Increasing Net Present Value by a Third at an Operating Sublevel Cave Mine Using Draw Strategy Optimisation

Presented by Alex Campbell

Presentation Overview

• Three year project to optimise the draw strategy at the Ernest Henry SLC

• Achieved a 32% increase in mine NPV and developed a new process for draw strategy optimisation

• This presentation provides an overview of the project including:

• Summary of the Ernest Henry Mine

• Draw strategy overview

• Cave flow and recovery modelling

• Optimisation process

• Results and grade reconciliation

Mine Location

• Located 38km North East of Cloncurry

• Copper and gold deposit

• Open pit from 1997 to 2011

• First underground production in 2012

• Mine life to 2026

SLC

Mine Overview

• Pit is 1.5km x 1.3km across and 530m deep

• Underground has a planned depth of 1km

• Ore body dips at 45o

• Sublevel cave mining method

• Complex transition mining around the pit

• 3 Mt / pa when trucking during mine build

• 6 Mt / pa once hoisting

• 57.9 Mt @ 1.38% Cu eq. (2015 reserves)

Hoisting Shaft

Open pit

Shaft access

Conveyor incline

Shaft load out

Transition zone

Planned SLC

Crusher precinct

SLC Dilution and Recovery

• A potential disadvantage of sublevel caving is the relatively high dilution and ore loss

• Dilution of 15-30%

• Ore loss of 10% to 20%

• Dilution can be internal or external, planned or unplanned

• Many examples in the literature on the issue of dilution

Additional Challenges at the Ernest Henry SLC

• Ore body inclined at 45 degrees resulting in-

• A new source of hangingwall dilution on each level

• Draw constraints required along the hanging wall for air blast management

• A zone along the footwall without production rings below

• Ore has similar density to waste

• Ore is not (easily) visually distinguished from waste

• Sampling not always practical or timely with high turn over of production rings

• Therefore, the mine needed a tonnage based draw strategy determined by grade

modelling techniques

Flow Model Overview

• Flow modelling conducted using PGCA software

• Cellular automata solver

• Capable of simulating different particle properties for

different rock types and for fines

• Simulations are run to a prescribed tonnage or to a

user specified shut-off grade

• Model output includes tonnes and grade information

• All flow modelling conducted by site personnel

Draw Strategy Optimisation

What is the “optimal” draw strategy?

• Adheres to safety requirements

• Air blast, mud rush, cave propagation requirements

• Maximises economic return

• Optimum balance between ore recovery and dilution

• Exploits grade bearing external dilution where possible

• Ensures enough draw points are available so that production targets can be met

Draw Strategy Optimisation Process

Select grade boundary and

production layout

Apply draw zone constraints

Run models for various shut-off grades

Smooth the ring tonnages to remove fluctuations and

re-run flow model

Economic analysis

Repeat for other grade boundaries until

optimised

Draw Strategy Zones

• Constraints and shut-off grades are

applied by dividing the SLC into zones

Zone 1 – Hanging wall zone

• Low draw for air blast control

Zone 2 - Central zone

• Apply optimum shutoff grade

determined using iterative process of

flow models

Zone 3 - Footwall zone

• Mine to marginal break even grade as

ore cannot be recovered below

Zone 3

Zone 2

Zone 1

Footwall Overdraw

• The angle of the ore body can result in

ore loss along the footwall

• The footwall of each level is the last

opportunity to recovery grade the draw

column above

• Overdrawing to a break-even grade

maximises ore recovery in this zone

Remaining ore along the

footwall without overdraw

Footwall Overdraw Strategy

• Different options assessed for the footwall recovery including ring layout and final ring position

• Economics govern the exact location of the final ring…a balance between recovery and dilution

12

Footwall option with standard SLC rings Footwall option with draw bells

Unrecovered

ore

Additional

dilution

Unrecovered

ore

Additional

dilution

Ore Blanket Principal

• Dilution is unavoidable in SLC mines, but can be

managed using an ore blanket principle

• An “ore blanket” is formed by the low draw at the

hangingwall for air blast control

• The blanket is made up of grade bearing

material so that dilution is economic

• Any remaining ore is recovered at the footwall

by overdrawing

• The optimum ore blanket thickness is

determined via multiple flow model iterations

Ore blanket during a LOM flow model simulation

(facing North)

Ore Blanket Principal

14

Lamperud (1973) Bull and Page (2000)

Draw Strategy Optimisation Process

Select grade boundary and

production layout

Apply draw zone constraints

Run models for various shut-off grades

Smooth the ring tonnages to remove fluctuations and

re-run flow model

Economic analysis

Repeat for other grade boundaries until

optimised

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000

110,000,000

0.85% 0.90% 0.95% 1.00% 1.05% 1.10% 1.15%

Recovered ore tonnes

Copper Grade

Feasibility

Study

Mining strategy with

the highest NPV

Scenario Comparison

Footprint A

Footprint B

Footprint C

Economic Analysis and Cost Model

• Detailed cost model developed for

economic assessment

• Accurate economic evaluation was

critical to determining the “optimum”

draw strategy

• All costs included in the model and

scenario evaluation including-

• Mining

• Processing and transport

• Smelting, refining and sales

Underground development

8% Underground

production 14%

Fixed Plant Maintenance

4%

Mine Services 4%

Mobile Maintenance

12%

Administration, technical services,

management and site support

[PERCENTAGE]

Processing 18%

Transport [PERCENTAG

E]

Sales, smelting and refining

22%

Optimisation Results

• Over 200 draw strategy simulations were completed over three years

• NPV increased by 32%

• 10% increase in recovered grade compared to the feasibility study

• Increase in net smelter return (NSR) of almost 30% per tonne

• 6 month increase in mine life

• Cut-off grade reduced from 1.15% to 0.9% copper equivalent

• 101% metal recovery at 110% draw

• Significant improvements to the optimisation process:

• Flow modelling software updates and automated functions

• Draw strategy analysis and visualisation of results

• The same level of optimisation achieved in this project could now be completed in a matter of

weeks, rather than years

Economic Assessment

19

NPV@7% $M

Total coppersold (kt)

Feasibility

study

Multiple optimisation

iterations

Current

mine plan Under

evaluation

32% NPV

improvement Block model A Block model B Block model C

Additional

resource drilling

Higher

production rate

NPV ($)

Understanding flow model results - Recovered grade

20

0.9% Cu eq.

cut-off grade

Pit

1500 sublevel

(plan view)

Lower half of the

SLC not shown

Recovered

copper grade (%)

Understanding flow model results - Net Smelter Return (NSR)

21

High

Low

$ NSR per tonne

Lower half of the

SLC not shown

Pit

Grade and Metal Reconciliation

-

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

Ma

r-1

3

Ma

y-1

3

Ju

l-1

3

Se

p-1

3

No

v-1

3

Ja

n-1

4

Ma

r-1

4

Ma

y-1

4

Ju

l-1

4

Se

p-1

4

No

v-1

4

Ja

n-1

5

Ma

r-1

5

Ma

y-1

5

Ju

l-1

5

Se

p-1

5

C

op

pe

r E

qu

iva

len

t G

rad

e (

%)

Modelled vs Actual Grade

Actual Cu equiv grade Forecast Cu equiv grade

y = 1.01x R² = 0.956

0

2,000

4,000

6,000

8,000

10,000

0 2,000 4,000 6,000 8,000 10,000

Mo

de

lle

d C

op

pe

r E

qu

iva

len

t To

nn

es

Actual Copper Equivalent Tonnes

Modelled vs Actual Metal

Recap - How the NPV improvements were achieved

The optimisation process made significant economic improvements by:

• Modelling to determine the optimal draw for each ring.

• Applying a marginal break even grade along the footwall.

• Review of multiple footprint and cut-off grades.

• Increasing the draw percentage in high grade blocks to recovery metal earlier.

• Using an ore blanket to control dilution.

• Removing rings with a negative net smelter return (NSR)

• Reviewing the draw strategy quickly with changing economic factors and block model

updates

Future Improvements

• Calibration using marker recovery data

• Further validation of grade forecasts

• Automation of the optimisation process

• Automated footprint finder and mine design

• Application of this process at other mines

Questions