An open pit mining operation consists of various stages,
and the calculation of the production capacities of these stages depends upon the available supply of ore (mineralized material of economic value)
and waste material. Cutoff
grade is the criterion that specifies the amount of ore
and waste. The material with
grade equal to or higher than the cutoff
grade is classified as ore. The material with
grade less than the cutoff
grade is considered waste. While this explains the link between cutoff
grade theory
and the calculation of production capacities, the majority of optimization
models for finding production capacities not only disregards this relationship but also ignores expected variations
and uncertainty in metal content or the available supply of ore
and waste material.
An extension to an established theory of cutoff grade is proposed herein to determine the optimal production capacities based on a stochastic framework relying on multiple grade-tonnage curves derived from a set of simulated orebody realizations. The proposed model (i) maximizes the net present value of cash flows over the life of an operation; (ii) offsets the initial investment in developing the constituent stages of an operation; and (iii) explores the impact of creating a long-term stockpile on the designed operational capacities. Application on an actual copper deposit demonstrates the benefits of the proposed model.