Mineral Exploration, Evaluation and Planning


5. Fundamentals of mine planning

The very irregular geometry of most mineral deposits complicates mine design and operation. The higher the degree of irregularity, the more difficult it is to extract the entire resource cleanly with no dilution. Mining Recovery is the percentage of the full resource which is actually mined and processed.

Mine design has three primary objectives:

1. Safety

2. Economics

3. Mineral Resource Utilisation

The design process is based on a risk assessment in respect of each of the above parameters. All human activity contains inherent safety risk and a decision not to mine is the only way to totally avoid safety risk, but brings no economic benefit to the stakeholders. However, safety must be paramount in the design of any mine, even though it may preclude the lowest cost options that may be available. Furthermore, poor safety performance always impacts negatively on operating economics.

Artisanal and small-scale mining activities, which are often conducted illegally with regard to mineral rights and licensing, are prone to abysmally low health and safety standards. It is technically feasible to conduct them in a safe manner and this will improve economics. No human life is expendable and, quite simply, mining should never be carried out at all where it cannot be done safely.

Mineral resource utilisation refers to the optimum use of the available resource. It is seldom feasible to achieve a mining recovery of 100% or to totally avoid dilution of ore with waste or low-grade material. There is a often trade-off between this aspect and the economics of mining. It may be difficult for governments to accept that some potentially valuable material has to remain unexploited; equally, governments need to guard against operators maximising profits by leaving behind otherwise valuable resources, as discussed in the notes on Mineral Compliance. This objective is further complicated by the cycles of variation in commodity prices.

A simple example of mining recovery is the need, with some U/G mining methods, to leave pillars of ore to support the excavation. In some U/G coal mines only 55% of the seam may actually be mined. Whilst the activities of artisanal and small-scale miners (ASM) can provide useful information on a mineral resource, they can also render it difficult for large-scale operators to later exploit them safely and economically. The ASM sector typically mines without any formal planning, alternating between surface and U/G mining methods as they follow an orebody, and often extracting small portions which might be ignored by larger operators.

The over-riding factor in the formal, technical design of mines is the physical characteristics of the orebody: shape, size and depth below surface, followed by structural competence of the orebody and country rock. The first decision facing mine planners is whether to exploit an orebody by open pit or underground methods and this decision is heavily influenced by these factors.

These are discussed in more detail in the Mineral Processing topic. 

Infrastructural considerations such as availability of power and water, as well as the availability or otherwise of skills and readiness of access to equipment and materials, all influence design decisions.

Other important factors include environmental and social considerations. Open pit mining tends to disturb large areas of the surface for both the pit itself and for the disposal of large volumes of waste rock usually mined from pits, with both social and environmental implications. Underground caving methods may result in large areas of surface subsidence with similar consequences. Some mining methods consume more water and energy than others.

Mine closure planning should be incorporated in the initial design, which should consider ultimate land use after closure and rehabilitation.

Planning of large mines is carried out by teams of specialists with a wide range of skills from technical to financial, health, safety and environment and others. Technical skills may include, in addition to geologists and mining engineers, mechanical, electrical and civil engineers, ventilation specialists and geotechnical engineers.

The laws of some countries require operators to submit a mining plan or feasibility study for government approval ahead of construction of a new mine. Other countries accept that the investor carries the main risks associated with his planning, and monitor only compliance with legislative requirements.  

Scale of Operations

Defining the size of a mine is a complex topic and may involve a number of different parameters. Some countries’ minerals laws or regulations contain definitions, for legal purposes. Technically, mines are commonly classified according to the amount of ore mined annually or monthly: kt/A,  kt/M or Mt/A. It is also common to refer to tonnes treated, which simply means the amount of ore mined and processed. It is important to distinguish between tonnes mined or treated and production:

  • a gold mine might treat 100kt/M of ore and produce 900kg of gold;

  • a copper mine might mine 10Mt/A of ore and produce 108kt/A of cathode copper.

Media reports often get this wrong and will say, for example, that a platinum mine has reserves of 100Mt of platinum group metals, when in fact it has reserves of 100Mt of ore at a grade of, perhaps, 5g/t, i.e. containing 500,000 kg (about 16 million oz.) of PGMs.

In planning the size of a new large mine, investors are influenced chiefly by the size of the known resource and the funding available to construct the mine, processing plant and associated infrastructure. In general terms, it is often beneficial to maximise production rate, i.e. extract maximum ore per annum, thereby shortening the operating life of the mine,  due to the time value of money, i.e. a dollar earned in ten year’s time is worth more than one earned in twenty years’ time. This topic is discussed in more detail elsewhere. However, this decision must be balanced against sober consideration of capital availability and the size and availability of equipment needed to achieve a given level of output, and the skills available to operate and maintain the equipment.

Furthermore, in both open pits and underground mines, there are physical constraints on the rate at which workings can be deepened. Planners must consider the drop-down rate, i.e. the average vertical depth in metres of the portion of the orebody being extracted annually. Limited points of attack may restrict the drop-down rate.

It is quite common for the initial design of a mine to be for a given rate of production, with the option of a later uprate or increase in production rate. This approach has the advantages that capital expenditure is deferred, increased technical information and confidence is available for planning the uprate, the business environment is better understood, skills can be developed during the earlier phase, and cash generated from earlier operations can fund the capital required for the production increase. Both mining and processing facilities can be designed on a modular basis to facilitate increases in output. However, this approach can sometimes adversely affect the costs or efficiencies of attaining higher production levels. Physical constraints may also arise when planning increased output, e.g. installed power capacity, capacity of shafts in underground mines, which are difficult to upgrade. In planning to increase output from a underground mine, ventilation requirements are frequently a major constraint.

Life of Mine (LOM) Plan: a company will normally produce an initial mining plan forming the basis of its business plan. This would be included in a feasibility study, where applicable.

Generally, the Life-of-Mine plan is based on a Depletion Schedule which starts with the mineral resource statement, showing the tonnes of ore, grade, and valuable mineral content. The schedule then shows depletion of the resource over the Life-of-Mine period, showing annual tonnes mined or milled, grade, contents, recovery and  production of saleable product. The initial period, perhaps one to three years, is often shown in more detail, monthly or quarterly.

Depletion Schedule, Syferfontein Colliery, South Africa

There are many benefits to maintaining a steady rate of production over the Life-of-Mine but the initial phase, typically one to five years, often has a ramp-up period, during which production is progressively increased toward full design capacity.

The example below shows a very simple LOM model of a copper mine with a life of seven years, including construction with no production in Year 1 & 2, and a ramp-up phase in Years 3 & 4.

In this example, some 2.7% of the resource (measured in contained copper) is not extracted.

The depletion schedule forms the basis for additional annual schedules which are used to build the life-of-mine model, including:

Technical inputs, together with a host of financial assumptions, are used to calculate annual capital expenditure (CAPEX) and annual operating expenditure (OPEX). These are used to generate a LOM Financial Model.

OPEX, also called Operating Costs, is the direct cost of operating the mine over a period of time. There are many other indirect costs such as financial costs and taxation, which have been dramatically simplified in the above example.

CAPEX is the cost of constructing the mine, processing plant and associated infrastructure. The bulk of this expenditure accordingly occurs at the start of the project, ahead of production. However, some CAPEX continues throughout the life of the mine, on replacement and overhaul of major equipment and facilities, special projects and, in some cases, increasing capacity.

In reality, a LOM plan is far more complex and comprises a series of very detailed spreadsheets accompanied by explanatory text which may explain assumptions and discuss decisions made in selecting options reflected in the plan.

The LOM plan is a dynamic document. Although large mines prepare a LOM plan at the start of the project, covering the full intended life at that time, they are usually updated annually, taking account of changes, e.g. additional resources identified, new technologies applied, changes in projected commodity prices.