www.excelenciaenmineria.uc.cl II Seminario de Excelencia en Minería UC Antofagasta, 18 de Agosto de 2011

1. Building the foundations of tomorrow´s professional mine planning engineer Dr. Martin Lloyd Smith Cátedra Planificación MineríaAndronicoLuksic Centro de Minería Pontificia Universidad de Católica msmith@ing.puc.cl

2. Resumen Origins State of the Art Limits Foundations Return of the Renacentista Environment Resource and reserve Geometallurgy Optimization Simulation Tomorrow´s mine planning profession

3. Historical Context of Mine Planning Historically, little exploration data and inadequate means of processing data Miners followed the ore. No planning as we think of it. Focus on immediate operational requirements Ores were simple and grades high. Mine tonnes not value. Diamond drilling, large scale mining and computing revolutionized planning Block models, operations research (OR) and geostatistics Computer graphics and CAD Planning tools graphically and computationally intensive Initially in-house R&D departments for planning software Rapid advances and difficulty managing FORTRAN code results in commercial General Mine Planning packages (GMPs)

4. No data = No planning ? ? Exploration drilling & computing led to modern mine planning

5. Current State of Mine Planning Mine planning lacks the academic foundations of design-based disciplines. Recent origins in industrial practice and software applications GMPs have transformed mine planning but limit the planner Curriculum focuses on design – not decision making. GMPs focus CAD not OR and logistics Commercial optimisation applications are black boxes to engineers with limited training in the underlying technology While design engineers follow the renacentistas of the Enlightenment and Industrial Revolution, mine planners look to GMPs!

6. General Mining Packages Many planning tools integrated key applications Import/export Geologic database management Geostatistics Volume and surface modelling and calculations String-based CAD design Design utilities Open pit optimisation and scheduling Reporting, printing and plotting Shared data file format and folder structure Shared Graphical User Interface and 3D graphics engine Productivity scripting languages Add-on specialist modules

8. Surveys of topography, face position & engineering structures

9. Map data as points and strings

10. Triangulated surfaces and volumes

11. Geologic (block) models

13. Mine design specific functionality

15. Definition of slopes

16. Economic modelling

17. Selection of pushbacks

19. Areas and volumes of intersction

21. Definitions of constraints

22. Definition of scheduling units

23. Optimisation?

25. Variography

26. Inverse distance and Kriging

28. Programming, Applied maths and Algorithms Financial modelling: Conversion schedules of cost and revenue into measures of value. Simulation: Evaluation of productivity, capacityand feasibility Geostatistics: Estimation, categorisationand ore/waste discrimination Math Programming: Optimisation of mine plans. Options, risk and sensitivity analysis. A mine planner without fundaments Financial Risk Schedule Optimisation Conditional Simulation GMPs Geologic Risk

29. Foundations of Mine Planning Mine planners work with specialists to ensure safe working conditions and continued productivity. Planning is about maximising project stakeholder objectives while meeting all constraints on the production system Geotechnical, metallurgical, environmental and operational constraints Design defines the constraintsand must be optimal with respect to objectives Unlike design, the foundations of mine planning are Engineering economics (cost estimation, financial modelling) Equipment and productivity analysis (simulation) Systems engineering (mathematical programming and others) Must “see the forest for the trees” at multiple levels of detail and decision informed variety of specializations

30. Share holders Government Financial Institutions The larger world: Stakeholder Objectives Indigenous Groups The mine planner seeks to maximise stakeholder value Land owners ?! The mine: Limits on Production Access Rates Drainage Capacities Environment Reserves Ground Support While honouring the constraints determined by the deposit and engineering limitations Exploration Blending Ventilatoin

31. Return of the Polymath Mine planning integrates the objectives, decisions and constraints of all aspects of the business. While conducted at many levels of the organisation, planners must have a sound working understanding of a wide variety of professions. With a broader emphasis on sustainability rather than simple profit, the mine planning engineer can no longer focus on being a GMP Top Gun. Rather, there is a pressing need for the return of the renacentista mining engineer with a deep understanding of planning technologies and broad understanding of all issues both technical and of primary interest to stakeholders.

33. Dust and smelter emissions as they relate to stoppages in production and smelting

34. The true cost of water usage and treatment

35. Capacity constraints on heap leaching, waste storage and stockpiling Planning must likewise include environmental products such as dust, heat, tailings and acid to be addressed in the mine plan. This is possible using the correct tools.

36. The Geostatiscian-Planner The geostatistician is responsible for the resource estimate. Resources are classified largely according to statistical risk associated with the distribution of data in the neighbourhood of the estimated block. The planner is responsible for the reserve estimate. Reserves are classified solely as a function of intersection of the design with the resource classification. There is no classification according to risk associated with the technical uncertainty associated with the design or plan. Ultimately, it is the responsibility of the mine planner to evaluate geologic uncertainty. Measured Indicated Inferred Waste

37. (b) ESTIMATION (a) SIMULATION Z1 Z2 Z3 Z4 Z1 Z2 Z3 Z4 Z5 Z6 Z7 Z8 Z5 Z6 Z7 Z8 Z9 Z10 Z11 Z12 Z9 Z12 Z11 Z10 Simulation vs Estimation Infinite equally possible realisations of the deposit exist. Using the expected value for mine planning may result in unacceptable error.

38. Some Results – Simulations 1-5 vs. Kriged Fe Simulation 2 Simulation 1 Simulation 3 Simulation 4 Kriged

39. Some Results – Probability of Fe Above Cutoff Cutoff = 53% Cutoff = 56% Cutoff = 62% Cutoff = 50% Cutoff = 59% Cutoff = 65% All level 16 at refinement factor = 10

40. Mine to Mill and beyond The mill is the heart of mining operations accounting for most expenses and all revenues. The planner must work towards maximum recovery and throughput with minimum environmental and concentrate penalties. Planning must account for geometallurgical characteristics of the ore, not simply grade and coarse assumptions on processing costs and recoveries. The mine planner must form the bridge between geology and metallurgy, accounting for operational constraints while delivering an optimal blend of ore to the mill.

41. Value CoG Capacity The Role of Optimisation Exact optimisation technologies enable solution of large systems of variables and constraints to a provable optima as defined by an objective function. Not only does this increase project value, it also enables comprehensive evaluation of complex combinations of options on an apples to apples basis. GMPs include some key algorithms (eg., pit optimisation and scheduling), but lack general flexibility and application. Powerful and generally applicable languages and optimisation libraries are available for solving a wide variety of mine planning problems. Value Capacity

42. Simulation, Risk and Robust Planning Planning is being conducted deterministically without consideration of the stochastic behaviour of many inputs (price, exchange rate, cost, capacity, grade, recovery, etc.). Robust mine planning requires greater flexibility in the toolbox used by planning engineers: Conditional Simulation for geologic uncertainty Discrete Simulation for production systems Options analysis within an exact optimisation framework Sensitivity analysis using Linear Programming Probabilistic financial modelling with Monte Carlo simulation Robust mine planning cannot be limited to flexing a few external sources of risk and requires a systematic and intensive analysis of interacting sources of uncertainty. No single commercial platform is available with this capability, but methodologies providing a framework for integrated risk assessment are available.

43. Tomorrow´s mine planning professional Unlike traditional mining specializations, the foundations of mine planning are not based on engineering fundamentals. Instead, planning is based on decision making. However, today´s mine planning engineers are not getting the same background as Industrial Engineers and OR professionals and are too dependant on GMPs. In addition to a broad understanding of geology, mining engineering and metallurgy, mine planners need a high level of competency in OR technologies inclusive of programming skills. Properly prepared, tomorrow’s mine planning professionals will fill a role between mining operations and stakeholders, seeking strategies that respond to multiple objectives and constraints by producing robust and sustainable plans. This will require a renacentista mining engineers with a focus on ongoing professional development.

44. Examples of Mine Optimisation projects: DeBeers Cullinen Mine Draw control optimisation Lisheen Primary through tertiary stope scheduling Cutoff optimisation Century Stage/Bench/Block sequencing Earth moving fleet minimisation Haulage and dump construction XSTRATA Zinc LoM production plan for multiple products Open cut and UG mines Stockpile usage Beaconsfield Gold Alternative reserve scenarios Cutoff grade by stope Development, fill and production schedules OK Tedi Extend OC production scheduling to production panels Inclusive of metallurgical model Fleet size and allocation Dump and stockpile usage Cutoff and stockpile optimisation Strategies for sulphur reduction in mine wastes Olympic Dam UG Expansion High level LoMP production schedule Inclusive of metallurgical model Regional Cut-off grade optimisation Roche/Kogan Creek Coal Pit and production schedule optimisation Blend optimisation Kaltim Prima Coal Multi-pit optimisation Contractor v. owner haulage Mine Reserve optimisation Consolidated Minerals Multi-pit business optisation Development rate/dewatering strategy PRIMO, Greens Creek (Rio Tinto/Hecla) Strategy optimisation (cutoff, methods, reserves) PRIMO, Prominent Hill (OZ Minerals) Strategic and tactical mine plan optimisation Prominent Hill (Oz Minerals) Stockpiling strategy and cutoffs Open pit schedule optimisation Blending, concentrate grade optimisation Multiple underground mines Coldeco– San Antonio project Mine optimisation across alternative mining and processing options Lumana (Barrick) Production schedule optimisation

45. Options for Today´s Planning Professional There is a specific skill set (eg., math programming, geostatistics, simulation) well supported by low cost professional application software. What is lacking is information on application to mine planning. Help is available: Continuing education (short-courses, certification and postgraduate programs External expertise on a mentoring and project oversight basis with on the job training Company sponsored R&D projects with Nationally-based consulting expertise on optimisation and logistics For example: Select a project in which to include optimisation (eg., LoM Schedule) Support with professional consulting (MineSmith Pty Ltd.) Inclusive of 1 week short course in Santiago or on-site using project data Take delivery of LOBOS with project (supplier of Cplex, Gurobi and Ampl) Benefit from continuing education (PUC), support and maintenance (MineSmith)