METHOD SELECTION – ECONOMICS

1
PRESENTATION OUTLINE
▪ Economic block model
▪ Method selection

2
ECONOMIC BLOCK MODEL
▪ Conversion of orebody model (block grades; geologic information) into economic block model (block $ values)
▪ Economic data
▪ 𝑝 = $4000.00 per tonne, 𝑟 = $500.00 per tonne
▪ 𝑚 = $10.00 per tonne, 𝑐 = $15.00 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

3
ECONOMIC BLOCK MODEL
▪ Block grades – Cu (%) 0.00 2.15 0.08 0.05 0.00 0.00 0.05

▪ Economic data 0.00 2.25 2.15 1.15 0.00

▪ 𝑝 = $4000.00 per tonne, 𝑟 = $500.00 per tonne
3.13 1.15 0.78
▪ 𝑚 = $10.00 per tonne, 𝑐 = $15.00 per tonne, 𝑦 = 90%

𝑉= 𝑝 − 𝑟 𝑔𝑦 − 𝑚 − 𝑐 -10.00 42.73 -10.00 -10.00 -10.00 -10.00 -10.00

2.15 90 -10.00 45.88 42.73 11.23 -10.00

𝑉 = 4000 − 500 × × − 10 − 15 = $42.73
100 100
73.60 11.23 -10.00
2.25 90
𝑉 = 4000 − 500 × × − 10 − 15 = $45.88
100 100
1.15 90 0.08 90
𝑉 = 4000 − 500 × × − 10 − 15 = $11.23 𝑉 = 4000 − 500 × × − 10 − 15 = −$22.48
100 100 100 100

3.13 90 𝑉 = −𝑚 = −$10
𝑉 = 4000 − 500 × × − 10 − 15 = $73.60
100 100 0.78 90
𝑉 = 4000 − 500 × × − 10 − 15 = −$0.43
100 100
𝑉 = −𝑚 = −$10

4
PRESENTATION OUTLINE
▪ Economic block model
▪ Method selection

5
METHOD SELECTION
▪ Value (𝑉) – grade (𝑔) curve 50

Value, V ($)
Breakeven Cut-off Grade: (2.25, 45.88)
▪ Point 1: (0.08, -22.48) The grade that corresponds to value 𝑉 = 0.
40
31.50𝑔 − 25 = 0
▪ Point 2: (2.25, 45.88)
25
30 𝑔= = 0.7937%
▪ Join two points to form a straight line 31.50

20
0.00 2.15 0.08 0.05 0.00 0.00 0.05
0.00 2.25 2.15 1.15 0.00
10 3.13 1.15 0.78

0.7937
𝑉= 𝑝 − 𝑟 𝑔𝑦 − 𝑚 − 𝑐 = 0
0
0 0.5 1 1.5 2 2.5
𝑝 − 𝑟 𝑔𝑦 − 𝑚 − 𝑐 = 0
-10
Grade, g (%)
𝑚+𝑐 𝑦2 − 𝑦1
𝑦 − 𝑦1 = 𝑥 − 𝑥1
𝑔= 𝑥2 − 𝑥1
𝑝−𝑟 𝑦
-20
(0.08, -22.48) 45.88 − −22.48
𝑦 − −22.48 = 𝑥 − 0.08
15 + 10 2.25 − 0.08
𝑔= = 0.007937 = 0.7937% -30
4000 − 500 0.90 𝑦 + 22.48 = 31.50 𝑥 − 0.08

𝑦 = 31.50𝑥 − 2.52 − 22.48

𝑦 = 31.50𝑥 − 25 𝑽 = 𝟑𝟏. 𝟓𝟎𝒈 − 𝟐𝟓

6
METHOD SELECTION
▪ Breakeven cut-off grade identifies mining blocks as ORE and WASTE blocks
▪ A mining block with grade greater than or equal to breakeven cut-off grade is identified as an ore block
▪ A mining block with grade less than breakeven cut-off grade is identified as a waste block

Increase in metal price →

Decrease in breakeven cut-off grade
Increase in size of the ultimate pit limit

Decrease in metal price →

Increase in breakeven cut-off grade
Decrease in the size of the ultimate pit limit

7
METHOD SELECTION
▪ Breakeven stripping ratio (ratio of the quantity of 45.88
$
𝑉 𝑡𝑜𝑛𝑛𝑒 𝑜𝑓 𝑜𝑟𝑒 𝑡𝑜𝑛𝑛𝑒𝑠 𝑜𝑓 𝑤𝑎𝑠𝑡𝑒
waste to the quantity of ore) and grade 𝐵𝐸𝑆𝑅 =
𝑆𝐶
=
$
= 4.588
𝑡𝑜𝑛𝑛𝑒𝑠 𝑜𝑓 𝑜𝑟𝑒
10
𝑡𝑜𝑛𝑛𝑒 𝑜𝑓 𝑤𝑎𝑠𝑡𝑒
▪ If cost of mining waste (stripping cost) is = $10 per
tonne of waste Increase in metal grade →
Increase in breakeven stripping ratio
▪ How many tonnes of overlying waste would be Increase in size of the ultimate pit limit
supported by a mining block with grade 𝑔 =
2.25% and value 𝑉 = $45.88 per tonne of ore? Increase in metal price →
Increase in breakeven stripping ratio
▪ Breakeven stripping ratio corresponding to 𝑔 = 2.25% Increase in the size of the ultimate pit limit

▪ When would you stop open pit mining and switch to

an underground mining method?