Optimisation of Cut-Off Grade at Mount Isa Mines Limited’s
Enterprise Mine
J Poniewierski1, G MacSporran2 and I Sheppard3
ABSTRACT
The practical application of Lane’s theory on optimum cut-off grade
policy has to date proved difficult for selective stoping in large-scale
underground mining. The key to determining an optimum cut-off grade is
the ability to rapidly perform complex mine layout designs combined
with rapid output of multiple potential schedules. This paper describes
aspects of the detailed investigation into estimating a practical static
cut-off grade for the two main orebodies in Mount Isa Mine’s Enterprise
Mine.
Rule based automated scheduling software was used to evaluate
thirteen different stoping layouts (including design infrastructure and
capital development) of the Enterprise Mine’s two main orebodies, with
over 200 schedules generated. The investigation illustrates the application
of commercially available software to solve the problems of generating
multiple cut-off grade stope designs and achieving the otherwise
insurmountable task of rapidly generating and valuing multiple scenarios
for each stoping layout.
Each scenario was evaluated using modelled net cash flows of the
mining, concentrating and smelting operations of the company and
calculating NPV. The cut-off grade for each orebody was selected based
on the cut-off grade that achieved maximum NPV – with an appropriate
production rate.
Underground mine scheduling is a complex task involving the
adherence to a number of simple scheduling rules and the balancing of
several competing drivers. The study also found that:
• while each scheduling rule itself is simple, the compounding
complexities of their interaction preclude manual scheduling from
being a realistic option.
• there is a maximum sustainable rate of production possible for any
given stoping layout, and that the actual maximum production rate is
also a function of the required number of years of sustainable
production.
• the optimal cut-off grade was different for each orebody – a
recognition of the impact of the different characteristics of each
orebody.
INTRODUCTION
The calculation of the optimum cut-off grade for any particular
mine is a complex procedure involving a considerable amount of
geological interpretation, mine design, scheduling, and economic
and financial modelling (Hall, 2000). At any given production
rate there is generally a particular cut-off grade that will
maximise the Net Present Value (NPV) of the mine – a grade that
will invariably be higher than the operating breakeven grade. As
the production rate at a mine is changed, it is also generally
found that the cut-off grade will vary – a result of fixed capital
and fixed operating costs being spread over greater or lesser
tonnages.
1. MAusIMM, Business Analyst/Senior Mining Consultant, Runge Ltd,
GPO Box 2774, Brisbane Qld 4000.
E-mail: jponiewierski@runge.com.au
2. MAusIMM, Formerly Mine Engineering Superintendent – 2002
Copper Business Study, currently Senior Mining Engineer, SRK
Consulting, PO Box 943, West Perth WA 6872.
E-mail: gmacsporran@srk.com.au
3. MAusIMM, Manager 2002 Copper Business Study, MIM – Copper
Study Group, Mt Isa Mines Private Mail Bag, Mount Isa Qld 4825.
E-mail: ikshep@isa.mim.com.au
Mine Planning and Equipment Selection Kalgoorlie, WA, 23 - 25 April 2003
In most studies where the changes in cut-off grade with respect
to production rate are assessed, the derivation of the maximum
sustainable production rates for an underground orebody have by
necessity required a number of simplifications. One such
simplification is to calculate the tonnes per vertical metre and
assume the mine production rate is limited by the vertical
advance rate. There can be a large range of rates used and a
typical one used in Western Australian gold mines is 30 to 50
vertical metres per annum (McCarthy, 1993). While useful in
conceptual studies, the validity of such simplifications is highly
dependent on the mining method used. For a large-scale multiple
level open stoping operation such as Mount Isa Mine’s Enterprise
Mine, an assumption of vertical depletion of an orebody bears no
resemblance to the actual mining operations.
The need to make such assumptions has in the past been a
result of the complexity and time-consuming nature of designing
an orebody at different cut-off grades and then manually
scheduling each orebody design at different production rates.
Iterative mine planning has therefore rarely been undertaken for
optimising cut-off grade, although previous authors (Wheeler and
Rodrigues, 2002; Hall, 2000; Hall, 2002) have however
highlighted the need for a comparative analysis at different
cut-off grades and different production rates.
This paper describes aspects of the detailed investigation into
estimating a best practical static cut-off grade for the two main
orebodies in Mount Isa Mine’s Enterprise Mine – a deep
underground copper mine. The investigation was undertaken as
part of a major review for the copper business at Mt Isa.
The approach described shows the first step towards achieving
a practical application of the cut-off grade theory of Lane (1997)
in selective underground mining.
Commercially available software was used to generate
simplified stope layouts for various cut-off grades for each of the
two orebodies in the mine. The mine designs for these different
cut-off grades were then repeatedly scheduled at various target
production rates, again using commercially available software, in
order to determine a suitable sustainable production rate for each
cut-off grade stoping layout. The resulting production tonnage
and grade profiles were used as input into financial models of the
mining, concentrating and smelting operations of the company.
Based on the maximum Net Present Value obtainable, the ideal
cut-off grade for each orebody was thus determined.
Further development of the software tools used for this study,
to a point where they will allow the rapid automation of an
optimum cut-off grade policy for underground mining should be
an industry goal.
A significant concept that emerged from the study was that for
each orebody design, the complex interaction of individually
simple scheduling rules that account for the unique
characteristics of each orebody, result in there being a maximum
sustainable production rate for a given stoping layout design. To
exceed that maximum sustainable production rate, major mine
design philosophy changes are required.
THE ENTERPRISE MINE
Located in mineral-rich north west Queensland, Mount Isa Mines
(MIM) operates one of the world’s largest underground mining
complexes, mining copper and lead-zinc-silver orebodies.
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J PONIEWIERSKI, G MacSPORRAN and I SHEPPARD
FIG 1 - Schematic cross-section of Enterprise Mine.
The MIM copper stream processes ore from the X41 Copper
Mine and Enterprise Mine at Mount Isa and concentrate from
MIM Holdings’ Ernest Henry Mine which lies about 40 km north
of Cloncurry. The Enterprise underground copper mine is the
most recent copper ore source at Mount Isa and was developed
beneath existing operations at a cost of $A 370 million. It
commenced commercial production on 1 July 2000, and was
officially opened in August 2000.
The Enterprise Mine is Australia’s deepest mine, with mining
expected to a depth of 1800 metres below the surface. Ore from
the mine has a head-grade of around four per cent copper.
The Enterprise Mine required construction of three major fixed
plant and equipment systems: a new ore handling system to
access the 3000 and 3500 orebodies, a refrigeration plant and a
new paste fill plant. A schematic cross-section of the mine is
shown in Figure 1.
The Enterprise ore handling system consists of an underground
jaw crusher, a conveyor connecting to the M62 internal shaft and
another conveyor connecting from the top of the M62 internal
shaft to the pre-existing U62 shaft and copper ore handling
system. The M62 internal shaft is 5.3 metres in diameter and 713
metres long. Its base lies approximately 1660 metres below the
surface.
Virgin rock temperatures at Enterprise which reach more than
60°C, along with the autocompression of ventilation air at the
depth of mining, required installation of a major refrigeration
plant. The refrigeration plant provides up to 22 MW of
refrigerative cooling to condition the air entering the mine to
14°C. Four large ammonia compressors provide 540 L/s of cold
water to the bulk air cooler, where 580 kg/sec of downcast air
passes through large spray towers before being sent underground
via the R67 fresh air intake.
A major paste fill plant was also constructed for the Enterprise
mine. The paste fill plant is among the largest of its type in the
world and is designed to produce 450 dry tonnes of paste per
hour continuously as a 76 per cent solids-by-weight slurry. The
paste is transported underground through two vertical boreholes,
each 200 mm in diameter and 1100 m deep.
The mining method utilised is sublevel open stoping (SLOS),
which has evolved over the last 70 years of operation, in the
copper and lead orebodies, to the present day design standards.
Stope dimensions for the Enterprise Mine are typically 35 by 35
532 Kalgoorlie, WA, 23 - 25 April 2003
metres in plan and are extracted vertically to the full height of the
orebody. The sublevel interval used is approximately 40 metres
which limits the length of blast holes. The mining method is
discussed in detail in numerous technical papers (Hall, 1992).
CUT-OFF GRADE THEORY APPLIED
The accepted theory on optimum cut-off grade policy is that by
K Lane (1997). Practical application of Lane’s theory has
however proved difficult for selective stoping in underground
mining. The availability of automated scheduling software for
open pits has allowed significant advances in cut-off grade
analysis in surface mining. However, difficulties in scheduling of
underground selective mining operations has deterred most
operations from undertaking such an investigation of optimum
underground cut-off grades.
The work presented in this paper is based on the assumption
that the corporate objective in cut-off grade selection is to
maximise the Net Present Value (NPV) of the mine, as is the case
in the cut-off grade theory expounded by Lane. In many cases
this is not the real objective of the corporation. Frequently
longest mine life, maximum Mineral Resource recovery or
conversely achieving bottom quartile position on the industry
cost curve, are cut-off grade selection objectives. These
alternative objectives are not always openly admitted. They may
be equally valid objectives alongside NPV for individual mine
owners. Some Australian mining consulting firms have made
comment on these issues over several years (Hall, 2000). In the
study undertaken for the Enterprise Mine, NPV was chosen as
the primary criteria for cut-off grade selection.
At a given point in the life of a mine and with a given future
production schedule, there is a particular cut-off grade that will
maximise the NPV. Lane has described three cut-off grade
equations that can be used to calculate the optimum cut-off grade
for maximum NPV. The three equations are required to cover the
three main operation scenarios possible:
• marketing limited operations,
• treatment limited operations, and
• mining limited operations.
In practice for long-term planning we are concerned with only
two cases, the mining limited and the treatment limited cases.
Mine Planning and Equipment Selection
 OPTIMISATION OF CUT-OFF GRADE AT MOUNT ISA MINES LIMITED’S ENTERPRISE MINE
FIG 2 - Optimum cut-off grade with respect to mining limited and
treatment limited grade-NPV curves.
Figure 2 shows an idealised concept of how these equations
may apply. The mining limited curve shows that for an orebody
constrained only by its own mining rate, there will be a cut-off
grade that gives the best NPV. Application of a treatment
capacity limit introduces a second intersecting curve. Where the
curves intersect is the physical capacity balance point, where the
mining and treatment capacities are balanced.
In Case 1 of Figure 2, the treatment capacity available is large
and the peak of the mining limited curve is at a higher cut-off
grade than the intersection point. Hence the mining limited curve
defines the best cut-off grade and we can ignore the treatment
capacity limit. In Case 2 of Figure 2, the treatment capacity is
smaller. The intersection of the curves is at a higher cut-off grade
than the peak of the mining limited curve. In this case we have to
consider the treatment capacity limit and the best cut-off grade is
the capacity balance point which is higher than for the simpler
Case 1. The difference in the two solutions is the mathematically
explained by Lane’s opportunity cost concept.
Other possible combinations of interaction between these
curves exist. But these simple cases explain the approach used in
the Enterprise Mine study described here. The reader is referred
to Lane (1997) for more detail.
The Enterprise Mine cut-off grade study assumed that the
situation described in Case 1 of Figure 2 existed for the orebodies
being reviewed. The Enterprise orebodies are the highest grade
copper deposits on the lease and processing capacity is twice the
likely mining capacity. Hence the problem was simplified to
establishing the nature of the mining limited curve.
It also needs to be noted that the above analysis is valid for
only one point in time. A true optimised cut-off grade policy will
consider the change in NPV of the mine over time. Lane (1997)
describes how this cut-off grade policy can be estimated. The
software to simulate this optimum cut-off policy is available for
open pit mines. The problem is more complex for selective
underground mining operations.
A fundamental concept in the optimum cut-off grade policy
theory is that cut-off grade for a mine should start high and then
decline over time reflecting the fall in the mine’s NPV as it is
Mine Planning and Equipment Selection Kalgoorlie, WA, 23 - 25 April 2003
worked out. A continuously falling cut-off grade is the ideal. A
major issue for this concept for many mining operations is that
adopting a high cut-off grade early in the mine life may result in
sterilisation of Mineral Resource. Shortened mine life and loss of
Mineral Resource are the result. This is one of the reasons that
companies may not adopt maximum NPV as the selection
criteria for cut-off grade. Open pit mines can avoid the
sterilisation cost by stockpiling ‘low-grade’ ore. Underground
mines mostly do not have this option.
Additionally, the concept of changing cut-off grade every year
in large underground mines in order to develop the optimum
cut-off grade policy is often not practical. The skilled geology
and engineering resources to redesign every stope for a new
cut-off grade each year are simply not available in the average
mine. A practical solution is to select either a few cut-off grade
steps over the life of mine or only a single life of mine cut-off
grade that shows the best NPV solution. In the study presented
here the decision was made to estimate the first ‘step’ in the
cut-off grade for the mine. To estimate this first step a life of
mine design and schedule over a range of cut-off grades is
required.
Scheduling and selectivity are the two key issues to be solved
in determining the mining limited cut-off grade – NPV curve.
Underground mine scheduling is a complex task involving the
balancing of several competing drivers. The same problem
applies to selecting the volume of rock from amongst the Mineral
Resource that can be mined as Ore Reserve. When the selection
and scheduling needs to be done at many cut-off grades the
problem can seem just too big. As stated in the introduction,
simplifying assumptions must be made to control the size of the
problem. Too many or too crude assumptions however can
destroy the sensitivity of the orebody to the calculations
involved. The aim is to achieve the right balance between the
simplifying assumptions and the real world complexity.
For any one mine design there are many possible production
schedules. Each possible schedule will generate a different NPV
result for the orebody. The more complex the stoping design the
more variation on NPV between alternative schedules. In simple
narrow single orebody mines the schedule choices are limited, so
the variation in NPV will be small. For complex geometry and
large orebodies the schedule choices are greater and the NPV
results will have more variation.
In this study sophisticated, but commercially available
software was used to solve the issues of selectivity and
scheduling.
CUT-OFF GRADE DETERMINATION TECHNIQUE
The steps taken to determine the cut-off grade for each orebody
were in summary (MacSporran, 2002):
A. Selectivity solution
Create simple mine designs at each cut-off grade.
1. establish the range of cut-off grades of interest. Simple
economic analysis showed the likely range;
2. select StopeSizor™ Smallest Mining Unit (SMU)
parameters;
3. establish stope modelling criteria;
4. generate ‘psuedo Mineral Resource’;
5. design stopes for each cut-off grade model;
6. establish dilution criteria for stope models; and
7. design infrastructure and capital development required for
each cut-off grade.
533
J PONIEWIERSKI, G MacSPORRAN and I SHEPPARD
B. Scheduling solutions
Generate life-of-mine schedules for each cut-off grade mine
design. There are many possible schedules for a mine. The use of
rule based semi automatic scheduling software allows the
identification of the best schedule for a given cut-off grade.
1. build XPAC Autoscheduler™ model for each design;
2. run, interrogate and re-run XPAC Autoscheduler scenarios
until a maximum sustainable production rate is achieved; and
3. output XPAC Autoscheduler life-of-mine schedule details.
C. Simple economic calculations
Evaluate all cut-off grade design maximum rate schedules in a
cash flow model to determine maximum NPV cut-off grade,
involving:
1. establish costs and pricing/revenue assumptions;
2. establish a cash flows analysis model, including costing of
mining, concentrating and smelting operations – including
both fixed and variable capital and operating costs;
3. conduct a sensitivity analysis on the key assumptions;
4. Mineral Resource cut-off grade is selected as the grade that
gives the highest cumulative cash value; and
5. Ore Reserve cut-off grade is selected as the grade that gives
the highest Net Present Value.
Thirteen different stoping layouts were generated in the study
of the Enterprise Mine’s two main orebodies. For each stoping
layout at least eight and up to fifteen different production rate
targets were investigated. Additionally, a number of ‘What If’
scenarios were reviewed to establish the sensitivity of the
production schedules to desired but flexible mining constraints.
In total, over 200 schedules were generated.
This has allowed the mine to determine its Mineral Resource
and Ore Reserve cut-off grades. These cut-off grades were
optimised from those previously used and are now specific for
each of the two Enterprise Mine orebodies – recognition of the
impact that the unique characteristics of each orebody has on the
final cut-off grade decision.
A number of the steps taken to evaluate the cut-off grade will
be discussed in more detail in the following sections of the paper.
CREATING THE CUT-OFF GRADE
DESIGN MODELS
Establishing a range of cut-off grades to evaluate
The geological resource block model was used to establish a
range of cut-off grades to be evaluated. The grade distribution of
this selection ensured that the expected optimum cut-off grade
was between the minimum and maximum. To reduce the amount
of work required, no more than five or six cut-off grades were
selected for evaluation.
Generating a ‘psuedo Mineral Resource’
A ‘pseudo Mineral Resource’ refers to material that is considered
mine-able at the selected cut-off grade. To establish a pseudo
Mineral Resource for each cut-off grade model, Snowden’s
StopeSizor software† was used (Thomas and Earl, 1999). This
software filters the block model and ‘lumps’ the geology model
blocks together within a specified Smallest Mining Unit (SMU).
† Refer to http://www.snowdenau.com/software.htm for further
information.
534 Kalgoorlie, WA, 23 - 25 April 2003
The SMU represent a block size that assist in establishing shapes
for stope designs. In the case of the Enterprise Mine the SMU is
30 mN by 30 mE by 10 mRL. The results of the StopeSizor
analysis were output in a form suitable for review in Microsoft
Excel. Figure 3 shows a typical cross-section (representing a
30 m of Northing) for one of the orebodies. The value within
each grid represents the grade (per cent copper) of the SMU
block.
FIG 3 - Typical cross-section of StopeSizor output in Excel.
The ‘lumped’ blocks that match or exceed the cut-off grade
being reviewed are tallied as part of the pseudo Mineral
Resource.
Designing stopes for each cut-off grade model
The conversion from a pseudo Mineral Resource to a pseudo Ore
Reserve required stope models to be created for each cut-off
grade being reviewed. A consistent set of rules established to
construct the stope models had to be followed at each cut-off
grade. This was to ensure that the analysis was relative to the
change in grade and not the change in the stope model design.
The rules used in constructing stopes with a SMU of 30 m by
30 m by 10 m were:
1. smallest stope height is 30 m (three SMU blocks high);
2. bands of low-grade blocks can be stoped but no more than
20 m (two blocks) thick; and
3. sill pillars between stopes must be 30 m (three blocks) thick.
Since the stopes are effectively a series of regular blocks, the
stope models were constructed in Excel by aggregation of the
SMU blocks with grades above the designated cut-off. A typical
cross-section through one of the orebodies is shown in Figure 4,
with the constructed stopes outlined for a cut-off grade in this
case of 1.7 per cent Cu. The SMU blocks greater than or equal to
the cut-off grade (used to create the pseudo mineral resource) are
highlighted. The corresponding tonnage and grade for each stope
were tallied below the ‘stope’ column lower in the Excel
spreadsheet.
Establishing the dilution criteria for stope models
Two principal conversion factors by which mineral resources are
modified to produce ore reserves are mining dilution and mining
recovery (Stephenson and Vann, 1999).
For this study the dilution for the stopes was based on
estimates of the Equivalent Linear Overbreak/Sloughing (ELOS)
for the stope crown and any fill walls exposed. The stope crown
generally has mineralised material, the grade of which was
estimated by using the grade of the SMU block directly above
the stope crown. The fill material has an effective zero grade.
Mine Planning and Equipment Selection
 OPTIMISATION OF CUT-OFF GRADE AT MOUNT ISA MINES LIMITED’S ENTERPRISE MINE
FIG 4 - Typical cross-section of lumped SMUs to create stope
designs at 1.7 per cent cut-off grade.
The total effect of the Fill dilution is dependent on the number
of exposed fill masses or the Sub Level Open Stope (SLOS)
state. The sequence in which the stopes are mined dictates this
state. A series of dilution possibilities were therefore assigned to
each modelled stope – one for each possible number of fill
exposures. During the XPAC scheduling process, the appropriate
dilution value was then assigned dynamically, dependent upon
the fill exposure state at the time of stoping.
Designing infrastructure and capital development
for cut-off grade model
The capital development requirements (level and decline) and
infrastructure requirements (ore-passes, ventilation shafts and
raises, and trucking loops) were needed to be determined for
each cut-off grade design. This involved determining a detailed
but conceptual level of design. The level of detail required (for
use in the XPAC Autoscheduler model and in the cash flow
analyses) was such that three lists were required:
‡ Refer to http://www.runge.com.au for further information.
FIG 5 - Plan view of XPAC database stope outlines for three of the six cut-off grade designs used for one of the orebodies shaded for
contained copper metal tonnages.
Mine Planning and Equipment Selection Kalgoorlie, WA, 23 - 25 April 2003
1. a description of each segment of the capital development
including length and appropriate development rates for that
segment;
2. a listing of the pre-requisite capital development segment(s)
for each segment of the capital development; and
3. a listing of the pre-requisite capital development segments
for each stope.
For the largest of the cut-off grade designs (the lowest cut-off
grade design), the number of capital development segments
(horizontal and vertical) was of the order of 100 individual
segments (in comparison to about 330 segments for the detailed
final design model).
SCHEDULING THE CUT-OFF GRADE DESIGNS
Preliminary
The next major step in the cut-off grade analysis was to
determine the maximum sustainable production rate for each
cut-off grade model. The schedule that best represents the likely
production rate is the one that has consistent sustainable
production over the shortest period duration.
In order to complete the required scheduling tasks in an
appropriate time frame, manual scheduling of the cut-off grade
designs was out of the question. A rigorous and automated
scheduling method was required – one that could allow large
numbers of schedules to be run quickly as well as obey the
scheduling rules for each orebody and enable evaluation of the
dynamic and static scheduling factors for each orebody.
Having had some earlier experience with the heuristic-
scheduling program XPAC Autoscheduler™ (Poniewierski,
2002a, 2002b, 2002c)‡, this software was chosen by MIM as
giving the best representation of achievable production and grade
profiles.
Thirteen different stoping layouts were generated as part of the
study. For each stoping layout at least eight, and up to 15
different production rate targets were investigated. Additionally,
a number of the specific layout production rate scenarios were
investigated for varying schedule objectives. In total,
approximately 200 schedules were generated and analysed
within a two-week period following model construction
(Poniewierski, 2002d).
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J PONIEWIERSKI, G MacSPORRAN and I SHEPPARD
Building the XPAC Autoscheduler model
Model database
In essence, XPAC Autoscheduler is a programmed suite of tools
(a ‘toolbox’) which quickly converts a spatially defined XPAC
database (a mine’s reserves) into a time-based database (ie the
definition of scheduling). Autoscheduler determines its own
mining sequence based on user specified targets, rules,
constraints and objectives. The constraints and rules instruct
Autoscheduler on what it cannot select in a given situation, and
the objectives guide Autoscheduler in the choice of the next
stope to schedule from the alternatives available.
The Autoscheduler model built for this study was based on an
XPAC database that contained details about each stope in the
deposit. The database was used to store a number of attributes for
each stope – tonnes, grade (including those for different dilution
alternatives), and factors such as LHD tram distance, stope
height, extraction level and ore-pass allocation. Programming
scripts were used to calculate more complex attributes (eg
allowable production rates for each stope).
Figure 5 shows stope outline plans and their contained metal
tonnages for the XPAC database layouts for three of the six
cut-off grades used for one of the orebodies.
Model logic
The logic built into the Autoscheduler model faithfully replicated
the majority of the logic that mine schedulers had used in the
past, and extended that logic when previously used
simplifications were no longer needed owing to the computing
power available.
Many different activities must be performed during the course
of mining a stope. The Autoscheduler model built for this study
allowed for five sequential activities to be scheduled – replicating
the stoping life cycle for each stope. These five activities were:
• Preliminary activities: being the ‘near’ fill development
mining, the cut-off slot raising and the production drilling of
the stope. The time for completion of these activities
obviously varies dependent upon the size of the stope.
FIG 6 - Report graph outlining the monthly achieved production based on an annual target rate showing periods of
‘no production’ and ‘low production’.
536 Kalgoorlie, WA, 23 - 25 April 2003
• Stope production (‘stoping’).
• Pre-fill activities: representing the time delay from
completion of stope production to commencement of
backfilling – effectively the time to prepare the stope for
filling – primarily fill-wall construction (particularly on the
extraction level).
• Backfilling with paste fill.
• Backfill curing: representing the time to cure the cemented
fill of a stope before preliminary activities are allowed to
occur in stopes adjacent to the filled stope.
Specifying the spatial characteristics of each stope was an
essential part of this model’s set up. This involved identifying the
other stopes that were adjacent to each stope and whether each
stope was accessible externally or only accessible via other
stopes. This allowed the scheduling behaviour of the model to
honour three important spatial rules:
• First Adjacent Stope Rule, ensuring that two adjacent stopes
could not be mined simultaneously.
• Second Adjacent Stope Rule, which prevented two stopes
being mined simultaneously if they exposed two sides of the
same filled stope.
• Accessibility Maintenance Rule, which prevented selection
of a stope for mining, if selection would prevent access to
other stopes in the orebody (development mining through fill
not practised).
Examples of other rules and constraints used to control the
scheduling behaviour included the following:
• A capital development time constraint, which was used to
ensure that a stope did not become available until sufficient
time to perform the prerequisite development, had lapsed.
• Use of variable stope-specific production profiles, which
modelled the production ramp-up to a maximum production
rate for an individual stope, followed by a production
ramp-down. The maximum rates achievable were a function
of the tramming distance to the assigned ore-pass.
Mine Planning and Equipment Selection
 OPTIMISATION OF CUT-OFF GRADE AT MOUNT ISA MINES LIMITED’S ENTERPRISE MINE

• Use of stope sequence dependencies in order to impose a

specific predecessor – successor sequence on certain stopes.
Dependencies were used to ensure compliance with the mine’s
pre-determined ventilation restrictions, rock mechanics
requirements and maintenance of tramming access corridors.
Each rule itself is simple, but their interaction quickly becomes
quite complex.

Determining maximum sustainable production

rates
The constructed XPAC Autoscheduler model for each cut-off
grade design was then scheduled at increasing production rates in
order to find the maximum sustainable production rate for that
cut-off grade design.
Various objectives with varying competing priorities were tried
for each schedule scenario in order to:
• maximise the sustainable production rate;
• maximise the time for which this production rate could be
achieved;
• maximise the copper grade earlier in the schedule;
• minimise any production sequence ‘tail’ resulting from single
stope pillar retreats; and
• minimise the number of total fill exposures for any individual
stope.
The model’s scheduling results were interrogated through the
use of graphs, tables and animations of the mining sequence.
Figure 6 provides an example of an XPAC report graph outlining
the monthly achieved production based on an annual target rate.
This figure shows the periods of ‘no production’ or ‘low
production’ caused through an attempt to produce from the
orebody at too high a rate. These ‘no production’/‘low
production’ periods occur when no stope is available for
production, due to combinations of the spatial constraints of the
stoping sequence and activity rate limits of the operation. This
highlights the fact that there is a maximum sustainable rate of
production possible for a stoping layout.
Schedules were repeatedly re-run with different objective
priorities and manual modifications to stope dependencies until a
satisfactory scenario that met the previous listed objectives was
achieved. Figure 7 shows the annual tonnage and grade
production profiles for three decreasing annual target rates. As
can be seen, the problem of choosing a suitable scenario
becomes one of deciding how many years at the sustainable
maximum rate is sufficient. In general a sustainable maximum
production rate of at least five years was deemed necessary. This FIG 7 - Annual tonnes and grade production profiles at three
period was believed to be a commensurate time frame with an decreasing annual tonnage target rates.
efficient use of a set mobile-equipment fleet size, and a time
frame in which further resources can be delineated by future
The analysis resulted in a Cumulative Cash Value (a zero
diamond drilling – with the expectation that the rate could then
discount rate assumption) and Net Present Value.
continue to be maintained.
Each of these values was plotted against the other cut-off grade
models and the ‘peak’ of these graphs represented the optimum
Output life-of-mine schedule details cut-off grade values. An example of such a curve for one of the
The main output required from the schedules, for use in the cash orebodies is shown in Figure 8. It was also found that the optimal
flow analyses were the tonnes and grade production profiles (in cut-off grade for each orebody was different from each other – a
time). Additional data required however included backfill recognition of the impact of the different characteristics of each
quantities schedule, capital development schedule, operating orebody.
development schedule, production-drilling schedule, and a The ‘peak’ of the cumulative cash value curve represents the
raise-boring schedule. cash breakeven cut-off grade for the orebody. Below this grade,
the total cash generated is lower and therefore some of the
OPTIMUM CUT-OFF GRADE DETERMINATION material being mined must be loss making (and therefore below
the break-even cut-off grade). Above this grade, the total cash
Each schedule created for each cut-off grade model and generated is lower as a result of potentially profitable material
production target rate was put through a cash flow analysis not being mined.
model, modelling the mining, concentrating and smelting This cut-off grade has been used as the ‘Mineral Resource’
operations of the company, with assumptions of prices and cut-off grade, as resources can be quoted if they have reasonable
exchange rates for revenue determination. expectation of economic extraction, ie if they are cash breakeven.

Mine Planning and Equipment Selection Kalgoorlie, WA, 23 - 25 April 2003 537
J PONIEWIERSKI, G MacSPORRAN and I SHEPPARD
FIG 8 - Graph of cumulative cash value and Net Present Value for
cut-off grade designs modelled for one of the Enterprise Mine
orebodies.
The cut-off grade at the peak of the NPV curve is a higher
cut-off grade than for the cumulative cash curve – a result of
influence of the opportunity costs (as per Lane’s theory). This is
the grade used for Ore Reserve calculation and mine design.
A sensitivity analysis was also undertaken and indicated that
the operating cost was the most sensitive parameter in selecting
the optimum cut-off grade. The discount rate used in calculating
the NPV, the copper price and the exchange rate, while
modifying the NPV and cumulative cash values, did not however
change the optimum cut-off grade selection.
CONCLUSION
The determination of an optimum cut-off grade in a large-scale
selective underground mine requires the ability to rapidly
perform complex mine layout designs and multiple scheduling
runs. By establishing a simplistic but representative model of an
orebody it is possible, with commercially available software, to
make a defendable estimate of the ‘optimum’ cut-off grade to
meet the business needs. In this study, such commercially
available software was successfully used to generate multiple
cut-off grade stope designs and to achieve the otherwise
insurmountable task of rapidly generating multiple scenario
evaluations of these multiple stoping layouts. This task has been
achieved in a manner that honoured the real world rules and
complex trade-offs of a sublevel open stoping mining system.
The scheduling software also provided the mine management
and operational personnel with a strong understanding of the
compounding complexities of the interaction between the
orebody and the mining rules of the operation.
538 Kalgoorlie, WA, 23 - 25 April 2003
This has allowed the Enterprise mine to determine its Mineral
Resource and Ore Reserve cut-off grades. These cut-off grades
were optimised from those previously used and are now specific
for each of the two Enterprise Mine orebodies – recognition of
the impact that the unique characteristics of each orebody has on
the final cut-off grade decision.
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