Determination of optimum cutoff grade with considering dilution
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ORIGINAL PAPER
Determination of optimum cutoff grade with considering dilution Yaghoub Zarshenas 1 & Gholamreza Saeedi 1
Received: 18 October 2016 / Accepted: 27 February 2017 / Published online: 29 March 2017 # Saudi Society for Geosciences 2017
Abstract In open pit mining, cutoff grade is one of the most important factors in production planning, which is simply defined as a grade that discriminates between ore and waste. It is also a sensitive parameter can have a major impact on the net present value and cash flow of the projects. On the other hand, dilution is one of the most important and sensitive parameters in the mining projects, which is closely related to the cutoff grade. Choosing the optimum cutoff grade is of considerable importance, since it has a significant impact on the mining operations. One of the most popular algorithms for determination of the optimum cutoff grade is the Lane’s algorithm. But in the Lane’s algorithm, mining dilution and its cost is not considered during the cutoff grade optimization. In this paper, effects of dilution on the cutoff grade are studied using Lane’s theory. Dilution and its cost is inserted directly into cutoff grade optimization process. The cutoff grades obtained using suggested method will be more realistic rather than ones by using the original form of the Lane’s formulation. Results of the study showed that with an increase of dilution, average grade decreases and consequently the cutoff grade increases. As a result of dilution, the quantity Qm increases and the quantities Qc and Qr decrease. Therefore, the annual profit and NPV of project is very significantly reduced.
Keywords Cutoff grade . Dilution . Open pit mines . Lane’s algorithm . Production planning
* Gholamreza Saeedi [email protected] 1
Department of Mining Engineering, Shahid Bahonar University of Kerman, Kerman, Iran
Introduction Mining production planning is a very complex and sensitive subject of mine design process that requires thorough engineering knowledge and a good understanding of the many issues. One of the most important parameters in production planning of open pit mines is the cutoff grade. Cutoff grade is defined as the grade, which discriminates between ore and waste (Degdelen 1992). The materials with the grade higher than cutoff grade are ore, which is sent to the processing plants; waste materials (below the cutoff grade) are sent to the waste dumps. Cutoff grade is one of the most sensitive parameters which has a major impact on the net present value (NPV) and cash flows of projects. The sensitivity of this parameter is from the fact that many factors are dependent on the cutoff grade; also, the cutoff grade is influenced by many factors. One of the crucial parameters that closely associated with the cutoff grade is dilution. Dilution refers to waste or non-ore materials (below cutoff grade) that are not separated from the ore during the operation and has reduced quality of the mined ore (Popov 1971). This factor leads to an increase in the cost of exploitation, loading,
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