Using Simulation to Quantify Uncertainty in Ultimate Pit Limits and Inform Infrastructure Placement

"There is uncertainty in ultimate pit limits due to geologic variation and unpredictable economic landscapes. In this work we show how this uncertainty affects the ultimate pit and how it can be analyzed to improve the mine planning process. A stochastic framework using geostatistical simulation and parametric analysis is used to model the effects of geologic and economic variation on ultimate pit limits and overall project economics. This analysis is made possible by a new, highly efficient pit optimization implementation which can be automated and set up to calculate ultimate pits for hundreds of different scenarios in a matter of hours. Quantifying ultimate pit uncertainty early in the mine planning process allows mining engineers to make informed decisions regarding infrastructure placement, and to mitigate the possibility of incurring substantial costs relocating critical mine facilities. INTRODUCTION The mining industry is increasingly concerned with the effects of risk and uncertainty. Uncertain prices, unpredictable global markets, and unknown foreign exchange rates can alter the economic viability of a mining project in substantial ways. This economic uncertainty is compounded by geologic uncertainty. The extent and quality of any given deposit cannot be fully measured and is not known before consequential decisions must be made. These two sources of uncertainty are responsible for the majority of deviation between what happens during operation and what was initially planned. Understanding and explicitly quantifying this uncertainty will lead to better decision making and allow mining engineers and investors to be aware of what may occur. It is unrealistic to believe that one model, estimated from sparse measurements, is enough to capture both geologic and economic uncertainty and allow for optimal decisions. The entire breadth of uncertainty should be considered, as both upside and downside risks have large impacts on the investment potential and operational efficiency of mining projects. The workflow presented here uses Monte Carlo simulation and parametric analysis together to explicitly analyze the breadth of geologic and economic uncertainty as it applies to ultimate pit calculation and long range mine planning."