Life of Mine Planning: Tools and Techniques You Need to Know (2024)

In the ever-evolving and highly technical field of mining, life-of-mine planning emerges as a critical process that ensures the extraction of minerals is both economically viable and environmentally sustainable over the entire lifespan of a mining project. This strategic mine planning encompasses everything from initial feasibility studies to the final closure and post-mining land use, shaping the framework for decisions that ensure optimal operational performance and profitability. By considering the life of mine (LOM) from the outset, companies can foresee potential operational and financial pitfalls, ensuring a roadmap for long-term success in the highly competitive mining industry.

This article delves into the essential tools and techniques vital for effective life-of-mine planning. Starting with a comprehensive understanding of what LOM planning entails, it breaks down the stages from developing a resource block model to pit optimization, and from conducting feasibility studies to crafting a detailed mineral reserve statement. Operational scenarios are explored to anticipate and mitigate challenges, alongside resource classification to ensure compliance and accuracy in reporting. Through illustrated case studies, the application of these principles will demonstrate their importance in strategic mine planning, providing valuable insights into how to navigate the complexities of the life of mine calculation and ensure the sustainability and profitability of mining projects.

Understanding Life of Mine (LOM) Planning

Life of Mine (LOM) planning is a strategic approach that integrates various planning stages from long-term to short-term, ensuring alignment with the overarching corporate goals. This planning process is crucial for the sustainable and profitable operation of mining sites [5].

Strategic Planning and Key Performance Indicators

The strategic planning process at mining sites involves evaluating planning options against different levels of technical, operational, and financial risks. This process is guided by strategic key performance indicators centered around quality, life, license to operate, cash generation, and scale. These indicators help in aligning the mining operations with the company's strategic goals, thereby providing a range of outcomes rather than focusing on a single option [4].

Strategic Options Analysis and Life of Mine Plan

The Life of Mine Plan (LOMP) is developed after a thorough Strategic Options Analysis (SOA), which assesses the impacts of various strategic decisions on the value of the company. The LOMP sets the framework for all other planning stages and is updated annually to reflect any changes in the business environment or operational strategies. This plan is crucial for maintaining the viability and profitability of mining operations over the long term [5].

Planning Hierarchy and Approval Processes

An integrated planning hierarchy is essential, where longer-term plans set the strategic direction and shorter-term plans provide detailed operational strategies. Approval processes also follow this hierarchy, ensuring that each stage of planning supports the next. This structured approach helps in achieving long-term corporate goals while managing day-to-day operations effectively [5].

Resource and Reserve Assessments

In the context of LOM planning, the assessment of resources and reserves is critical. The compliant Mineral Resource and Mineral Reserve that define the LOM plan are restricted to Proved and Probable Reserves as per the SAMREC Code. This compliance ensures that the planning and resultant financial modeling are reliable and adhere to industry standards [4].

Annual Business Plans and Operational Planning

Each site develops an annual business plan that refines the preferred strategic plan option. This plan includes detailed operational strategies for the upcoming year and is developed considering the long-term potential of the asset. The inclusion of factored Inferred Mineral Resources in the business plan provides essential information for a realistic resource to reserve conversion in the medium to long term [4].

By understanding and implementing these strategic planning elements, mining companies can optimize their operations and ensure the long-term success of their projects. The integration of various planning stages, from the Life of Mine Plan to annual business plans, plays a pivotal role in aligning day-to-day operations with strategic objectives, thereby enhancing the overall efficiency and profitability of mining operations [4][5].

Stages of LOM Planning

Conceptual Study (Scoping)

The initial phase in the stages of Life of Mine (LOM) planning is the conceptual study, often referred to as scoping. This stage involves generating ideas and considering the advantages and disadvantages of these ideas to minimize the likelihood of errors, manage costs, assess risks, and evaluate the potential success of the intended mining project [7]. Scoping studies are based on initial drilling and informed assumptions, including an elementary mine plan to determine whether further pre-development efforts are warranted [13]. These studies are crucial as they delineate the scope of a potential project, providing rough estimates of potential production values and costs [14].

Pre-Feasibility Study

Following the scoping phase, the pre-feasibility study serves as an intermediate step. This study is more detailed than the scoping study but less comprehensive than the feasibility study. It aims to determine whether a mineral resource is likely to support a viable mining project [13]. During this phase, preliminary mine planning and engineering evaluations are based on the likely conversion of the mineral resources delineated during exploration into possible mining reserves. The pre-feasibility study includes assessing reserves, generic mine design, non-detailed, staged life of mine planning, and production scheduling. It also evaluates mining methods, and treatment routes, and identifies cut-off factors, recoveries, dilution, and losses in both mining and treatment [13]. This phase is crucial for outlining probable plant, infrastructure, services, and other facilities, and for producing a summary development structure and timetable [13].

Feasibility Study

The feasibility study is the final stage before a production decision is made, providing a definitive technical, environmental, and commercial base for an investment decision [8]. This stage includes detailed capital and operating cost estimates with an accuracy that typically falls within a range of plus or minus 10-15% [17]. It integrates all engineering disciplines, environmental studies, permitting activities, economic modeling, and risk assessments into a single, cohesive document that addresses all aspects of the project lifecycle from start to finish [17]. The feasibility study deliverables typically include establishing the proven and probable reserves, assessing project alternatives, selecting the desired development route, and defining the mine's plant, equipment, and infrastructure requirements and capacities [13]. This phase is critical for establishing resource consent and other legal/governmental conditions and requirements for approvals to proceed with the project [13].

Each of these stages plays a pivotal role in ensuring that the mining project is technically feasible, economically viable, and environmentally sustainable before significant capital is invested.

Developing a Resource Block Model

In the process of life of mine planning, developing a resource block model is a critical step that involves detailed analysis and categorization based on geological data. This model serves as the foundation for subsequent mine planning and feasibility studies.

Parameters of Block Model

A resource block model is constructed through resource estimation studies and must be validated before proceeding with further mine planning [20]. The model typically includes several domains identified according to the geological setting of the mineral deposit. These domains are distinguished by their geological features such as lithology, alteration, and mineralization, which influence their behavior during production and processing [20].

The block model is comprised of closely packed, six-sided orthogonal cells, known as rectangular cuboids. These include a parent cell, which is the largest cell size permitted, and sub-cells, which are divisions of the parent cell [23]. Essential fields within the block model include the model origin, which is the corner of the first parent cell, and dimensions defined by the fields XINC, YINC, and ZINC, which determine the extent of the model [23].

Categorization of Domains

Domains within a resource block model are categorized generally into mineralized (ore) domains, transition domains, and waste domains. Mineralized domains consist of materials that are processed in a mineral processing plant to extract valuable elements. Transition domains may require further metallurgical testing to determine the appropriate processing method, while materials from waste domains are typically used for dumping [20].

Each domain is derived from zones, which represent fundamental geological features interpreted from data such as geological logs and geophysics [27]. These zones are not factual but are interpreted representations, increasingly shaped by implicit modeling algorithms based on the available data [27].

For instance, an estimation domain (ESTDOM) might be derived by combining different MINZONE codes within a single feature or across multiple features. An example of this would be ESTDOM code 'A', which could be a combination of MINZONEs 10 and 20, or ESTDOM code 120, which combines MINZONE 20 with fully oxidized and transitional WEAZONEs [27].

This structured approach to block modeling and domain categorization ensures that the resource estimates are based on logical and statistically sound methodologies. It also facilitates the accurate calculation of ore and waste materials, crucial for efficient mine planning and operation [20][23][27].

Resource Classification

Measured Mineral Resource

A Measured Mineral Resource is defined by a high degree of confidence in the geologic evidence, which supports detailed mine planning and economic viability evaluations. This resource category is based on thorough exploration, sampling, and testing, confirming geological and grade continuity between observation points. The comprehensive data allows for precise estimates of tonnage and grade, making this resource classification highly reliable for economic evaluations and detailed mine planning. Such resources can be converted to Proven Mineral Reserves or Probable Mineral Reserves, depending on the modifying factors applied [32][36].

Indicated Mineral Resource

An Indicated Mineral Resource is characterized by a sufficient level of confidence to support mine planning and economic viability evaluations but is less certain than Measured Resources. This category relies on detailed and reliable exploration and testing to assume geological and grade continuity. The nature, quality, quantity, and distribution of data allow for a confident interpretation of the geological framework, supporting a Pre-Feasibility Study and major development decisions. Indicated Resources can be upgraded to Probable Mineral Reserves with further exploration and data interpretation [32][36].

Inferred Mineral Resource

The Inferred Mineral Resource category represents the least confidence level regarding the quantity and grade of mineral deposits. Estimates are based on limited geological evidence and sampling, sufficient to imply but not verify continuity. This category is crucial for initial economic assessments but must not be included in detailed economic analyses or mine life evaluations in feasibility studies. However, with continued exploration, there is potential for upgrading Inferred Resources to Indicated Resources, enhancing their economic and operational value [32][36].

Pit Optimization

Adjustments before Optimization

Before the optimization process can begin, several crucial adjustments are made to ensure that the initial pit design is grounded in the most current and relevant data. These adjustments include updating geological and geotechnical data to reflect the latest understanding of the mineral deposit and surrounding rock formations [44]. Economic parameters are also refined, taking into account current commodity prices, operating costs, and transportation expenses, which are pivotal in determining the profitability of the mining operation [44].

Furthermore, environmental and social considerations are integrated into the pit design. This step ensures that the design minimizes the disturbance of sensitive habitats and addresses any necessary relocation of local communities, aligning with sustainable mining practices [44].

Pit Optimization Process

The pit optimization process is a sophisticated blend of technology and strategic planning aimed at defining the most economically viable pit design. This process utilizes advanced software and algorithms to analyze various factors such as geological and geotechnical data, economic parameters, and environmental considerations [44][45].

The primary goal is to maximize the recovery of valuable minerals while minimizing the overall cost of extraction. This may involve strategic decisions on the pit's size, shape, and depth, as well as the optimal placement of infrastructure like access roads and waste dumps [44].

During this process, the use of algorithms such as the Lerchs-Grossman (LG) and Pseudoflow, which are industry standards, plays a crucial role. These algorithms help in determining the ultimate pit limit by generating a series of shells, varying input revenue against fixed costs [43][42]. However, these algorithms do not account for capacity constraints or the time value of money, which are critical in dynamic mining environments [43].

To address these limitations, Direct Block Scheduling (DBS) has been introduced as a novel approach. DBS utilizes Mixed-Integer Linear Programming (MILP) to optimize the pit by determining the extraction sequence of each block, categorizing them as ore or waste. This method is enhanced by the Bienstock-Zuckerberg (BZ) algorithm, which efficiently handles the complexities of mine scheduling [43].

DBS not only considers the economic aspects but also incorporates time-variable capacity constraints, capital decisions, and commodity prices, delivering a block-by-block extraction sequence. This approach allows for dynamic cut-off grades that adapt to varying operational conditions and market dynamics, thereby optimizing the financial outcome and operational efficiency of the mine [43].

Moreover, DBS enables the consideration of multiple block models during optimization. This flexibility allows the mine to realistically integrate and schedule limited mining and processing resources, providing a comprehensive solution that addresses both internal and external competitive pressures [43].

By refining the pit design continuously throughout its lifecycle, the optimization process ensures that the mining operation remains economically viable and environmentally sustainable, adapting to changes in market conditions and technological advancements [44].

Operational Scenarios

Operations analytics in the mining industry employ advanced analytical techniques to enhance the efficiency and productivity of mining operations. By collecting, processing, analyzing, and visualizing large amounts of data generated from various mining processes and equipment, companies can optimize production scheduling, equipment maintenance, resource allocation, and safety [47]. For instance, predictive analytics can forecast the remaining useful life of mining equipment, such as crushers and trucks, allowing for proactive maintenance and operational adjustments [47].

Pit-by-Pit Analysis

Pit-by-pit analysis is crucial in operational scenarios where strategic decisions are made based on the economic viability of each pit. Nested pit shells, ordered from highest to lowest value per tonnes mined, guide the sequence of mining operations. The growth of these nested pit shells over time represents the optimal evolution of the mine, ensuring that the most economically viable sections are mined first under varying economic conditions [49]. This method incorporates risk aversion by selecting pit shells like the Revenue Factor 0.46 shell, which maximizes net present value (NPV) while minimizing risk, such as lower strip ratios and sensitivity to price changes [49].

Scheduling

Scheduling in mining operations is pivotal for aligning daily activities with long-term strategic goals. Tools like Whittle software utilize parameters such as starter pit, pushbacks, and ultimate pit limits to run scheduling modules, producing detailed graphs and spreadsheets that outline the excavation of ore and waste materials over the mine's life [50]. This detailed scheduling allows for the optimization of mine cash flows and ensures that each phase of mining is economically and operationally viable [50].

Furthermore, today's technology facilitates rapid and efficient pit analysis, making it more accessible and less intrusive. Drones equipped with AI-driven software can perform comprehensive pit analyses in minutes, providing critical data on haul roads, berm heights, and overall site progression. This technology not only speeds up the inspection process but also enhances safety and compliance monitoring, delivering real-time insights and predictions about potential operational issues [51].

In summary, operational scenarios in mining leverage advanced analytics and technology to optimize mining operations, enhance safety, and ensure economic viability. These scenarios are supported by tools that provide actionable insights and detailed forecasts, enabling mining companies to make informed decisions and adapt to operational challenges swiftly [47][48][49][50][51].

Mineral Reserve Statement

Converting Resources to Reserves

In the realm of mining, the transition from Mineral Resources to Mineral Reserves is a critical step underpinned by rigorous evaluations and the application of Modifying Factors. These factors encompass considerations such as mining methods, metallurgical processes, market prices, legal permissions, environmental factors, and economic viability. A Mineral Reserve is defined as the economically mineable part of a Measured and/or Indicated Mineral Resource, which has been subjected to feasibility studies confirming its economic extraction potential [55].

A Probable Mineral Reserve represents a lower confidence level compared to a Proven Mineral Reserve but still holds sufficient data to assume economic viability under current and foreseeable economic conditions. It is typically derived from an Indicated Mineral Resource, and in some cases, a Measured Mineral Resource, when the confidence in the Modifying Factors is not high enough to categorize it as Proven [55].

Conversely, a Proven Mineral Reserve denotes the highest confidence category, reflecting detailed and reliable data that supports mine planning and economic analysis. This category is strictly used for parts of the deposit that are scheduled for production and where any variations in the estimate would not significantly impact the project's economic viability [55].

Net Present Value Calculation

Net Present Value (NPV) is a pivotal financial metric used in the evaluation of mining projects, providing a clear indication of the project's potential profitability. NPV calculates the present value of expected cash flows from the mine, discounted back to their present value using an appropriate discount rate. This method takes into account the time value of money, offering a comprehensive snapshot of the project's financial health over its expected life [58].

The calculation of NPV involves summing the present values of incoming and outgoing cash flows over the life of the mine. Positive NPV values indicate that the projected earnings, discounted to the present, exceed the initial capital costs, suggesting that the project is financially viable. Conversely, a negative NPV suggests that the project would result in a net loss [58].

NPV is particularly favored in the mining industry due to its ability to provide a straightforward financial outcome in dollar terms, making it easier for stakeholders to compare different investment opportunities. It is also adaptable to projects with fluctuating cash flows, unlike the Internal Rate of Return (IRR), which can be less reliable in such scenarios [58].

In practice, the NPV calculation can be facilitated by tools such as built-in calculators within mining software, which allow for adjustments in input parameters and quick assessments of different scenarios, enhancing decision-making processes [58].

By integrating these financial and resource assessments, mining companies can ensure that their projects not only comply with regulatory standards but also stand a strong chance of financial success, securing the necessary capital and stakeholder confidence to move forward [55][58].

Conclusion

Through the exploration of various stages of life of mine planning, operational excellence, and strategic decision-making, this article has illuminated the fundamental tools, techniques, and practices essential to the mining industry. By integrating advanced planning methodologies—from conceptual studies to feasibility assessments, and from resource classification to pit optimization—mining companies can not only ensure the sustainability and profitability of their projects but also navigate the complexities of the mining sector with confidence. The case studies further demonstrate the practical application and significant impact of these strategies on the operational success and long-term viability of mining projects.

In conclusion, the effective life of mine planning is a multidisciplinary effort requiring meticulous attention to detail, strategic foresight, and a deep understanding of the technical, environmental, and economic factors at play. By adhering to the principles outlined in this article, mining entities can enhance their operational efficiency, minimize risks, and secure a competitive edge in the global market. As the mining industry continues to evolve, the adoption of these comprehensive and strategic planning processes will undoubtedly play a crucial role in shaping the future of mining operations worldwide, underscoring the importance of continuous innovation and improvement in the sector.

References

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