral 1 and mineral 2 dictates the quantity mined, processed and
refined in a given period i and, accordingly, the profit becomes dependent upon the definition of
cutoff grade. Therefore, the solution of the problem lies in the determination of optimum cutoff
grades in a given period, which ultimately maximizes the objective function.
The grade–tonnage distribution is two-dimensional for the case of deposits of two economic
minerals (Lane 1984, Mohammad 1997, 2003), as shown in figure 1. Instead of a curve, the
distribution is a surface and may be represented by a series of contours. The cutoff is a boundary
between the ore and the waste, and therefore it is a line. The simplest way to specify a cutoff line is
by means of its intercepts, g1 and g2, on the grade axes. The value g1 is actually the cutoff grade for

Figure 1. Two-dimensional grade–tonnage distribution of the deposit.

 Cutoff grade optimization algorithm 179

mineral 1 in the absence of mineral 2 and g2 is the cutoff grade for mineral 2 in the absence of
mineral 1. Therefore, the problem of determining an optimum cutoff policy for a deposit of two
economic minerals is in fact the determination of the sequence of pairs of values for the cutoff
intercepts g1 and g2 that maximize the NPV of operation (Lane 1984, Mohammad 1997, 2003).

2.2. Problem solution

The grid search technique was used to solve this problem of determining the optimum values of
intercepts g1 and g2 that maximize NPV. This technique is iterative and starts with an initial guess
of g1 and g2 and then progresses by generating a sequence of new estimates. Each new estimate
offers an improvement over the previous one. The attributes of the grid search technique, which
become a reason for its choice in this study, include the following (Ataei and Osanloo 2004).

1. It ensures reduction in the uncertainty of solution to the objective function by considering

all possible points in the grid near the estimated solution.
2. The considered estimates or points in the grid attempt to determine the direction of search
in which the maximum value of the objective function is expected.
3. Its iterative nature is better suited to calculations by computer.
4. The technique is general and applicable comprehensively, even if the second mineral is of
minor importance.

Assume that the grade tonnage distribution of the deposit consists of K individual grade
categories or increments of mineral 1, which is presented as:




g1 ð1Þ; g1 ð2Þ ; g1 ð2Þ; g1 ð3Þ ; . . . ; g1 ðK  1Þ; g1 ðKÞ

Therefore the deposit consists of M individual grade categories or increments of mineral 2 for
each grade category or increment of mineral 1, which is presented as:




g2 ð1Þ; g2 ð2Þ ; g2 ð2Þ; g2 ð3Þ ; . . . ; g2 ðM  1Þ; g2 ðMÞ

Consequently, for each grade category of mineral 1 and M grade categories of mineral 2, there
exist t tons of material.
In general, if grade category [g1 (k), g1(k + 1)] of mineral 1 is represented as k*, and the lower
grade in k*, g1(k) is considered as cutoff grade of mineral 1. Accordingly, if grade category [g2 (m),
g2(m + 1)] mineral 2 corresponding to k* is represented as m*, and the lower grade in m*, g2(m) is
considered as cutoff grade of mineral 2.
This leads to the following four calculations.

1. Ore tons, i.e. tons above cutoff grade of mineral 1 and mineral 2, represented as To:

X
K X
M
To ðk ; m Þ ¼ tðk;mÞ ð7Þ
k¼k m¼m

2. Waste tons, i.e. tons below cutoff grades of mineral 1 and mineral 2, represented as Tw:
 
kX X
1 m 1
Tw ðk ; m Þ ¼ tðk;mÞ ð8Þ
k¼1 m¼1
180 M. W. A. Asad

3. Average grade of mineral 1, represented as gavg1:

 g ðkÞ þ g ðk þ 1Þ
PK PM 1 1
k¼k m¼m tðk; mÞ
2
gavg1 ðk Þ ¼ ð9Þ
To ðk ; m Þ
4. Average grade of mineral 2, represented as gavg2:
XK XM  g2 ðmÞ þ g2 ðm þ 1Þ

k¼k m¼m
tðk; mÞ
2
gavg2 ðm Þ ¼ ð10Þ
To ðk ; m Þ

Now,

Qc ¼ C; if To > C
ð11Þ
Qc ¼ To ; otherwise
Similarly,
 
Tw
Qm ¼ Qc 1 þ ð12Þ
To
Qr1 ¼ Qc gavg1 y1 ð13Þ
Qr2 ¼ Qc gavg2 y2 ð14Þ

If it takes time T to mine the next Qm of material, then the profit realized from Qm at the end of
time T can be achieved by substituting equations (13) and (14) into equation (6):




  
ðS1  r1 Þgavg1 y1 þ ðS2  r2 Þgavg2 y2  c Qc
P¼ ð15Þ
mQm  fT

However, the objective function is to maximize the NPV of future profits. Assuming that V is
the maximum possible present value of future profits at time zero and W is the maximum possible
present value of future profits (pT+1 to pN) to be obtained from reserves after mining next Qm of
material, i.e. in time T, then the scenario can be presented as shown in figure 2.
Knowing the discount rate d:
pTþ1 pN
W¼ þ  þ ð16Þ
ð1 þ d ÞTþ1 ð1 þ d ÞN
PþW
V¼ ð17Þ
ð1 þ d ÞT

Figure 2.
 Cutoff grade optimization algorithm 181

The difference of V and W represented as v is actually the increase in present value achieved by
mining the next Qm of material. Since T is short interval of time, equation (17) can be written as:
v ¼ ðV  WÞ ¼ P  dVT ð18Þ
Substituting equation (15) into equation (18) yields the basic present value expression, which is
used for calculation of optimum cutoff grades:
2


  3
ðS1  r1 Þgavg1 y1 þ ðS2  r2 Þgavg2 y2  c Qc
v¼4 5 ð19Þ
mQm  ð f þ dVÞT

The time T is defined by the limiting capacity of any of four stages of the mining operation,
which introduces four cases depending upon the actual constraining capacity. Therefore, it
changes as follows depending upon whether mining, milling, refinery of mineral 1 or refinery of
mineral 2 is limiting the operation, respectively:

Qm
T¼ ð20Þ
M

Qc
T¼ ð21Þ
C
Qc gavg1 y1
T¼ ð22Þ
R1

Qc gavg2 y2
T¼ ð23Þ
R2

Substituting equations (20)–(23) into equation (19) yields:

2

   3
ðS1  r1 Þgavg1 y1 þ ðS2  r2 Þgavg2 y2  c Qc
6 7
vm ¼ 4 h   i 5 ð24Þ
f þ dV
 m þ M Qm

2 28   9 33
< ðS1  r1 Þgavg1 y1 þ ðS2  r2 Þgavg2 y2 =
64   Q 57
6 ; c 7
vc ¼ 6 :  c þ fþdV 7 ð25Þ
4 C 5
½mQm 
228   9 3 3
< S1  r1  f þ dV gavg1 y1 =
R
vr1 ¼ 44 1
Q 5  ½mQm 5 ð26Þ
:  ; c
þ ðS2  r2 Þgavg2 y2  c

228  9 3 3
< ðS1  r1 Þgavg1 y1 =
vr2 ¼ 44    Q 5  ½mQm 5 ð27Þ
: þ S2  r2  f þ dV gavg2 y2  c ; c
R2
182 M. W. A. Asad

Now, for any values of g1 and g2, it is possible to calculate vm, vc, vr1 and vr2. The minimum of
these four values is always associated with the constraining capacity. Hence, the objective function
is maximized as:

vmax ¼ Max½Minðvm ; vc ; vr1 ; vr2 Þ ð28Þ

In practice, the optimum values of g1 and g2 are calculated with the primary grid of 9 6 9 cells.
The maximum is then overlaid by a finer grid with 6 6 6 cells covering the four original cells,
which surround the maximum point. Finally, this step is repeated around a new maximum. The
cutoff grades obtained after this step of the grid search technique are the optimum cutoff grades.
This gives an accuracy of 1 in 81, which involves calculating a total of about 200 grid point values.
Once the optimum values of g1 and g2 are established, the material above the optimum cutoff
grade in the deposit is sent to the processing plant and that below the optimum cutoff grade is sent
to a waste dump.

2.3. Grade tonnage distribution of stockpiles

If a mining operation chooses the strategy of creating stockpiles, the mineralized material with
grades between the breakeven and optimum cutoff grades, called the intermediate grade material,
is sent to the stockpile during the life of the mine.
The tons of waste, as defined by the optimum cutoff grade of mineral 1 and 2 in a given year and
determined using equation (8), are split into two categories:

1. the tons of waste below the breakeven cutoff grade will never be economical and hence sent
to the waste dump;
2. the tons of waste between the breakeven cutoff grade and the optimum cutoff grade become
the intermediate grade material and hence sent to the stockpile.

Note that the grade categories of stockpile are arranged according to the original grade categories
of the deposit between the breakeven and the optimum cutoff grades of mineral 1 and 2 as
mentioned in section 2.2.
This creation of stockpiles continues throughout the life of a mine. Once the mine is exhausted,
the material from the stockpile is processed in the same fashion as the material from the mine. The
value of material is assessed based on the material handling cost incurred during the loading and
transportation of stockpiled material rather than the mining cost. This material handling cost is
usually 45% of the mining cost, which is composed of 40% corresponding to material handling
and 5% to supervision (Schellman 1989).

3. Steps of the algorithm

The algorithm develops the optimum cutoff grade policy for the life of the mine in two iterations.
The steps of the algorithm are as follows.

1. Read the input files, which includes:

(a) price and refining cost of mineral 1 and 2, mining, milling, fixed costs, discount rate
and metallurgical recovery of mineral 1 and 2;
(b) operational capacities, i.e. mining, milling and refining capacities;
(c) grade tonnage distribution of the deposit.
2. Set the iteration indicator j to 1.
 Cutoff grade optimization algorithm 183

3. Set the year indicator i to 1.

4. Compute the reserves available in the deposit, i.e. TDeposit. If TDeposit equal to zero then go
to step 13. Otherwise go to next step.
5. Set V = NPV, where initial NPV = 0.
6. Compute the optimum cutoff grades of mineral 1, i.e. g1, and mineral 2, i.e. g2, using the
procedure described in section 2.2.
7. As a function of g1 and g2 compute the tons of ore To (g1, g2), tons of waste Tw (g1, g2)
average grade for mineral 1 gavg1 (g1, g2) and average grade for mineral 2 gavg2 (g1, g2) in the
deposit.
8. Set

Qc ¼ C; if To ðg1 ; g2 Þ > C
ð29Þ
Qc ¼ To ðg1 ; g2 Þ; otherwise

 
Tw ðg1 ; g2 Þ
Qm ¼ Qc 1 þ ð30Þ
To ðg1 ; g2 Þ

Qr1 ¼ Qc gavg1 ðg1 ; g2 Þy1 ð31Þ

Qr2 ¼ Qc gavg2 ðg1 ; g2 Þy2 ð32Þ

9. If j is equal to 1, then:
(a) compute the life of deposit N based on the limiting capacity among mine, mill,
refinery 1 and refinery 2;
(b) compute the annual profit for the life of mine using modified equation (15):
2(
 ) 3
ðS1  r1 Þgavg1 ðg1 ; g2 Þy1 þ
6
 Qc 7
P¼6
4 ðS2  r2 Þgavg2 ðg1 ; g2 Þy2  c 7
5
 mQm  f T ð33Þ
Where T ¼ 1; if N >¼ 1
T ¼ N; otherwise

(c) determine NPV by discounting profits at a discount rate d for the time N. The
following relationship is based on the assumption that uniform profit will be achieved
from years 1 to N.
h i
P ð1 þ d ÞN 1
NPV ¼ ð34Þ
dð1 þ d ÞN

(d) compare this NPV with the previous V (step 5). If the computed NPV is not
converged (within some tolerance, say + $500,000 of V), go to step 5, otherwise, go
to step 10.
10. Create the stockpile grade categories and accumulate the reserves available in each
category, as discussed in section 2.3.
184 M. W. A. Asad

11. Adjust the grade tonnage curve of the deposit by subtracting ore tons, i.e. Qc from the
grade distribution intervals above optimum cutoff grades g1 and g2 and the waste tons
(Qm 7 Qc) from the intervals below optimum cutoff grade g1 and g2 proportionate
amounts such that the distribution is not changed.
12. Check if the deposit is completely depleted, then go to step 4. If not, then go to step 3.
13. Start processing the stockpile material using steps 3 to 13. However, equation (33) is
modified as:

2(
 ) 3
ðS1  r1 Þgavg1 ðg1 ; g2 Þy1 þ
6
 Qc 7
P¼4 ðS2  r2 Þgavg2 ðg1 ; g2 Þy2  c 5 ð35Þ
 sh  Qm  f  T

If stockpile is exhausted go to step 14.

14. If j is equal to 1, then knowing the profits obtained in each year, find the NPV year by year
by discounting back those profits and go to next step. If it is the second iteration then stop.
15. Use NPV values for each year obtained in step 14, as initial NPV for the corresponding
year in second iteration ( j = j + 1), go to step 3. The cutoff grades obtained in the second
iteration will give the optimum cutoff grades policy for the life of the mine.

4. Application of algorithm to copper–gold deposit

Implementation of the algorithm is possible in situations where an ore reserves block model has
been developed and, subsequently, the ultimate pit limits and pushback design have been
completed. In addition to the grade–tonnage distribution in each pushback, the parameters
including mining, milling and refining stage capacities, operating costs of these stages, and
current metal price are assumed to be known. The assumption is realistic in cases where the
open pit mining operation in question is either in the final stages of feasibility study or in
production.
Consider a hypothetical copper–gold deposit. Table 1 presents economic parameters and
operational capacities. The economic parameters include price, refining cost and metallurgical
recovery of copper and gold. They also include the operating costs of mining, milling and
stockpiling stages, and general and administration fixed costs. The operational capacities include
mining, milling and copper and gold, refining stage capacities.
Table 2 lists the two-dimensional grade–tonnage distribution of the deposit within the ultimate
pit limits of the deposit. As indicated in table 2, there are five grade categories of gold for each
grade category of copper.
Table 3 presents the optimum cutoff policy without the stockpiling option. As indicated in
table 3, during year 1, the optimum cutoff grade for copper and gold is 0.25% and 0.028 oz/ton,
respectively. In year 13, the optimum cutoff grades decline to 0.042% and 0.011 oz/ton for copper
and gold, respectively, due to the declining effect of NPV from year 1 ($192,670,000) to year 13
($26,270,000). The intermediate grade material is stockpiled during the mine life. Once the mine is
exhausted, the stockpile sends material to the processing plant.
Table 4 shows the optimum cutoff grade policy with the stockpiling option, which
demonstrates enhancement of NPV from $192,670,000 to $200,190,000. Also, the life of
operation is increased from 13 to 16 years, where the material is supplied from the stockpile from
year 14 to 16.
 Cutoff grade optimization algorithm 185

Table 1. Economic parameters and operational capacities.

Parameter Unit Quantity

Mine capacity tons/year 4 000 000

Mill capacity tons/year 2 000 000
Copper refining capacity tons/year 15 000
Gold refining capacity ounces (oz)/year 80 000
Price of copper $/ton 2100.00
Price of gold $/oz 420.00
Mining cost $/ton 1.50
Milling cost $/ton 3.50
Stockpile handling cost $/ton 0.675
Refining cost of copper $/ton 500.00
Refining cost of gold $/oz 50.00
Fixed cost $/year 2 000 000
Recovery of copper % 90
Recovery of gold % 80
Discount rate % 15

Table 2. Grade–tonnage distribution of the copper–gold deposit.

Gold (oz/ton)

Copper (%) 0.00 – 0.02 0.02 – 0.03 0.03 – 0.04 0.04 – 0.05 4 0.05

0.00 – 0.25 963 250 834 670 987 650 824 870 977 640
0.25 – 0.35 782 450 928 780 887 780 954 480 853 760
0.35 – 0.45 954 760 919 830 692 870 673 780 839 860
0.45 – 0.55 827 380 739 390 842 670 689 290 658 540
0.55 – 0.65 853 890 794 790 947 870 824 890 875 780
0.65 – 0.75 682 760 823 760 983 480 974 590 773 830
0.75 – 0.85 754 870 859 940 991 650 873 480 930 580
0.85 – 0.95 747 780 759 570 693 390 962 380 878 470
4 0.95 927 470 797 780 892 480 989 870 627 780

Table 3. Optimum cutoff policy without stockpiling option.

Cutoff Grade
Qm Qc Qr1 Qr2 Profit NPV
Year Copper (%) Gold (oz/ton) (ton) (ton) (ton) (ton) ($) ($)

1 0.250 0.028 3 490 000 2 000 000 12 830 79 350 35 660 000 192 670 000
2 0.250 0.027 3 380 000 2 000 000 12 830 78 180 35 380 000 185 920 000
3 0.250 0.027 3 380 000 2 000 000 12 830 78 180 35 380 000 178 430 000
4 0.250 0.026 3 270 000 2 000 000 12 820 77 030 35 100 000 169 810 000
5 0.194 0.026 3 180 000 2 000 000 12 560 77 080 34 850 000 160 180 000
6 0.194 0.024 3 080 000 2 000 000 12 550 75 940 34 560 000 149 360 000
7 0.167 0.023 2 950 000 2 000 000 12 410 74 850 34 130 000 137 210 000
8 0.167 0.022 2 860 000 2 000 000 12 400 73 740 33 840 000 123 660 000
9 0.167 0.020 2 700 000 2 000 000 12 390 71 560 33 250 000 108 370 000
10 0.125 0.018 2 590 000 2 000 000 12 190 70 780 32 800 000 91 370 000
11 0.104 0.017 2 520 000 2 000 000 12 080 69 960 32 440 000 72 280 000
12 0.063 0.016 2 430 000 2 000 000 11 870 69 420 32 020 000 50 680 000
13 0.042 0.011 2 220 000 1 940 000 11 390 64 960 30 210 000 26 270 000
186 M. W. A. Asad

Table 4. Optimum cutoff policy with stockpiling option.

Cutoff Grade
Qm Qc Qr1 Qr2 Profit NPV
Year Copper (%) Gold (oz/ton) (ton) (ton) (ton) (ton) ($) ($)

1 0.250 0.028 3 490 000 2 000 000 12 830 79 350 35 660 000 200 190 000
2 0.250 0.027 3 380 000 2 000 000 12 830 78 180 35 380 000 194 570 000
3 0.250 0.027 3 380 000 2 000 000 12 830 78 180 35 380 000 188 370 000
4 0.250 0.026 3 270 000 2 000 000 12 820 77 030 35 100 000 181 250 000
5 0.194 0.026 3 180 000 2 000 000 12 560 77 080 34 850 000 173 340 000
6 0.194 0.024 3 080 000 2 000 000 12 550 75 940 34 560 000 164 490 000
7 0.167 0.023 2 950 000 2 000 000 12 410 74 850 34 130 000 154 600 000
8 0.167 0.022 2 860 000 2 000 000 12 400 73 740 33 840 000 134 660 000
9 0.167 0.020 2 700 000 2 000 000 12 390 71 560 33 250 000 131 370 000
10 0.125 0.018 2 590 000 2 000 000 12 190 70 780 32 800 000 117 830 000
11 0.104 0.017 2 520 000 2 000 000 12 080 69 960 32 440 000 102 710 000
12 0.063 0.016 2 430 000 2 000 000 11 870 69 420 32 020 000 85 670 000
13 0.042 0.011 2 220 000 1 940 000 11 390 64 960 30 210 000 66 510 000
14 0.230 0.010 2 000 000 2 000 000 14 950 30 460 24 840 000 46 280 000
15 0.183 0.010 2 000 000 2 000 000 14 080 30 460 23 440 000 28 380 000
16 0.042 0.010 1 610 000 1 610 000 5 820 25 900 10 580 000 9 200 000

5. Conclusions
The provision of stockpiles is a strategic decision, which solely depends upon the existing
conditions of a given mining operation. The technique developed in this study is applicable to
metallic ore deposits, because it considers long-term stockpiles (e.g. in the case study the life of the
stockpile is almost equal to the mine life). Hence, an important consideration to take into account
is that the material may deteriorate during long exposure to the environment. Some leaching may
occur, with consequent loss of mineral. Oxidation may create difficulties in the treatment plant and
cause poor recoveries.
However, it is a well-established fact that stockpiles provide an additional flexibility to
management in decision-making with respect to ore processing in the processing plant. The impact
of this decision is also demonstrated in the case study through enhancement of the NPV and life of
the mining operation.

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