ULTIMATE PIT LIMIT – MANUAL PROCEDURE

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PRESENTATION OUTLINE
▪ Introduction
▪ Manual procedure – method of sections

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INTRODUCTION
▪ Ultimate pit limit identifies the size or extent of extraction
▪ Objective
▪ Maximises the undiscounted value of future cash flows
▪ Constraints
▪ Satisfies the precedence – slope constraint

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MANUAL PROCEDURE – METHOD OF SECTIONS
▪ Hypothetical section showing current pit outline
▪ Section thickness = 1m
▪ Slope angle = 45°

Vw = 24.65 m3

45°
Vo = 47.00 m3

Ore
Waste Waste

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MANUAL PROCEDURE – METHOD OF SECTIONS
▪ Net value (NV) from mining next slice of ore
▪ Value of ore = V ($ per m3 of ore) = $1.90
▪ Stripping cost = SC ($ per m3 of waste) = $1.00

Vw1= 7.50 m3 Vo1= 5.00 m3

Waste
Vw1 7.50
ISR1 = = = 1.5
Ore Vo1 5.00
NV1 = 1.90  5.00 − 1.00  7.50 = $2.00

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MANUAL PROCEDURE – METHOD OF SECTIONS

Vw2= 8.40 m3 Vo2= 5.00 m3

Vw 2 8.40
Waste ISR 2 = = = 1.68
Ore Vo 2 5.00
NV2 = 1.90  5.00 − 1.00  8.40 = $1.10

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MANUAL PROCEDURE – METHOD OF SECTIONS

Ore
Vo3= 5.00 m3
Vw3= 9.45 m3

Waste Vw 3 9.45
ISR 3 = = = 1.89
Vo 3 5.00
NV3 = 1.90  5.00 − 1.00  9.45 = $0.05  $0.00

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MANUAL PROCEDURE – METHOD OF SECTIONS

Waste Ore
Vo4= 5.00 m3
Vw4= 10.50 m3
Vw 4 10.50
ISR 4 = = = 2.10
Vo 4 5.00
NV4 = 1.90  5.00 − 1.00 10.50 = −$1.00

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MANUAL PROCEDURE – METHOD OF SECTIONS
▪ Breakeven stripping ratio (BESR) corresponds to ultimate pit limit

V 1.90
BESR = = = 1.90
SC 1.00
▪ ISR3, i.e. the incremental stripping ratio at ultimate pit limit is equal to the breakeven stripping ratio

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MANUAL PROCEDURE – METHOD OF SECTIONS
▪ Overall stripping ratio (OSR)
▪ Ratio of volume (or quantity) of waste to the volume (or quantity) of ore inside the ultimate pit

Vw 24 .65 + 7.50 + 8.40 + 9.45

OSR = = = 0.81
Vo 47 .00 + 5.00 + 5.00 + 5.00
▪ OSR and ISR at ultimate pit limit relationship
▪ OSR is always less than ISR at ultimate pit limit
▪ 0.81 < 1.89 (≈ 1.90)

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MANUAL PROCEDURE – METHOD OF SECTIONS
▪ Net value (NV) for the section

NV = 1.90  62.00 − 1.00  50.00 = $68.00

▪ Repeat same procedure for next section

▪ Upon completion of all sections
▪ Join pit outlines in plan and section maps

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METHOD OF SECTIONS – ECONOMIC BLOCK MODELS
▪ Economic data
▪ 𝑝 = $4000.00 per tonne, 𝑟 = $500.00 per tonne
▪ 𝑚 = $15.00 per tonne, 𝑐 = $10.00 per tonne, 𝑦 = 90%
▪ Block grades – Cu (%)
0.00 2.15 0.08 0.05 0.00 0.00 0.05

0.00 2.25 2.15 1.15 0.00

3.13 1.15 0.78

Ore and Waste Blocks

0.00 2.15 0.08 0.05 0.00 0.00 0.05

15 + 10 0.00 2.25 2.15 1.15 0.00

𝑔= = 0.0079 = 0.79%
4000 − 500 0.90
3.13 1.15 0.78

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METHOD OF SECTIONS – ECONOMIC BLOCK MODELS
▪ Value of an ore block
𝑉 = (𝑝 − 𝑟)𝑔𝑦 − 𝑚 − 𝑐

2.15 90
𝑉 = 4000 − 500 × × − 10 − 15 = $42.73
100 100
▪ Value of a waste block = – m = – $10.00

-10.00 42.73 -10.00 -10.00 -10.00 -10.00 -10.00

-10.00 45.88 42.73 11.23 -10.00

73.60 11.23 -10.00

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METHOD OF SECTIONS – ECONOMIC BLOCK MODELS
UPL @ Slope Angle = 45°

-10.00 42.73 -10.00 -10.00 -10.00 -10.00 -10.00 -10.00 42.73 -10.00 -10.00 -10.00 -10.00 -10.00

-10.00 45.88 42.73 11.23 -10.00 -10.00 45.88 42.73 11.23 -10.00

73.60 11.23 -10.00 73.60 11.23 -10.00

-10.00 42.73 -10.00 -10.00 -10.00 -10.00 -10.00 -10.00 42.73 -10.00 -10.00 -10.00 -10.00 -10.00

-10.00 45.88 42.73 11.23 -10.00 -10.00 45.88 42.73 11.23 -10.00

73.60 11.23 -10.00 73.60 11.23 -10.00

-10.00 42.73 -10.00 -10.00 -10.00 -10.00 -10.00 -10.00 42.73 -10.00 -10.00 -10.00 -10.00 -10.00

-10.00 45.88 42.73 11.23 -10.00 -10.00 45.88 42.73 11.23 -10.00

73.60 11.23 -10.00 73.60 11.23 -10.00

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METHOD OF SECTIONS – ECONOMIC BLOCK MODELS
▪ Ultimate pit @ slope angle = 45°

-10.00 42.73 -10.00 -10.00 -10.00 -10.00 -10.00

-10.00 45.88 42.73 11.23 -10.00

73.60 11.23 -10.00

▪ At ultimate pit
▪ Overall undiscounted value = $167.40 per tonne
▪ Overall stripping ratio (SR) = 6/6 = 1; (a ratio that relates the waste to be removed to mine ore)

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METHOD OF SECTIONS – ECONOMIC BLOCK MODELS
▪ Some insights
▪ What if Cu price increases to $7500.00 per tonne of ore?
▪ Breakeven cut-off grade

15 + 10
𝑔= = 0.0040 = 0.40%
7500 − 500 0.90

Ore and Waste Blocks

0.00 2.15 0.08 0.05 0.00 0.00 0.05 -10.00 110.45 -10.00 -10.00 -10.00 -10.00 -10.00

0.00 2.25 2.15 1.15 0.00 -10.00 116.75 110.45 47.45 -10.00

3.13 1.15 0.78 172.19 47.45 24.14

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METHOD OF SECTIONS – ECONOMIC BLOCK MODELS
▪ Some insights
▪ What if Cu price increases to $7500.00 per tonne of ore?
▪ Breakeven cut-off grade

15 + 10
𝑔= = 0.0121 = 𝟏. 𝟐𝟏%
2800 − 500 0.90

Ore and Waste Blocks

0.00 2.15 0.08 0.05 0.00 0.00 0.05 -10.00 19.51 -10.00 -10.00 -10.00 -10.00 -10.00

0.00 2.25 2.15 1.15 0.00 -10.00 21.58 19.51 -10.00 -10.00

3.13 1.15 0.78 39.79 -10.00 -10.00

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