Mining Project Value Optimization

verfasst von: Greg Guanlin You

Verlag: Springer Nature Singapore

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik"

Inhaltsverzeichnis

Über dieses Buch

This book provides a holistic approach of integrated mine planning and scheduling to optimize mining projects using the discounted cash flow rate of return (DCF-ROR) method. There are nine chapters in the book. Chapter 1 is the Introduction, which provides overviews of mineral assets, minerals in Australia, mineral exploration, mining methods, and significance of valuation, optimization, and integrated mine planning. Chapter 2 is the Mineral Resources and Ore Reserves Estimation, including grade composition method, inverse distance weighting method, ordinary Kriging method and block model. Chapter 3 is the Feasibility Study that delves into three phased feasibility study, namely scoping, prefeasibility and feasibility studies, data requirements, risk identification and mitigation in the feasibility study, and mining project cost estimation. Chapter 4 is the Valuation of Mineral Projects. It starts with the time value of money; followed by methods to calculate cash flow, discounted cash flow (DCF), net present value (NPV), internal rate of return (IRR) and payback period; valuation methods, including market-, income-, and cost-based approaches; and finally the sensitivity study of key factors influencing the valuation of mining projects. Chapter 5 is the Mine Planning and Open Pit Optimization that covers different types of mine planning, block model valuation, Lerchs-Grossmann and floating cone techniques for pit optimization. Chapter 6 is the Life of Mine Optimization that details a case study of strip mining optimization using the DCF-ROR method and integrated LOM optimization of open pit mining. Chapter 7 is the Production Schedule Optimization of Surface Mining, covering production schedule optimization, equipment availability and utilization, and loading and hauling equipment match optimization. Chapter 8 is the Optimization of Underground Mine Planning and Scheduling that delves to a case study of room and pillar mining optimization using the DCF-ROR method and mathematical programs for underground stope layout and production schedule optimization. Chapter 9 is the Conclusion of the book.

The book can benefit students and professionals in multiple ways. Firstly, divisions and confusions may arise from different contexts of technical frameworks, taxation, and relevant legislations in literature. Having quality contents in one book will improve the efficiency of study. Secondly, the inclusion of plentiful hands-on examples and calculation tables underscores the practical application of the concepts, bridging the gap between theoretical knowledge and real-world scenarios. Thirdly, the book adopts an integrated approach to evaluate and optimize mineral projects, utilizing methodologies such as DCF-ROR for optimization, ordinary Kriging for ore reserve estimation, and multi-level optimization including strategic planning, pit optimization, life of mine optimization, and production schedule optimization. Finally, the content is fully aligned with internationally recognized standards such as the VALMIN and JORC codes, ensuring compliance with industry best practices and guidelines.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Abstract

This chapter introduces the concepts of mineral assets, the stages of mineral projects, and the importance of their valuation and optimization. It begins with an overview of the valuation and reporting of mineral assets in accordance with the VALMIN and JORC codes, clarifying the definitions and classifications of mineral resources and ore reserves. The chapter highlights Australia’s abundant mineral resources and critical minerals. It emphasizes Australia’s leading role in supplying various minerals to the global market and the significant contributions of mining to the economy and employment. After exploring the characteristics of mineral exploration and the administrative authorities responsible for issuing permits for mineral exploration and mining in Australia, it discusses various mining methods, outlining their applications and characteristics. The critical roles of valuation, optimization, and integrated mine planning are underscored to address geological, mining, economic, environmental, social, and governmental aspects in mining projects, ultimately aiming to maximize the value of mineral assets. Finally, the chapter outlines the purpose and scope of the book, which aims to equip readers with the knowledge and techniques necessary for mining project valuation and optimization through integrated mine planning.

Greg Guanlin You

Chapter 2. Mineral Resources and Ore Reserves Estimation

Abstract

This chapter delves into the methods for estimating mineral resources and ore reserves. It begins with sampling and sample analyses, emphasizing the importance of sample studies, including geological, hydrogeological, physical, geotechnical, chemical, and metallurgical assessments. The concepts of ore grade, compositing of grades, and cut-off grade are discussed, highlighting the significance of the length-weighted average method for calculating average ore grade. Various estimation methods are introduced, including polygonal methods and geostatistical approaches such as inverse distance weighting (IDW) and ordinary Kriging methods. These methods are explained in the context of their applications, strengths, and limitations in mineral resources estimation. The chapter details the mathematical processes of the Ordinary Kriging method, which optimizes ore reserves estimation by considering the spatial correlation and variation of ore grade. The chapter also highlights the creation and utilization of block models together with geostatistical methods as an essential foundation for visualizing and calculating mineral resources. Additionally, the importance of regulatory compliance in the reporting of mineral resources and ore reserves according to the JORC code is emphasized.

Greg Guanlin You

Chapter 3. Feasibility Studies

Abstract

This chapter introduces feasibility studies for mineral projects at various stages, focusing on scoping studies, prefeasibility studies, and feasibility studies, along with their data requirements. It delineates the distinct objectives and characteristics of each phase, including typical durations, costs, and accuracies. Scoping studies are described as preliminary assessments that provide an initial evaluation of a mineral project’s potential. Prefeasibility studies offer a more in-depth technical and economic analysis of multiple project options. Full feasibility studies present comprehensive evaluations of the most favorable option identified in the prefeasibility study, aiming to eliminate uncertainties and enhance the accuracy of estimates, which serve as the foundation for decision-making and securing project financing. The chapter also addresses the outcomes and applications of feasibility studies, emphasizing the importance of thorough risk identification and the development of effective mitigation strategies to enhance project robustness. Furthermore, the chapter introduces methods for estimating mining project costs during feasibility studies, including production rate-based empirical methods such as O’Hara models and cost indexing methods.

Greg Guanlin You

Chapter 4. Valuation of Mineral Projects

Abstract

This chapter delves into the process of valuing mineral projects, exploring fundamental concepts and techniques essential for determining their value. It begins with an explanation of the time value of money, laying the groundwork for understanding the significance of discounted cash flows in valuation. The chapter then covers core elements of cash flow analysis through tables and its applications, including discounted cash flow modeling, and the calculation of net present value (NPV), internal rate of return (IRR), and payback period, elucidating their critical roles in project evaluation. Furthermore, various valuation methods are scrutinized, including market-based, income-based, and cost-based approaches, along with the net asset value method. Each method is explained in detail with real-life examples of project evaluations. Finally, the chapter details the processes of sensitivity studies of key factors that influence project valuation, particularly NPV, through a case study of a mining project. Through detailed examples, this chapter equips readers with the knowledge and skills necessary to perform valuations of mineral projects, providing a foundation for subsequent project optimization.

Greg Guanlin You

Chapter 5. Mine Planning and Open Pit Optimization

Abstract

This chapter explores methods of mine planning and open pit optimization. The chapter begins with real options analysis and strategic mine planning, which establish the long-term direction, vision, and objectives for the mine, ensuring that mineral resource extraction aligns with the corporate business goals and economic conditions. It then delves into medium-term planning, focusing on the scheduling of mining activities over several years, and short-term planning, detailing day-to-day operations and immediate targets. Key techniques for optimizing open pit mines are then introduced, including block valuation, the Lerchs–Grossmann algorithm, and the floating cone method. Block valuation assesses the economic value of blocks of ore and waste to create a value matrix in the geological domain. The Lerchs–Grossmann algorithm and the floating cone method are dynamic processes for determining the optimal pit shell based on the block valuation and subjected to operational constraints. A working example of block valuation is presented to demonstrate the operational processes to search for the optimal open pit using the Lerchs–Grossmann method. These techniques and planning strategies highlight the importance of integrating various planning levels and optimization methods to maximize the value of mining projects.

Greg Guanlin You

Chapter 6. Life of Mine Optimization of Surface Mining

Abstract

Determining the life of mine (LOM) involves assessing the optimal duration during which a mining project achieves the most favorable outcome. The LOM can be empirically estimated using Taylor’s Rule through a relationship between the LOM and the expected ore reserves. The modern approach to determine the LOM is through feasibility studies, where multiple LOM scenarios are studied, and their cash flows are forecast over the LOM. By calculating the net present value (NPV) and internal rate of return (IRR), the most profitable scenario can be identified. This chapter presents a detailed case study of a coal deposit using strip mining method, demonstrating the application of the discounted cash flow-rate of return (DCF-ROR) to optimize the mining project. The case study covers mining method selection, strip size and layout design, DCF-ROR study of multiple LOM scenarios, equipment selection, cost estimation, and selection of the optimal LOM scenario. Additionally, mathematical approaches for achieving an optimal annual production rate are introduced. Finally, the model of LOM optimization is expanded to integrate both open pit optimization and waste dump optimization, incorporating the geotechnical aspects of waste dump site selection and design.

Greg Guanlin You

Chapter 7. Production Schedule Optimization

Abstract

This chapter focuses on production schedule optimization, emphasizing its impact on net present value (NPV) through working examples. It begins by detailing how an optimized production sequence enhances NPV and explores the influence of the discount rate on NPV. The effect of optimized production sequences on NPV is further illustrated through an open pit optimized using the Lerchs–Grossmann algorithm. This approach enhances the value of mining projects by aligning production schedules with the time value of mineral assets. The chapter then addresses equipment availability and utilization, highlighting that equipment availability, utilization, working efficiency, and operating efficiency, or overall equipment efficiency affects both productivity and the number of equipment required. Loading and hauling optimization involves factors such as cycle time, equipment productivity, and the matching of loaders and trucks. Methods for minimizing cycle time, improving overall equipment productivity (contrasting tonnage productivity and volume productivity), and achieving an optimal loader-truck match are discussed, distinguishing between theoretical cycle time and equipment match cycle time. The equipment match highlights the significance of both size match and number match or fleet match to reduce cycle time and to minimize equipment time waste.

Greg Guanlin You

Chapter 8. Optimization of Underground Mine Planning and Scheduling

Abstract

This chapter delves into the optimization of underground mine planning and scheduling, focusing on enhancing the value of underground mining projects through the life of mine (LOM) optimization and advanced mathematical programs. It begins with a detailed case study of a coal deposit using the room and pillar mining method, demonstrating the application of the discounted cash flow rate of return (DCF-ROR) to optimize project value. The case study covers mining method selection, room and pillar dimensions design, NPV modeling of multiple LOM scenarios, designs of underground mine development and mining layout, equipment selection, cost estimation, and the determination of the optimal LOM. Furthermore, the chapter introduces various mathematical programming techniques for underground mine optimization. This includes linear, mixed integer, nonlinear, and stochastic programs aimed at optimizing different aspects of mine planning, such as resource allocation, stope layout, production scheduling, and the integration of multitime horizon mine planning. A practical example is presented to demonstrate the application of linear programming for optimizing ore blending under different ore grade, production, and price scenarios.

Greg Guanlin You

Chapter 9. Conclusion

Abstract

This chapter reflects on the comprehensive journey undertaken throughout the book, exploring the complex and dynamic process of mineral asset evaluation and optimization through mine planning. From fundamental principles of mineral assets to advanced optimization techniques, we have examined multifaceted factors that influence the value and success of mining projects. This includes the classification and estimation of mineral resources and ore reserves, feasibility studies, valuation methods, mine planning strategies, open pit and underground mine optimization techniques. Detailed case studies have demonstrated the life of mine or annual production rate optimization using the DCF-ROR method for both surface and underground mines, alongside production schedule and equipment match optimizations. As mining industry continues to evolve in response to technological advancements, environmental sustainability, shifting regulatory demands, innovation and responsible practices will be essential for future success.

Greg Guanlin You

Backmatter

Titel: Mining Project Value Optimization
verfasst von: Greg Guanlin You
Verlag: Springer Nature Singapore
Electronic ISBN: 978-981-9778-83-6
Print ISBN: 978-981-9778-82-9
DOI: https://doi.org/10.1007/978-981-97-7883-6