simultaneous destination and schedule optimization with ...€¦ · simultaneous destination and...

Simultaneous Destination and Schedule Optimization

with Minemax Scheduling Technology at Newmont

Xiaolin Wu SME, Phoenix

Newmont Technical Services, Mine Engineering March 2010

Jim Butler

Minemax Pty Ltd

1. Newmont Overview

2. Minemax Overview

3. Production Scheduling Concept Through a Simple Example

4. Minemax Scheduler Features

5. Minemax Scheduler Implementation at Newmont

6. Minemax Scheduler Examples at Newmont

7. Concluding Remarks

Contents

2

History• Founded in 1921 and publicly traded since 1925

• Headquartered in Greenwood Village near Denver, Colorado

• ~31,000 employees and contractors people employed worldwide

• First gold company selected to be part of the Dow Jones Sustainability

World Index in 2007

• The only gold company included in the S&P 500 Index and Fortune 500

• Liquid gold stock with ~8 M shares traded daily

• Market capitalization: ~$23 B

• Proven and probable gold reserves of 85 million equity ounces and an aggregate

land position of ~38,840 square miles as of December 31, 2008

• Gold Produced: 6.3 Moz, Equity Gold Sales: 5.2 Moz, Copper Sales: 290 Mlb

Newmont Mining Corporation

3

Newmont’s Operations

4

Operations

Major Projects

Hope Bay

Nevada (3)

Conga (2)

Batu Hijau

Boddington

Ahafo (2)

Akyem

Jundee

Kalgoorlie

Tanami

Waihi

La Herradura (1)

Yanacocha (4)

Sites Using Minemax (# Projects) Sites Implementing Minemax (# Projects)

1. Newmont Overview

2. Minemax Overview

3. Production Scheduling Concept Through a Simple Example

4. Minemax Scheduler Features

5. Minemax Scheduler Implementation at Newmont

6. Minemax Scheduler Examples at Newmont

7. Concluding Remarks

Contents

5

History• Founded in 1996

• Based in Perth, Australia

• Vision to provide mining companies with easy-to-use software applications for creating practical and economically optimal plans

• Product innovation track record:

– Minemax Scheduler is the original solution for strategic planning and has set the standard for strategic schedule optimization at mid-to-large-size mining companies world-wide.

– iGantt for underground scheduling is the first product in the market to integrate a Gantt chart, 3D mine visualization, and dynamic reporting in a single application.

– Tempo is currently the only product in the market for integrated and optimized mine planning and scheduling in a collaborative environment.

• Minemax software is now used in over 35 countries by companies including Anglo, Barrick, BHP Billiton, Newmont, Rio Tinto, Vale and Xstrata

Minemax

6

1. Newmont Overview

2. Minemax Overview

3. Production Scheduling Concept Through a Simple Example

4. Minemax Scheduler Features

5. Minemax Scheduler Implementation at Newmont

6. Minemax Scheduler Examples at Newmont

7. Concluding Remarks

Contents

7

Why Optimization and Production Scheduling?

8

Example1. 10 ore blocks overlain by 10 waste

blocks

2. Mining: <= 5 blocks per year

3. Net value for an ore block is $200

4. Waste mining cost: $100 per block

5. Annual discounting rate: 10% starting

from the 2nd year

6. Total value

10 (ore block) x $200 – 10 (waste

blocks) x $100 = $1000

Modified from Hustrulid & Kuchta, 1995, Open Pit Mine Planning & Design, pp 565-569

Waste

Ore

Mine Sequences 1 & 2

9

Scenario 1. Removal of waste followed by ore mining

NPV = (-$500/1.100) + (-$500/1.101) + ($1000/1.102) + $1000/(1.103) = $623.2

Scenario 2. One year of pre-stripping followed by both ore (3 blocks/year)

and waste (2 blocks/year) miningNPV = (-$500/1.100) + ($400/1.101) + ($400/1.102) + $700/(1.103) = $720.1

Scenario 1

5W5W5O5O

$623.2

Scenario 2

5W2W3O2W3O1W4O

$720.1

1 3

1 3

1 3

1 3

1 3

2 4

2 4

2 4

2 4

2 4

1 2

1 2

1 2

1 3

1 3

2 3

2 4

3 4

3 4

4 4

Mine Sequences 3 & 4

10

Scenario 3. Mining of waste one block ahead of ore

NPV = (-$100/1.100) + (-$100/1.101) + ($100/1.102) + $700/(1.103) = $799.5

Scenario 4. Modified Scenario 3 (Years 3 and 4)NPV = ($100/1.100) + ($100/1.101) + ($400/1.102) + $400/(1.103) = $822.0

Scenario 3

3W2O3W2O3W2O1W4O

$799.5

Scenario 4

3W2O3W2O2W3O2W3O

$822.0

1 1

1 1

1 2

2 2

2 3

2 3

3 4

3 4

3 4

4 4

1 1

1 1

1 2

2 2

2 3

2 3

3 3

3 4

4 4

4 4

Scenario Sequence NPV $

1 5W5W5O5O 623.2

2 5W2W3O2W3O1W4O 720.1

3 3W2O3W2O3W2O1W4O 799.5

4 (Best) 3W2O3W2O2W3O2W3O 822.0

Mine Sequences Summary

11

NPV Difference: (822.0-623.2)/623.2 = 32%

Minemax Set-up

12

MineMax Model: Products and Attributes

Alternative Processes

13

Material could go to Mill or Waste Dump

Does Minemax Find the Best Sequence?

14

Maximum total movement: 5 blocks

Does Minemax Find the Best Sequence?

15

Does Minemax Find the Best Sequence?

16

• Bench by bench precedences within a stage

• Inter-stage precedence with lag

Does Minemax Find the Best Sequence?

17

Does Minemax Find the Best Sequence?

18

Does Minemax Find the Best Sequence?

19

Minemax

Schedule

Year 1 - 3W2O

Year 2 - 3W2O

Year 3 - 2W3O

Year 4 - 2W3O

= Best Scenario 4

Waste Blocks

Ore Blocks

Does Minemax Find the Best Sequence?

20

Minemax Schedule

Disc Cash Flow

Year 1 - $100

Year 2 - $91

Year 3 - $331

Year 4 - $301

Total: $822

= Best Scenario 4

1. Newmont Overview

2. Minemax Overview

3. Production Scheduling Concept Through a Simple Example

4. Minemax Scheduler Features

5. Minemax Scheduler Implementation at Newmont

6. Minemax Scheduler Examples at Newmont

7. Concluding Remarks

Contents

21

• A mixed-integer LP modeling and optimization tool for strategic and long range mine plan optimization and production scheduling

• Optimize life-of-mine NPV

subject to

Mining and process constraints

Stockpile and ore blending requirements

Product targets

Minemax Scheduler

22

NPV =

T - 1

t = 0

∑(Rprod

t– Cm

t– Cp

t– Cf

t)

(1+d)t

Rprod: revenue from the final product

Cm: mining cost

Cp: processing cost

Cf: fixed cost

T: number of time periods

d: discounting rate

t: time

• Designed in response to industry requirements, used by Rio Tinto, BHP, Newmont, Barrick, etc

• Simultaneously multi-period NPV optimization

• Min-Max mining limits by time period by mining phase ; tonnes or truck hours based

• Min-Max product targets by time period ; tonnes or mill hours based

• Ore blending controlled by the Min-Max attribute limits by time period

• Flexible time-dependent revenue definition by product prices, variable costs and recoveries

Minemax Scheduler Main Features 1

23

• Number of concurrent mining phases, mining precedence

• Concurrent schedule and process destination optimization

• Cut-off grade optimization

• Flexible modelling capabilities

– Series and parallel material flow

– Alternative process routes

– Immediate stockpiles

– Multiple mines

• Rich collection of spreadsheet reports and charts

Minemax Scheduler Main Features 2

24

• Minemax Scheduler enables the definition of key decision points associated with alternative material destinations

• Allows a single optimization to simultaneously consider both time of scheduling and material destination

Simultaneous Destination and Schedule Optimization

• Cut-off and cut-over grades are an output rather than an input into the optimization

Cut-over grades as an output

1. Newmont Overview

2. Minemax Overview

3. Production Scheduling Concept Through a Simple Example

4. Minemax Scheduler Features

5. Minemax Scheduler Implementation at Newmont

6. Minemax Scheduler Examples at Newmont

7. Concluding Remarks

Contents

27

• Address strategic and long range mine plan optimization and production scheduling tool gap– Replace manual spreadsheet based technique

– Apply Minemax in Strategic Scheduling, Operation Sizing and Long Range Scheduling

• Integrate Minemax in the long range mine planning process

• Provide solutions to complex mine planning problems through utilization of the proven optimization technology and software tool– Multi-mine and multi-phase with different ore types

– Multi-metal (gold, silver, copper, …) with variable recoveries

– Multi-process options (leach, mill, autoclave, …) with variable processing costs and plant throughputs by ore types

– Multi-destinations (leach pads, stockpiles and waste disposals)

– Ore feed blending requirements (head grades, arsenic, mercury, CuCN, zinc concentrate grade, argillic ore percent, etc.)

– Alternative process options to maximize revenues under process capacities

Minemax Scheduler Implementation Goals

28

• Software Demonstration – Feb 2007

• Proof of Concept Study – April 2007– Multi-process: mill and copper leach; Multi-metal: gold, copper and silver– Variable mining and process costs, metallurgical recoveries, mill throughputs– 24 mining phases

• Alternative Software Trial Evaluation – December, 2007

• Implementation/Training/Documentation/Validation and User Endorsement – June 2008 to December 2009– 10 Minemax Scheduler Setups: new projects, SA/NA/Africa operating mines, merge and acquisition projects

• Ongoing Minemax Projects, Training/Support/Documentation

Minemax Scheduler Implementation Milestones

29

Minemax

Demonstration

February 2007

Proof of

Concept

Study

April 2007

Alternative

Software

Evaluation

December 2007

Implementation

Training

September 2008

– December

2009

Ongoing

Projects

Training/

Support

Documentation

1. Pit Limit Determination

Geologic Models

Economic Inputs

Metallurgical Parameters

4. Strategic Scheduling

3. Pushback/Phase Design

5. Operation Sizing

6. Long Range Planning

7. Mid- Range Planning

2. Pit Limit Sensitivity

8. Short Range Planning

Pre

cis

ion

Ac

cu

rac

y

Minemax Usage

30

Minemax: 4, 5 and 6

Pit Optimization: LG Cones

31

Pit and Phase Design

32

Pit Mining Phases

Mine Plan Optimization and Scheduling

33

Year 1 Year 2 Year 3Legend

Mining Phases

Life-of-Mine Plan

Minemax

0

10

20

30

40

50

60

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Y ear

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

Mi l l Or e Leach Or e on Pad Waste Mi l l Rev Cutof f ($ / ton)

1. Newmont Overview

2. Minemax Overview

3. Newmont Exercise to Validate Optimization Results

4. Minemax Scheduler Features

5. Minemax Scheduler Implementation at Newmont

6. Minemax Scheduler Examples at Newmont

7. Concluding Remarks

Contents

34

Minemax Scheduler Example 1

35

Yanacocha Mine Plan Optimization

- 7 Pits, 15 Mining Phases

- Three metals: gold, silver and copper

- Two process options: mill and oxide leach

- 10+ ore types (CuCN, SS, Ag, …)

- 5 Dumps and backfills

- 12 Leach ore destinations

- Sulfide ore stockpiles for future process

- Metal production targets

- Total dore sales constraint

- Haulage constraint

- Variable mill throughputs

- Silver, mercury, fines, CuCN grade blending

- Mining: 212 Mt, 1.8 Moz gold produced in 2008

Minemax Scheduler Example 1

36

Product Join Example

Truck Hour Join

Product Split Example

Oxide Leach Pads Split

• Multiple deposits (11 deposits) 11 open pits + 1 underground

Minemax Scheduler Example 2

37

• Variable mill costs and recoveries by pits/ore types

• Stockpiles by pit/ore types/revenue cutoffs (low/middle/high)– 11 pits x 2 ore types x 3 revenue cutoffs = 66 stockpiles

• North pits ore production <= 4.0 Mt/year

• Number of trucks and shovels constraints

• 1.6 million blocks contained in the design pits/phases

Minemax Scheduler Example 2

38

Minemax Scheduler Example 2

39

Minemax Scheduler Example 2

40

• Two multi-metal (gold, copper, silver) pits, 26 ore types, five mining phases

• Mine life: 15 to 20 years • Variable mill costs by ore types• Variable Au/Cu/Ag recoveries by ore types, grades

and concentrate grades• Variable mill throughputs by ore types• Blending requirements

– Zn in concentrate (<= 6%)– Arsenic in concentrate (<= 0.5%)– Argillic ore percentage in mill feed (<= 20%)– Actual mill rate can not exceed 102% of the design rate

Minemax Scheduler Example 3

41

Minemax Scheduler Example 3

42

1. Newmont Overview

2. Minemax Overview

3. Newmont Exercise to Validate Optimization Results

4. Minemax Scheduler Features

5. Minemax Scheduler Implementation at Newmont

6. Minemax Scheduler Examples at Newmont

7. Concluding Remarks

Contents

43

• Minemax Scheduler has become one of key strategic and long-range mine planning tools for new projects and operating mines at Newmont since 2008

• Newmont has been able to improve its mine planning process with increased efficiency and effectiveness

• With Minemax Scheduler, Newmont had been able to develop a range of optimal and achievable mine plans under complex mining and process constraints quickly

– Multi-mine (-metal, -process, -destination)

– Variable plant throughputs

– Ore blending constraints

– Loading and hauling capacities

• With the right resources and skill sets, Minemax can be integrated seamlessly with the general mine planning packages, and it is extremely easy to use when the scheduling requirements and models are correctly developed

Conclusions

44