Value Creation Through Strategic Mine Planning and Cutoff Grade Optimization

The OptiPit® software program is developed based on expertise gained at the Colorado School of Mines (CSM) using Mixed Integer Linear Programming (MILP) techniques. This program has been developed to satisfy the need in the mining industry for a multi-time period schedule and cutoff grade optimization tool that handles large scale open pit and underground mining operations involving many dumps, stockpiles, complex processing options and blending requirements. The current software (or earlier development versions) has been beta tested and used on various large scale projects within Placer Dome Inc., Newmont Mining Corporation, and Phelps Dodge Corporation since 2003. Through the use of this software, these companies experienced additional value creation by optimizing mine sequences, cutoff grades, material process flows and stockpiles under complex operational and processing constraints. This paper will present simple case study results to demonstrate the power of OptiPit® when used as a cutoff grade optimization tool. Furthermore, the paper will show, by example, how significant the difference in the Net Present Value (NPV) of a given project can be, depending on whether results are obtained by way of cutoff grade optimization using OptiPit®, or by using traditional breakeven cutoff grade approach.