Ceg Visser 2006

Optimization of the OP/UG transition - DRAFT 1/100
AES/GT/06-15 Optimization of the OP/UG Transition - DRAFT
Development of a Software Tool for Optimization of the Transition

Depth and the Open Pit Slope Angle
Main report
June 2006 W.F. Visser
Wilfred Visser June 2006 Delft University of Technology

Title : Optimization of the OP/UG Transition
Development of a Software Tool for Optimization of the Transition Depth

and the Open Pit Slope Angle Main report
Author(s) : W.F. Visser
Date : June 2006

Professor(s) : Dr. Ir. J.J. de Ruiter
Supervisor(s) : Drs. P.H. van der Kleyn
TA Report number : AES/TG/06-15
Postal Address : Section for Resource Engineering

Department of Applied Earth Sciences
Delft University of Technology
P.O. Box 5028
The Netherlands
Telephone : (31) 15 2785001
Telefax : (31) 15 2782836
Electronic-mail : j.j.deruiter@citg.tudelft.nl
wfvisser@12move.nl
Copyright 2006 Section for Resource Engineering
All rights reserved.

No parts of this publication may be reproduced,
Stored in a retrieval system, or transmitted,
In any form or by any means, electronic,
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Without the prior written permission of the
Section for Resource Engineering

Executive summary
This report describes the development of a of a generic software program for economic optimization of the
transition depth from open pit to underground mining; the Transition Optimizer. This program is used to
evaluate the importance of slope angle optimization for the transition optimization. By analysis of a
standardized dataset and the case of Palabora Mining Company (South Africa) the critical design and
planning parameters for the transition have been defined and a set of general transition rules for OP/UG
transitions is formulated.
The development and analysis have been carried out as a MSc. Mining Engineering thesis project at Delft
University of Technology (the Netherlands) in cooperation with Rio Tinto Technical Services.
Several large mining operations will perform a transition to underground mining by block caving in the next
decades. The current practice of transition planning often comes down to development of an underground
mine to continue production after the open pit ceases to be feasible. Optimization of the transition depth can
lead to a significant improvement of the financial performance of a mining operation.
The developed model fully automatically creates a combined production planning for every transition
scenario, which is used to calculate a full cash flow overview of the operation. Apart from an open pit and
underground production planning, operation characteristics and economical data a set of specific transition
data have to be provided to adapt the normal production and investment planning to a transition on any
specified bench. Based on the project cash flow a set of financial performance indicators is calculated for the
underground operation and for the combined project.
Operations are categorized based on the vertical continuity of the orebody. Operations with a relatively
unlimited continuity can use a fixed lift height, which is not affected by the final depth of the pit. In orebodies
with a clear vertical boundary this boundary is fixed as the lowest point of underground production, so that
the lift height is variable.
To analyze the relevance of slope angle optimization for the transition optimization decision a geotechnical
module linked to the Transition Optimizer has been created. This module performs a probabilistic cost-
benefit analysis of slope steepening or flattening. The potential benefit of slope steepening is the revenue
generated by mining additional ore or the decreasing costs by reduction of the stripping ratio. The costs of
slope steepening are the costs for failure prevention (including monitoring and slope reinforcement) and the
costs of failure response, which is a combination of cleaning, unloading, loss of ore, production delay,
restoration of haul roads, increased haulage costs and damage to equipment, injuries and loss of life.
The assessment of slope reliability is performed by standard kinematic analysis of planar, circular and wedge
failures. The results from the module are imported in the Transition Optimizer analysis to evaluate the impact
on the transition optimum.
The analysis by the Transition Optimizer reveals the importance of the production capacities and related
production period of the various methods for the transition optimum. The higher the open pit production rate

relative to the underground production, the deeper the transition optimum. This effect stronger for vertically
limited orebodies then for orebodies in which a fixed lift height can be used.
The impact of the depreciation policy on the transition optimization is noteworthy. The depreciation of
underground development expenditure creates a tax cover for the final stages of the open pit operation. The
resulting benefit can amount to years of operating profit and can potentially be tuned by careful planning of
the underground development
The developed transition rules focus on the decision making process and project evaluation process. An
initial estimate of range of transitioning should be made during the OP feasibility study for every operation
that will possibly make a transition. This initial estimate has to be based on the non-discounted cumulative
cash flow to prevent the result to be time-dependent, as the analysis by NPV would be. The initial estimate
can be used as a milestone to ensure that a full exploration program of the reserves is started at least 9-10
years prior to the end of the life of the open pit.
Important factors in the decision making are the drop of production rate and the availability of ores and
concentrates from other mines or from stockpiles in order to bridge a potential production valley caused by
the slow ramp up of underground production. The pit should be left in such condition that maximizes the
return from the underground mine in the last years of production.
The underground investment decision has to be based on the underground cash flow including all changes
of the underground project to the optimized stand-alone open pit cash flow. The transition point optimization
should be based on an integrated approach, combining the cash flow of the open pit and the underground
project. Initial long term range definition should be done by optimization of the cumulative cash flow, while
the short term feasibility optimization has to be based on the overall NPV.
Regional economics and sociology generally favor a transition over closure because of the continued
employment, governmental tax income and self-sufficiency for raw materials. Environmental impact is
smaller for a transition than for optimization of the open pit in the short term, but is larger in the long term
because of the increasing tailings volume and subsidence.
The relevance of slope optimization in transition issues highly depends on the slope height to which the
optimization is applied. Cost-benefit optimization of high slopes is corrupted by the exponential increase of
the potential failure volumes. In reality this optimization is limited to adopting a proven slope angle and
reinforcing the weak zones. Slope steepening of the lower benches of an open pit, up to more then 100m.,
has a significant influence on the financial performance of the open pit. However, the impact on the transition
optimum is limited to a maximum deepening of the optimum pit of 0-2 benches.

Index
Table of figures 8
List of abbreviations 9
Authors note 10
1. Introduction 11
2. OP/UG Transitioning 13
1. Worldwide practice and research 13

a. History 13
b. Types of operations 14
c. Research 17
d. Social and environmental issues 18
2. Transition methodology 18
a. Traditional approach 19
b. Integrated approach 20
3. Slope angle optimization 22
1. Slope design methodology 22

a. Stability analysis 22
b. Design & Optimization 28
2. Pit slope steepening 29
4. Model methodology 33
1. Transition model 34
a. Model setup 34
b. Production planning 35
c. Investment planning 38
d. Mass flow 40
e. Cash flow 40
f. Financial analysis 41
g. Sensitivity analysis 43
2. Geotechnical module 44

a. Module setup 44
b. Slope stabilization 45
c. Stability calculations 47
d. Instability response model 50
e. Cost-Benefit analysis 52
3. Platform 55
5. Assumptions and limitations 56
1. Methodological limitations 56
a. General transition model 56
b. Geotechnical module 57
2. Model assumptions 58
3. Model constraints 59
a. General transition model 60
b. Geotechnical module 61
6. Transition Optimization Results 62
1. Financial and engineering parameters 62

a. Standardized dataset 62
b. Result presentation 64
c. Model validation 69
d. Variable lift height results 70
e. Fixed lift height results 72
f. Optimization criteria discussion 73
2. Process optimization 75
7. Slope optimization relevance 81
1. Result accuracy 81
a. Input limitations 81
b. Failure geometry constraints 83
c. Result application 83
2. Parameter analysis 84
a. Rock parameters 85
b. Engineering parameters 87
3. Transition impact 89

a. Overall slope angle optimization 90

b. Slope steepening 90
8. Conclusions and recommendations 93
1. Conclusions 93
a. Model development 93
b. Slope optimization relevance 94
c. Transition optimization 95
2. Recommendations 97
9. References 98

Table of figures
Figure 1 - Increasing pit size over time (source: Flores, G., A. Karzulovic, 2004) 15
Figure 2 - Unlimited and limited vertical ore extent 16
Figure 3 - Traditional transition optimization 20
Figure 4 - Slope failure types (Hoek & Bray; 1977) 23
Figure 5 - Plane failure forces 24
Figure 6 - Sequence of steps involved in using a circular failure chart 25
Figure 7 - Wedge failure geometry 26
Figure 8 - Ramp scavenging design at Palabora Copper Mine (South Africa) 30
Figure 9 - Reduced excavation volume at steepened slope 31
Figure 10 - Groundwater flow conditions (Source: Hoek & Bray; 1977) 32
Figure 11 - Transition optimization diagram 35
Figure 12 - Production planning format 36
Figure 13 - Construction of a combined production planning 36
Figure 14 - Cash flow calculations 42
Figure 15 - Slope optimization process diagram 45
Figure 16 - Probabilistic failure criterion 48
Figure 17 - Design of a steepened pit slope 54
Figure 18 - Cash Flow Diagram 64
Figure 19 - Cumulative cash flow of the optimized open pit and transition scenarios 65
Figure 20 - Cumulative Net Present Value of optimized transition and open pit scenarios 66
Figure 21 - Bell shaped UC and NPV curves 67
Figure 22 - IRR and NPV curves for a transition with variable lift height 68
Figure 23 - Spider diagram with price and cost categories 68
Figure 24 - Investment valuation for various transition scenarios 69
Figure 25 - Model and real case cash flow comparison 70
Figure 26 - NPV and IRR as function of the transition bench for a fixed lift height 72
Figure 27 - NPV Base year shift 74
Figure 28 - NPV and Cumulative cash flow optimization curve 75
Figure 29 - Geotechnical dataset settings 85
Figure 30 - Rock parameter sensitivity for circular failure 86
Figure 31 - Rock parameter sensitivity for wedge failure 86
Figure 32 - Rock parameter sensitivity for planar failure 87
Figure 33 - Optimized slope angle for pit depth 89
Figure 34 - Kink steepening overview 91

List of abbreviations
A Surface of failure plane

c Natural cohesion of rock mass
CANMET Canada center for Mineral and Energy Technology
CapEx Capital Expenditure
CF Cash Flow
CoC Cost of Capital
d Dilution
Dep Depreciation
F Safety Factor / Factor of Safety
FC Fixed Costs
FS Safety Factor / Factor of Safety
g Grade
H Slope height
ICS International Caving Studies
IRR Internal Rate of Return
MF Mass Flow
NPV Net Present Value
NPV[n] Net Present Value at n% discount rate
OP Open Pit
OpEx Operating Expenditure
OP/UG Open Pit to Underground
P Probability
PMC Palabora Mining Company
R Reliability
SF Safety Factor / Factor of Safety
UG Underground
SR Stripping Ratio
T Tonnage
U Upward water pressure on failure volume
UC Unit Costs
V Lateral water pressure on failure volume
VC Variable Costs
W Weight of failure volume
Seismic coefficient
Specific density
Natural friction of discontinuity

Authors note
At the end of this project I would like to thank some people who attributed greatly to the success of this
research project.
In the first place I would like to thank Rio Tinto Technical Services and in particular John Singleton for
enabling me to go to Palabora and collect the required data for the validation of the model. Furthermore the
feedback during my visit to the Bristol office in December was very helpful in focussing the analysis.
I am grateful to Delft University of Technology and the department of Resource Engineering for organizing
the visit to Bristol and all other support.
In South Africa the meeting with Robin Kear was essential for understanding the transition process of
Palabora. At the mine site Sheperd Dube, Sam Ngidi and Barry Ndlovu helped me to find my way, and Peter
Townsend was of great help in the data collection.

1. Introduction
In the coming decades a number of large open pit mines will end open pit production and make a transition
to underground mining by caving methods. Some of the most well-known of these mines are operated by
subsidiaries of Rio Tinto plc. Therefore a research project has been set up by Delft University of Technology,
the Netherlands, and Rio Tinto Technical Services in order to investigate the optimization of this OP/UG
transition.
The objective of this project, which is carried out as a MSc. thesis project lasting 9 months, is twofold. The
primary objective is the development of a generic software tool for economic optimization of the transition
depth. Besides this, the relevance of slope angle optimization for optimization of the transition is analyzed.
Optimization of the transition depth can lead to a significant improvement of the financial performance of a
mining operation. The ore on every bench of a large open pit represents tens of millions of dollars revenue.
However, determining the optimum transition depth is not simply a trade-off between mining a block of ore by
open pit or underground methods in order to achieve the lowest production costs and the highest margin, but
also involves investment planning and changes in the total recovery due to different cut-off values of OP and
UG mining. For large operations the difference between an accurately optimized transition scenario and the
traditional scenario in which an underground mine is started when further expansion of the open pit mine is
no longer feasible can amount to many tens of millions of dollars.
Many open pit operations reconsider steepening the slope angles in the last period of production in order to
gain a better stripping ratio and a higher recovery. Potential slope steepening can lead to a deepening of the
originally optimized pit. The additional cash flow obtained by this operation can add up to many millions of
dollars. However, does this steepening affect the optimum transition depth, so that it has to be involved in all
transition optimization procedures? The effect of slope steepening for both revenues and costs of the
operation has to be assessed and included in the optimization analysis to answer this question.
Based on open pit and underground production planning, transition and investment planning and operational
and economical characteristics a generic model is developed, which is validated by back-analysis of the
transition of Palabora Copper Mine, South Africa, in the past decade. Linked to this general model a
geotechnical module has been developed. This module performs a probabilistic stability assessment and
cost-benefit analysis for slope optimization, based on input data on slope geometry, structural and
geotechnical features and the applied methodology for slope reinforcement and slope failure response.
The developed model has been used to find the critical design and planning parameters for the transition
and slope angle optimization and to analyze the optimization of the transition decision making process. The
results of this analysis have been formulated in a list of general transition rules, which are applicable to every
major open pit operation transitioning to underground mining by caving methods.
A further introduction into OP/UG transitions is given in chapter 2, while chapter 3 describes slope angle
optimization and potential slope steepening. The development of the model, which was the primary objective

of the study, is then described in the next chapters. The methodology of the model and the applied
algorithms are explained in chapter 4, followed by a discussion of the main limitations and constraints of the
model in chapter 5.
The results of the general analysis of transition optimization is then discussed in chapter 6, after which
chapter 7 discusses the relevance of slope optimization and the results from the analysis with the
geotechnical module. Chapter 8 lists the projects conclusions and gives some recommendations for further
research.
A user manual of the Transition Optimizer can be found in the first appendix. Because the full model has
been developed as an open source program the program code is printed in appendix 2. Appendix 3 holds a
detailed list of the required input data for both the transition model and the geotechnical module. The back-
analysis of the Palabora transition process and design has been printed in a separate volume (Appendix 4)
because of the contained confidential information.

2. OP/UG Transitioning
Transitioning from open pit to underground mining is not a new practice in the mining industry. In many
massive or vertically aligned orebodies mining has started using the method with the lowest investment and
production costs; open pit mining. Over time the open pit increases in depth and size. Due to the limited
stability of slopes in discontinuous rock masses, the increasing depth of excavation requires an ever greater
amount of waste rock to be removed. The combination of increasing stripping ratio, decreasing efficiency and
increasing cycle times due to lengthening of haulage roads, results in a gradual increase of the mining unit
costs. At a certain depth the production costs of mining the ore by open pit mining will be higher than those
of mining the same ore using underground mining methods. Therefore excavation in many ore deposits
started by open pit and switched to underground mining once open pit mining became unfeasible or starting
an underground project would yield higher profits than continued open pit mining.
This chapter gives an overview of the historical and current situation in the mining industry concerning
OP/UG transitions. Furthermore, paragraph 2 will describe the methodology that is commonly used in
defining the transition depth.
1. Worldwide practice and research

The current attention for OP/UG transitions is mainly caused by the transition of several big mines in the next
10 to 15 years. This paragraph will describe the history and characteristics of transition projects and give an
overview of the current research and knowledge situation in mining engineering. The paragraph ends with a
section listing the most important social and environmental issues that play a role in many transitions.
a. History
For a number of reasons the size of mining operations considering a transition to underground mining is
strongly increasing over the last decades. Information and communication technology has caused a
revolution in mine design and mine management, allowing operation of both open pit and underground
mines at enormous capacity. Many marginal ore deposits, which were not feasible to mine by any
underground mining method in the past, can be mined by high-capacity caving methods at competitive costs
at the current state of technology and high levels of commodity prices. The caving methods benefit in
particular from technological developments due to the broad opportunities for automation.
Most of the first modern mines performing the transition, like Kirovsky (Russia, 1959), Premier (South
Africa, late 40s) and Kiruna (Sweden, 1958) used sub-level caving for UG excavation. Sub-level caving is
more flexible than block- or panel caving and normally allows a more rapid ramp-up of production. Over time
panel or block caving, reaching higher and higher production levels around the world due to improvements in
equipment and data management, has become the preferred underground mining method replacing an
existing open pit operation. Main constraint to the use of this method is the caveability of the ore.

After the more or less successful transition of Palabora Copper Mine (South Africa) around 2000, at least
four other major open pit mines will consider (and likely perform) a transition to massive underground mining
by block caving. Argyle Diamond Mine (Australia), Grasberg Gold and Copper Mine (Indonesia), Bingham
Canyon / Kennecott Copper Mine (USA) and Chuquicamata Copper Mine (Chile) are the most prominent
mines working on transition planning. Table 1 gives a list of important historical and future transitions.
Table 1 - Overview of major historical and future transitions

Transition
Country Mine name Company Main product
year
Australia Argyle Rio Tinto 2010? Diamonds
Fosterville Perseverance 2006? Gold
Mt. Keith BHP Billiton 2015? Nickel
Canada Kidd Creek Falconbridge 1973 Copper, zinc
Stobie Inco 1948 Copper, nickel
Chile Chiquicamata Codelco 2016? Copper
Mansa Mina Codelco 2020? Copper
Indonesia Grasberg Rio Tinto 2016? Copper, gold
Russia Mir Alrosa 2001 Diamonds
Udachny Alrosa 2010? Diamonds
South Africa Finsch DeBeers 1990 Diamonds
Palabora Rio Tinto 2000 Copper
Venetia DeBeers 2015? Diamonds
Sweden Kiruna LKAB 1958 Iron
USA Bingham Canyon Rio Tinto 2015? Copper
As mentioned before, computerized mine design, planning and control have caused a significant increase in
the size of major mining operations. Computers can play a very important role in optimization of the transition
as well, by facilitating exploration data control and providing the opportunity to perform many simulations and
calculations of scenarios that have never been possible before. Due to the increasing size of operations
(depicted in Figure 1) development of suitable software, like the project described in this report, is feasible. A
major advantage of analysis software linked to mine planning software is the possibility to analyse 3D-
situations (Collings, P.S., S.Khosrowshahi, W.J. Shaw, 1993).
b. Types of operations
Operations in which an OP/UG transition is considered typically mine orebodies that could theoretically be
mined both by open pit and by underground methods. Open pit mining requires the ore to be located close to
the surface, in order to achieve a low stripping ratio of waste against ore. Underground mining by caving
methods at the same time requires the orebody to have a considerable height and preferably rather
homogeneous characteristics. Combining these prerequisites, an operational transition can be considered in
massive or vertically aligned orebodies starting relatively close to the surface.
Most of these types of deposits will be formed by magmatic activity in the crust of the earth in the form of
magma penetrating through the bedrock and cooling down. During the various stages of this cooling process
different groups of minerals will be formed, causing high concentrations of specific elements in various
regions. Best examples of these types of deposits are volcanic pipes like kimberlites and lamproites, which

often contain high concentrations of diamonds, and phorphiric deposits, often containing high concentrations
of copper, nickel, gold and silver. Looking at the list of transitions in table 1, most of these operations do
indeed mine diamonds or copper and nickel deposits with high concentrations of precious metals.
Figure 1 - Increasing pit size over time (source: Flores, G., A. Karzulovic, 2004)
Apart from the type of orebody an important prerequisite for consideration of underground mining to replace
open pit operations is limitation of the potential drop in mining capacity. Especially for large scale open pit
operations the only type of underground mining capable of coming close to the open pit capacity are caving
methods and preferably block caving. Caving methods require the ore to cave well within the limited footprint
of the cave, and can therefore not be applied in orebodies with very high strength. However, it is noteworthy
that some recent block- and panel caving operations (El Teniente, Palabora) operate in very competent rock
(Flores, G., A. Karzulovic, 2003; Moss, A., Russell, F. and Jones, C., 2004).
In situations where the underground mine does not need to reach a high capacity dictated by an existing
plant, various other underground mining methods can be considered. Longhole open stoping, panel caving
and sublevel stoping all have been applied to replace open pit mining operations.
Many different factors have to be considered to decide on a specific configuration of open pit and
underground mining. Size, shape and depth of the deposit, rock conditions, productivities and machinery
operations, capital requirements, ore recoveries, safety and injuries en environmental aspects are among the
most important (Fourie G.A., G.C. Dohm, 1992).
Classification of design groups

Not every transition decision is made under the same conditions regarding the available ore reserves. In the
first place a division can be made between greenfield en brownfield operations. A greenfield operation gives
the opportunity to choose between an open pit mine, an underground mine or a combination of these

methods over time. A brownfield operation, in which an open pit mine is already operating, just leaves the
option of terminating the operation at the optimum pit shell, or developing a transition to underground mining.
The implications of this division will be further discussed in paragraph 2.
The second major classification of operations is based on the extent of the orebody. Some orebodies, due to
limited vertical extent, will only leave a choice between an open pit or an underground mine. A transition can
not be performed in these orebodies. The other orebodies, large enough to develop both an economic open
pit and underground mine, can be divided into the bodies with limited vertical continuity and unlimited
vertical continuity.
In the case of a limited vertical continuity a clear boundary of the orebody can be defined in vertical direction.
The production level of an underground mine is likely to be situated near this boundary. An open pit mining
operation will in this case decrease the potential size of underground operations. This situation is often found
in phorphyric ore deposits. The right side of Figure 2 depicts this situation.
In the case of unlimited vertical continuity no boundary of the ore is found in the vertical direction within the
area of the maximum conceivable open pit followed by the maximum conceivable underground mine. In this
situation the sizing of the underground mine will be done relatively independent from the ultimate size of the
open pit operations. The production level of the block cave mine can be shifted up or down according to the
optimization of the design. The left side of Figure 2 shows this situation.
Figure 2 - Unlimited and limited vertical ore extent
This classification leads to the division in underground designs with and without fixed lift heights. In
optimization of the transition in a vertically limited orebody the underground mine will have no fixed lift height,
because this would make design of an economic open pit mine impossible, while the lift height can be fixed
in optimization of unlimited operations.

Availability of ore and concentrate

The ICT-revolution has not changed the fact that open pit mines generally operate at higher capacities than
underground mines. All companies developing the transition from surface to underground mining therefore
have to take into account the likely decrease in mining capacity and often resulting overcapacity in
processing facilities. In most mining operations processing costs are higher or at least equal to mining costs.
A large part of these costs are fixed, which causes a big increase in processing unit costs once throughput is
substantially decreased.
To enable the processing of less underground ore at unit costs comparable to open pit ore processing, the
shortage of ore has to be mitigated by buying ore or concentrate from other operations. In these cases it has
to be taken into account that the plant will not be compatible with all ores and concentrates. Excess capacity
from neighbouring mines would in most situations give the most attractive possibility to keep processing
throughput on level. However, in most situations these ores will not be available, so that concentrates will
have to be bought.
The feasibility of importing enough ore or concentrate will play a major role in any potential transition to
underground mining, especially where the funds for capital investments required for a big underground cave
mine are limited.
c. Research
Although not much scientific research on the topic of transitions has been done at universities or other
institutes, the recent transitions and plans of future transitions, in combination with the rapidly increasing
possibilities of computerized analysis, triggered a series of engineering research projects by various
companies and consortia. However, most of this research is focusing on the design of the underground
project, rather than the optimization of the total transition.
The most important recent research project is the International Caving Studies II (ICS II), sponsored by
Codelco, De Beers, Rio Tinto, LKAB, Sandvik Tamrock, Newcrest Mining, Western Mining Company and
Northparkes Mines. In the previous research project, ICS-I, Anglo American, BHP Copper, PT Freeport
Indonesia, Noranda and TVX Gold participated as well.
Scope of the ICS-II Task 4 is providing the project sponsors with practical geotechnical guidelines to develop
the transition from open pit to underground cave mining. These guidelines are set up in the areas of caving
propagation, the surface crown pillar, subsidence and water inrushes, and were presented in a series of
reports in 2003-2004. Part of the findings of the project group was presented at the international conference
MassMin 2004.
Apart from the combined research, Rio Tinto and Codelco, owning most of the major operations considering
a transition, both perform detailed studies targeted at the specific operations involved.
Rio Tinto Technical Services in combination with Rio Tinto South Africa and engineers from Palabora Mining
Company (Palabora), South Africa, modeled the planned underground mine in order to find the optimum
design characteristics. In this way a decision was made on lift height (or cave height), production rate and

the design boundary or cut-off grade, which determines the size of the footprint. Results of this research
were presented during the conference MassMin 2000 by mr. R.M. Kear.
Codelco worked together with Queens University (Canada) in the development of optimization algorithms for
mine planning (Cceres S., J., 2006; Fuentes S., S., Cceres S., J., 2004). This research will continue in
2006 in cooperation with Datamine in order to develop a 3D planning optimizer that differentiates between
the possibilities of mining ore by open pit or underground methods.
SRK Consultants (South Africa), participant in ICS II, recently performed geotechnical consulting projects for
the planned transition of TVX' Skouries gold/copper mine (Greece).
d. Social and environmental issues

The decision to go underground is not purely driven by business economics. Many political, social and
environmental aspects play a role as well. Many mines are significant drivers of the economy of a province or
country. Closure of these mines would have negative national economic implications in the form of loss of tax
income and increased dependence on foreign resources. For regional economics the multiplier-effect of mine
closure can lead to a big setback of a geographical area. Skilled employees from the mine, contractors and
suppliers move out of the area, wage level decreases and the customer base of local industry and shops
becomes smaller. Negative social implications include increasing unemployment and the termination of
social initiatives from the mining company (Tapela, T.N., 2002).
These social and economic reasons, combined with the generally lower environmental impact of
underground mining as compared to open pit mining, give strength to the arguments to look for options to
continue mining underground instead of entirely closing the mine.
Most mining companies in remote areas, where a mining town develops at start-up of the mine, work hard to
establish a sustainable economy that will survive the closure of the mine. Prolonged operation of the mine
could give this economy more time to reach maturity, but could also increase dependence on the mining
operation and lead to an increased setback after closure.
In some areas, especially in the western world, public pressure to limit environmental impact to an absolute
minimum could lead to the opposite situation; instead of going underground the mine is closed because of
increased financial risk due to environmental legislation. A second reason to oppose a transition to
underground mining is the increased health and safety risk of underground mining compared to open pit
mining (Nilsson, D., 1982). However, this risk is normally taken into account in project analysis by the mining
company. Difficulties in changing or adapting to a new infrastructure and methodology or the lack of skills
and knowledge are likely to hinder any transition that is not properly planned.
2. Transition methodology
As mentioned earlier, very little scientific work has been done in mining engineering concerning the
methodology of decision making and optimization of the OP/UG transfer. Main reason is the limited number
of mines making this transition, in combination with the great variety of circumstances of these operations.
However, in general the decision to go underground is made in a comparable way, which is described below

as the traditional approach. This approach regards the open pit and the underground mine as two separate
projects, often only considering underground mining once open pit mining ceases to be feasible.
In the opinion that this approach is likely to lead to a sub-optimal financial result, as explained later in this
paragraph, this report advocates the integrated approach, in which open pit and underground phases of
mining are analysed as one project.
a. Traditional approach
In the traditional approach an open pit mine and a potential underground mine in the same orebody are seen
as two separate and to a large extent independent projects. In most cases the open pit mine is simply mined
out to the optimized pit limit, and during the last stages of OP mining a study is performed to check the
feasibility of an underground mine excavating the remaining ore.
In some cases in which a future transition to underground mining is obvious, the optimized transition depth is
calculated using the incremental stripping ratio. At the value of the stripping ratio where open pit and
underground mining costs are equal the open pit operation ends (Hartman, H.L., J.M. Mutmansky, 2002).
This value can be calculated using equation 1.
( ( SR *UC OP ,Waste ) + UC
OP ,Ore ) *T
OP ,Ore = UCUG ,Ore * TUG ,Ore + UCUG ,Waste * TUG ,Waste (1)
SR = Stripping ratio (waste:ore)

UC = Unit Costs
T = Tonnage
The tonnage of waste mined by underground methods is often set to 0, because the mine does not have the
facilities to hoist ore and waste separately. In this case the waste is counted as dilution and decreases the
ore grade while increasing the ore tonnage.
The main problem in application of this formula is the definition of the mining unit costs. To get a meaningful
transition value of the stripping ratio the fixed operating costs and capital costs in the form of depreciation
must be included in the unit costs. These costs have to be allocated to either the ore or the ore and the
waste. A second formula can be derived from this allocation if the mining costs for the waste are included in
the unit cost for ore.
DepOP FCOP DepUG FCUG ,Total

TOP ,Ore
(
+ ( SR *VCOP ,Waste ) + VCOP ,Ore + )
TOP ,Ore
=
TUG
VCUG +
TUG
(2)
Dep = Depreciation
VC = Variable Costs
FC = Fixed Costs

The result of this traditional approach is a graph as shown in Figure 3. The transition point is found at the
crossing point of the lines of OP and UG costs. The stripping ratio at this point is lower than the maximum
feasible open pit stripping ratio, so that the optimized transition will occur at a shallower depth.
Figure 3 - Traditional transition optimization
The interdependence between open pit and underground mining in this methodology is limited to minor
design changes and development timing. The pit bottom should be prepared for future underground ore
extraction. Ideally the last bench is flat over the total orebody to prevent loss of ore in the pit walls. More
important, the processing facilities have to be supplied with enough ore to prevent temporary shutdown. Ore
production from the open pit will decrease in the last years of operation, while the production ramp up of a
big underground mine will take at least 3-4 years. The resulting 'production valley' has to be kept to a
minimum by good development planning or bridged by supplying stockpiled or purchased ore to the
processing facilities.
b. Integrated approach
The first important shortcoming of the traditional approach is the impossibility to take the time value of money
in account. Without calculating the present value of the future cashflows the optimization of the open pit will
result in a deeper open pit than with the present values, which reflect the importance of time-dependent risk.
Therefore the Net Present Value (NPV) is currently mostly used to optimize open pit design. However,
current versions of mine planning software just optimize open pit or underground operations, but do not
facilitate optimization of the transition depth for these operations.
The second shortcoming, which led to the development of the model as described in this report, is the lack of
attention for the operational and financial influence of the open pit and the underground operation. Simply
calculating an NPV or Internal Rate of Return (IRR) for the open pit operation or the future underground
operation does not take into account the changes in the finance of the underground project caused by
changes in the design of the open pit mine and vice versa. An additional bench or marginal ore mined in the
open pit changes the cashflow of both the open pit and the underground mine. This 'vertical'
interdependence is especially important in the case of 'limited vertical extent' of the orebody. Development

planning of the underground workings has a big impact on the possibilities for combined open pit and
underground production overlap.
Moreover, the financial influence of the one project on the other can have a big impact on the transition
optimization. In most countries the depreciation of capital investment in underground development has a
major impact on the tax costs and thus forms a tax shield from which the open pit operation benefits greatly.
A third shortcoming of the Unit Cost or Stripping Ratio approach is the limited view that is created by only
looking at the cost-side of the operation. Variations in grade and resulting revenue are not taken into
account.
To include all of these topics in the transition decision making the model uses an integrated financial and
engineering approach. The combined design is constructed based on the interaction between the methods
and taking into account the constraints set by one method to the other. The open pit and underground model
are both evaluated in the traditional way, but also in a combined financial and sensitivity analysis, giving the
NPV and cumulative financial indicators of the total project. Comparison of the combined and separate
financial analysis and consideration of the social and environmental issues altogether leads to a decision on
the optimized transition depth.
End of life planning

An important complication in the determination of the optimum transition depth for both the traditional and
integrated approach is the change in production planning with regard to the sinking rate during the last years
of open pit life. When it is decided to close an open pit, the production in the remaining lifetime of the open
pit will have a very low stripping ratio. This is often the result of focusing the production on sinking the pit
bottom lower into the highest grade ore, decreasing the size of the boxcut. No additional stripping at the pit
walls for future production has to be performed anymore. Therefore, the cost breakdown for the last years of
open pit life is significantly different from the normal cost breakdown and the sinking rate of the pit is much
higher. Because the possibilities of decreasing the size of the box cut and sinking the pit in the highest grade
ore are highly site-specific, it is very hard to incorporate this important change in production planning in a
general transition model. The developed model requires relative changes of the planning parameters as
input in order to solve this problem.

3. Slope angle optimization
The developed model optimizes the combination of transition depth and open pit slope angle. This chapter
gives some background on geotechnical theory and the methods for slope angle optimization applied in
industry. Besides this, paragraph 2 describes the practice of slope steepening at the end of open pit life to
extract additional ore and the interdependence of this slope steepening and the transition decision.
1. Slope design methodology

Design of slopes in open pit mining is a continuous trade-off between maximizing financial return and mineral
recovery on the one hand and minimizing risk on the other hand. In order to limit the stripping ratio to a
minimum the slopes have to be as steep as possible, but this should not lead to a reliability of the slope that
is regarded as 'unsafe'.
No slope in open pit mining is fully reliable. Production maximization drives planners to increase the slope
angle beyond the natural angle of repose of the rock, so that natural rock mass strength or support have to
ensure stability. The definition of sufficient stability or reliability is the critical design factor. In other words; not
'risk minimization' (Nilsson, D., 1982), but 'the level of unsafety' the designer accepts determines the
steepness of the slope.
The slope angle is just one of many factors influencing slope stability. Geological structure, rock stresses,
groundwater conditions, rock stresses, discontinuity characteristics, wall curvature, vibrations from blasting
and seismic events, weathering and climatic conditions all play a role in inducing or resisting slope failure
(Piteau, D.R., 1970 ; Sjoberg, J., 1996). Moreover, time is an important factor in slope design. Theoretically,
the correct pit slope fails as soon as all equipment and personnel have left the pit (Steffen, O.K.H., W. Holt,
V.R. Symons, 1970). Many of the factors mentioned above vary over time. Groundwater levels change with
the seasons, seismic events are highly irregular and weathering can cause chemical or structural changes in
the rock mass characteristics. Progressive small-scale failure changes the stresses and loads of benches. In
general, increasing pore water pressure, removal of toe support, changes in rock shear strength, loading of
the slope or seismic activity are (in this order) most often responsible for slope failure (Bromhead, E.N.,
1992).
a. Stability analysis
Slope design starts with determining the steepest possible slope for mining a certain amount of ore. Various
types of stability analysis exist, mostly divided into analysing a specific type of failure. Some modern
computer programs combine these methods and evaluate the general stability.
The most important failure methods for rock slopes are depicted in Figure 4. Because this chapter is written
in the context of potential steepening of pit slopes, discussion of analysing methods will not include toppling
failure, since slope angle only plays a minor role in this process. Raveling (not depicted here) is influenced
by slope steepening to a very limited extent, and will therefore not be discussed.

Figure 4 - Slope failure types (Hoek & Bray; 1977)
Planar failure, circular failure and wedge failure all are very common in the mining industry. The scope of
failure can vary from bench scale to ramp scale to pit wall scale (Hustrulid, W., M. Kuchta, 1995). Large
scale planar failure requires a moderately or steeply dipping failure plane, more or less parallel to the pit wall,
daylighting in the pit. Circular failure occurs when a rock mass has a low internal cohesion. Most massive
slope failures in open pit mining are a combination of circular and planar failure, where the failure envelope
propagates through weak rock masses and along existing discontinuities. Wedge failure is responsible for
most of the bench-scale failures in heavily jointed rock masses. However, depending on the discontinuity
spacing stepped wedges can occur on a larger scale (Bye, A.R., F.G. Bell, 2001).
Apart from finite element software programs all stability analysis is based on mathematical kinematic
analysis of the failure modes mentioned above. Kinematic analysis assesses the potential movement of a
body without looking at the actual driving forces (Goodman, R.E., 1989). Further methods, like block theory
and limit equilibrium analysis were derived from this physical consideration (Hoek, E., K.H. Rippere, P.F.
Stacey, 2001). In 1977 E. Hoek and J. Bray published the book 'Rock Slope Engineering', which gives a set
of mathematical equations for analysis of the stability for the different failure modes. A comprehensible chart
system for various groundwater situations and explanation for supporting stereographical analysis are part of
the analysing method.
The equations by Hoek and Bray form the base of the stability analysis for the slope optimization of the
developed model. Chapter 4.2 describes the methodology of the model, but the basic theory for the various
failure modes is set out below.
All stability calculations result in a ratio of the forces resisting failure over the forces inducing failure. This
ratio is named the Safety Factor (SF). This factor does not include a measure of uncertainty of the output.
However, for many years this single factor determined the slope angle of pit walls. A SF of 1.3 for normal
walls and 1.5 for haul roads was regarded as sufficient for open pit mining (Hoek, E., J. Bray, 1977;

Jennings, J.E.B., 1970). At the end of this paragraph the disadvantages of the use of safety factors and the
remedial measures in the form of probabilistic analysis will be explained.
Planar Failure
In the system of forces shown in Figure 5 the natural cohesion (c) and friction () over the surface of the
failure plane (A) are the resisting forces, while the water pressure (U and V), the weight of the block (W) and
the seismic load (W) are the driving forces for failure. The influence of the water pressure depends on the
level of the phreatic water surface, which can be measured as a zw/z-ratio.
Figure 5 - Plane failure forces
Additional resisting forces in the form of bolts under a certain angle can be added to the calculation. The
resulting safety factor can be calculated using equation 3.
SF =
( )
cA + W ( Cos p Sin p ) U VSin p Tan
(3)
W ( Sin p + Cos p ) + VCos p
Where:
(
z=H 1- Cot f Tan p ) (4)
A = ( H z ) Co sec p (5)
1
U = w zw A (6)
2
1
V = w zw2 (7)
2

2
1 z
W = H2 1 Cot p Cot f (8)
2 H
The main problem with application of this formula in general slope analysis is the required knowledge about
the failure plane. It is not always clear in advance that a discontinuity is a potential failure plane.
Furthermore, in reality a stepped failure will often occur. However, for planar failure analysis this method and
the more specific additions for special cases are the most accurate tools.
Circular failure
Hoek and Bray's system for circular failure analysis is based on the results of four other chart methods;
Taylor, Janbu, Bishop and Morgenstern and Spence. Hoek combined the results from various cases
analyzed by these methods and in this way created a new system, in which he found a relationship based on
slope stability between slope height and slope angle. The main parameter in this system is the groundwater
pressure, and therefore a categorization of groundwater regimes was defined and a stability chart was
developed for all five categories shown in Figure 10 at the end of this chapter.
The calculation steps to find the safety factor in the failure chart for the specific groundwater conditions are
shown in Figure 6. First the dimensionless ratio is calculated:
c
r= (9)
HTan
The second step is to follow the radial line from the value of the dimensionless number inward to its
intersection with the curve for the right slope angle. From this intersection, the safety factor is calculated from
the slope angle function (Equation 10) or the slope height function (Equation 11), depending on which axes
is closest to the point of intersection (in these equations the safety factor is historically noted F).
Figure 6 - Sequence of steps involved in using a circular failure chart

c
Slope angle function: (10)
HF
Tan
Slope height function: (11)
F
Use of this method is not as accurate as mathematical calculation in the forces in vertical slices of the failure
volume, but gives a good approximation of the factor of safety. Software programs like Slide calculate the
safety factor for many potential failure envelopes with varying center point and radius.
Wedge failure
Multiple discontinuity sets in various directions form wedges in the pit walls. Apart from the characteristics of
the rock mass, stability of these wedges depends on the direction and dip of the failure planes in relation to
the pit wall. Kinematically, the wedge has the potential to come out of the wall if the dip of the line of
intersection of the discontinuity planes is higher than the friction angle of the rock mass. However, just as in
the case of planar or circular failure, the water pressure is a major force inducing failure. Hoek and Bray
(1977) developed a method in which the safety factor is based on the geometry of the wedge, the cohesive
strength and friction angle of the planes and densities of the rock and water.
Figure 7 - Wedge failure geometry
With cA, cB, A and B the cohesive strengths and friction angles of planes A and B, the density of rock, W
the density of water and H the vertical height of the wedge, the factor of safety can be calculation with
Equation 12 (Afrouz, A.A., 1992).

3
SF = ( cA X + cBY ) + A W X Tan A + B W Y TanB (12)
H 2 2
X, Y, A and B are ratios based on the geometry of the wedge, which are calculated with the angles between
various lines of intersection. These angles can be measured with stereographic analysis or calculated using
the vector products of the lines. The ratios are calculated with the following equations. In all equations is
the dip of a plane or line and 'na' and 'nb' are the poles of the two planes.
Sin 24
X= (13)
Sin 45 Cos 2.na
Sin13
Y= (14)
Sin35 Cos1.nb
Cos a Cos b Cos na .nb

A= (15)
Sin 5 Sin 2 na.nb
Cos b Cos a Cos na .nb

B= (16)
Sin 5 Sin 2 na.nb
Probabilistic analysis
The value of the safety factor only gives information about the stability in a specific case matching the input
data. However, in reality conditions vary over time and the rock mass and discontinuities have largely varying
characteristics within the evaluated body. Undisclosed geological features, errors in testing procedures,
variability of material properties, variability of water pressures, shortcomings in applied theories and errors in
calculations have led to the general practice of assuming a SF of over 1.3 for normal cases to include a
sufficient safety margin (Steffen, O.K.H., W. Holt, V.R. Symons, 1970). Due to the high level of uncertainty
some experts regard safety factors as meaningless unless they imply failure (Bromhead, E.N., 1986).
The unreliability of calculating a safety factor can be hedged if the variety in conditions is incorporated in the
input data. Using a distribution of values as input a probabilistic analysis can be performed. By looking at the
effect of the spread of potential input values the variety and uncertainty of the input values is reflected in the
distribution of output values. The developed model for stability analysis uses Monte Carlo analysis to
calculate a large of output values with randomized input values, so that a distribution of potential stabilities is
obtained. The reliability of the slope can be assessed by evaluating the percentage of output values that
indicate failure (Khalokakaie, R, P.A. Dowd, R.J. Fowell, 2000), that is; the SF <1 or the safety margin
(forces resisting failure - forces inducing failure) <0.

b. Design & Optimization

When the stability of the slopes of a pit has been assessed, the results have to be incorporated in a pit
design. This is an iterative process, in which the stability of the designed slopes is constantly re-assessed.
Slope design starts with defining design sectors based on geology, hydrology and often the layout of the
haulage system. For each sector the stability requirements are defined, after which the steepest slope
meeting these requirements is searched. The full design has to take account of working efficiency, which has
consequences for the width of benches and haul roads, the design of catch benches, berms and ditches, the
size of the pit floor (box cut). Nowadays, the initial design is often based on an optimized pit designed by pit
optimization software like Whittle, in which many of these parameters are included.
As said before, theoretically the ideal pit slope fails as soon as all equipment and personnel have left the pit.
Because in reality the knowledge of the rock mass is very much limited, the normal practice is to find out the
slope angle that appears to be stable and flatten this slope by some degrees for extra safety. The
experimental knowledge about existing stable and unstable natural and artificial slopes can be of great help
to the designers.
Cost-Benefit analysis
In most operations optimization of the slope angle is limited to designing a stable slope and adding an extra
safety margin (Hustrulid, W.A. ed., 2001). However, optimization really indicates a trade-off between costs
and benefits of maintaining a slope at a certain angle. Therefore the ideal optimization methodology is a
cost-benefit analysis over varying slope angles.
Benefit of mining a pit with certain pit slope angles is the value of the extracted ore. Costs are primarily the
mining costs for the same volume of ore, but with extra attention for the costs associated with slope stability.
These costs could be split up between capital expenditure to design and excavate the wall at a certain angle
and operating expenditure including the maintenance of the wall.
The capital stabilization costs are costs for specific blasting methods and stabilization/reinforcement of the pit
wall, like installation of drainage, bolts, mesh and shotcrete. Operating costs are divided into normal
maintenance of the wall and cost of failures. These failure costs could be the cleaning up of the slide
material, but also loss of ore, delay of production, repair of haul roads, damage to equipment and even
injuries or loss of life.
This last list immediately shows one of the difficulties of cost-benefit optimization; loss of life is of a different
order than the cleaning up of slide material. Although modern engineers have developed monetary indicators
to incorporate safety risks in the analysis, one has to be very careful to keep the human aspect in mind.
As in stability analysis, it is impossible to calculate meaningful values without using probabilistic analysis;
which in this case includes the probability of failure, the probability of a potential victim to be in the wrong
place, the probability for these situations to coincide and the impact of a slide (Pine, R.J., Roberds, W.J.,
2004). Furthermore a probabilistic analysis is done on the slide stability and the volume of the failure
material. In the complete analysis the time a slope has to remain stable plays an important role.
Only one complete model has been developed for this optimization (Kim, Y.C., W.C. Cassun, T.E. Hall,
1977). This model, part of CANMET's Pit Slope Manual (Coates, D.F., 1977; first edition in 1976), has not
been widely used, but is widely seen as the best attempt to perform a slope optimization with economic cost-

benefit-analysis (Call, R.D., 1992; Hustrulid, W., M. Kuchta, 1995; Sjberg, J., 1996; Sjberg, J., 1999).
Based on the concept of this study and using the calculation power of current computer systems, the
developed model, as described in chapter 4.2 gives an optimization of the slope angle, which is later used to
optimize the OP/UG-transition.
2. Pit slope steepening

Because slope stability is partly time dependent - theoretically stability could be seen as a stand-up time of a
slope - design can be reconsidered when the pit comes close to closure. The pit walls will not have to remain
stable at that moment for a long time. Therefore, in some operations the choice is made to steepen the pit
slopes in order to excavate additional ore at a very low stripping ratio. Especially in OP/UG-transitions, with
the looming production shortage due to slow ramp-up of underground operations, this decision is attractive.
A good example is the ramp scavenging project undertaken at Palabora Mining Company (South-Africa)
(Whitham, M., Townsend, P.A., Dennis, B. and Mossop, D., 2004). Because the new design will likely differ
greatly from the normal pit design, requiring other types of equipment and operation, slope steepening for
short periods of time will mostly be done by contractors.
Additional production by steepening an existing slope can be done by two alternative methods; ramp
scavenging or wall scavenging (increasing the interramp slope). Ramp scavenging can again be done in two
ways; by ramp steepening or by ramp narrowing. In ramp steepening the gradient of the existing ramp is
steepened, while in ramp narrowing part of the existing ramp is excavated.
Wall scavenging has the inherent disadvantage that in most cases blasting a small slice from existing
benches is practically impossible. Double and triple benches only allow blasting with very long drillholes.
Mining thin slices pose a risk in blasting and limited width of final benches makes removal of the blasted ore
very hard. Therefore ramp scavenging will mostly be the preferred method of slope steepening (Whitham,
M., e.o., 2004).
Ramp scavenging can be performed moving upwards or downwards. Important design parameters for the
new slope are the bench width, ramp width, blast design and the gradient of the new ramp. Apart from slope
stability, catch performance is the main characteristic considered in determination of the bench width. New
bench faces can be created by cutting a new (less wide) ramp into the existing ramp. A small part of the
existing ramp can be left in place to act as catch bench. Blast design has to result in minimization the side
throw of the blasted material because of the limited working space.
Because the size of the boxcut at the pit bottom increases by slope steepening (as shown in the case of
Palabora, Figure 8), the operation could continue mining on lower benches and deepen the pit after ramp
scavenging took place.
Sometimes the decision will be made to steepen the slope on benches that are not yet excavated. This can
be done by narrowing the ramp or bench width or increasing the bench height (by double or triple benching).
On the point of transition to a steeper angle the slope will have a kink.

The main disadvantage of narrowing final benches is the increasing risk of rockfall. Therefore multiple
benching is often done in combination with blasting improvement projects like perimeter blasting. Therefore
these blasting costs have to be taken into account as steepening costs in an optimization program.
Figure 8 - Ramp scavenging design at Palabora Copper Mine (South Africa)
The pit bottom is horizontally often located in the material with the highest grade, so slope steepening near
the bottom of the pit will often give the best results. However, by removing material at the pit bottom, the
stability of the total wall is decreased. Stability assessments and monitoring are therefore very important in
this process. Development of a tool for cost-benefit analysis for steepening the slope on the lower benches
of a pit was the starting point for development of the geotechnical model as discussed later in the report.
Interdependence with OP/UG transition

The most important interdependent characteristic between slope angle optimization and transition depth
optimization is the influence of slope steepening on the open pit mining unit costs, which play a major role in
determination of the economic transition point. A slope steepening operation planned at an early stage will
lead to a later startup of UG operations. In the case of Palabora, the ramp scavenging was not planned in
this way, but was started to supply the plant with sufficient ore during the slow ramp-up of underground
production.
A small increase in the slope angle can lead to a very significant reduction of the volume that is to be hauled
for a fixed amount of ore. The main parameter in calculation of this reduction is the size of the boxcut. In a pit
with a big boxcut, and thus a big core of the mined volume, the reduction by increasing the slope angle is
smaller than in a pit with a small boxcut. The second, much less important, parameter is the height of the pit;
steepening a deeper pit is relatively more advantageous then steepening a shallow pit. The reduction of
excavation volume for a 250m. deep pit with a 50m. box cut is shown in Figure 9.

Figure 9 - Reduced excavation volume at steepened slope
Obviously, a second interdependence occurs in the production planning when steepening of the pit leads to
deepening of the pit. The material mined on an OP bench cannot be mined by UG mining anymore.
Therefore, pit deepening by slope steepening is likely to have a negative effect on the financial results of the
underground operation in the long term, more specific due to limitation of the UG minelife.
A third group of interdependence issues can be found in the disturbance of the development of underground
workings due to pit steepening in the case this steepening is overlapping UG development. In many cases
geotechnical monitoring equipment will be installed in the pit, but this is not possible on benches that are still
active or will be mined in the near future. Furthermore in some cases pumps will be installed near the pit
bottom to limit the water inflow into the future cave material.
Besides the open pit operation having influence on the underground development, this development sets
serious limitations to the work in the open pit. During cave initiation, there is only limited time until the cave
breaks through in the pit. When ramp scavenging is applied in order to fill the production valley at startup of
UG mining, the preferred order of working is bottom-up, to retain a safety zone during cave propagation. The
period of overlapping production in the open pit and underground operations depends on the slope stability,
the cave propagation and the lift height. In most cases overlapping production will not occur for more than
one year (Kear, R.M., 2006).

Figure 10 - Groundwater flow conditions (Source: Hoek & Bray; 1977)

4. Model methodology
The shortcomings of the traditional transition optimization methodology led to the development of the model
presented in this chapter. This model is based on the integrated transition optimization approach, analyzing
both the separate open pit (OP) and underground (UG) projects and the combined cash flow in which the
interdependence between the projects is evident.
The primary objective of the model is to find the optimum transition point from open pit to underground
mining from a financial point of view. Various financial analyzing methods can be used to determine which
transition depth or year gives the best overall performance. According to most investment decision projects
optimization of the Net Present Value (NPV) of the project has been taken as the primary indicator.
Apart from optimizing the transition point, the secondary objective of the model is to optimize the slope angle
of the open pit. This optimization is performed by a cost-benefit analysis based on probabilistic stability
calculations.
Slope design is the most important factor in management of the mining costs of an opencast operation due
to the big impact on the stripping ratio. Furthermore, during the last years of open pit mining the slope angle
for the lowest benches is often reconsidered to maximize the recovery from the reserves. Therefore, slope
angle optimization potentially has a big influence on the transition point. Combination of the optimization of
slope angle and transition depth leads to a new integrated approach of the whole transition process.
The constructed model consists of a general part in which the transition point of an operation is optimized by
selecting the best alternative after calculation of the financial results of all possible cases. A geotechnical
module in which the slope angle is optimized is linked to this transition model.
Application of the model to specific cases allows the assessment of the relevance of geotechnical
considerations like steepening of the lower benches compared to the transition project. Moreover, the model
gives an overview of the financial results, including sensitivities, of terminating open pit operation on various
depths, so that the best transition point can be chosen. General analysis gives insight into the relative
importance of various planning and design parameters of the transition process.
Paragraph 1 describes the setup, algorithms and output of the transition model. The geotechnical module is
discussed in paragraph 2. The last paragraph of this chapter describes the software-setup of the model.
The most important assumptions and limitations of the model are listed in Chapter 5. Chapters 6 and 7 give
an overview of the results from the analysis by the model, including general rules on transition decision
making derived from these results.

1. Transition model
a. Model setup
The basic principle of a generic transition model is the comparison of the financial analysis of all potential
transition scenarios. These scenarios are created by the model based on the termination of open pit
operation on a set bench or in a set year. Results of every scenario are stored, so that the optimum scenario
can be chosen with any given set of financial criteria.
Components of the model

Supplied user data can be split into sets of OP-specific data, UG-specific data, General data and Transition
data. The OP- and UG-specific data consist of production planning and cost data. General data is mainly
economic, while transition data is concerned with specific operational phenomena around a transition like the
decrease in stripping ratio prior to closure of the open pit. Some specific data will be discussed in this
paragraph at the description of the applied algorithms. A full list of required input data can be found in
Appendix A.
The data is processed by the model in a series of components with a full cash flow of the operation on which
the financial analysis is performed as the final result. First, a full production planning is created from the open
pit and underground production planning combined with the transition data, based on transition in a set year.
Using this production planning an investment planning is generated, in which the development and
replacement investments are set per year and yearly depreciation is calculated. The production planning also
functions as the source of information for a mass flow overview. Using the supplied financial data, the mass
flow and the investment planning the cash flow is constructed. To compare the various scenarios financial
analysis and sensitivity analysis are performed over this cash flow. The algorithms for each of these
components will be discussed in the next paragraphs.
Optimization process
The user of the model can choose between an optimization of the transition in time or in depth. An
optimization run starts with a transition at year or bench 0, which means mining the full deposit by
underground mining. The results of the financial analysis are stored, after which the next potential transition
point is selected, the cash flow is calculated and analysis applied. This procedure continues to the point
where the full orebody is mined by open pit mining. In this way a full overview of the financial results of all
potential transition points is generated. A schematic overview of the process is shown in Figure 11 -
Transition optimization diagram. At the end of the run the model will select the best scenario, based on
preset selection criteria. The user can browse through the results and recall the detailed analysis for every
single scenario.

Figure 11 - Transition optimization diagram
Output
The basic output of the model consists of a table with financial indicators for every transition scenario. Net
Present Value for the total project and for the underground project, Internal Rate of Return for the
underground project, discounted and undiscounted cumulative cash flows and various types of unit costs
give a good foundation for comparison of the alternatives. Plotting multiple indicators in one graph allows
visualization of the differences in the optimized result for the various indicators.
The output of the sensibility analysis is a standard spider diagram, showing the impact of relative changes to
certain input parameters to a financial result. With these diagrams the most important profitability-drivers can
be identified.
b. Production planning
The combined OP and UG production planning is constructed from the separate production schedules for
OP and UG mining. The separate schedules contain the production data in tonnages per bench (rows) and
per year (columns) and the average grade of the excavated material per year as shown in Figure 12. The
schedules can be exported from mine planning software programs or constructed manually and should be
generated for both ore and waste and reflect the mining of the total orebody by the one method.
In general, it can be said that production in an open pit moves downwards over time at a set sinking rate,
while a block cave produces the ore in an upward fashion at a set drawing rate. When combining these
schemes, the open pit production has to be cut off at the right moment and the UG scheme has to be shifted
to the right position. The most important parameters in this transition production planning are the overlap in
time of open pit and underground methods or the temporary production stop and the potential need of a
permanent crown pillar or underground mining of the pit walls. These parameters are depicted schematically

in Figure 13. Apart from these major transition parameters some general alterations have to be made to
account for process alterations in the years prior to the transition or mine closure.
Figure 12 - Production planning format
The generation of the production plan for every scenario is fully automated. If all required input has been
saved the algorithms stated below will be activated.
Figure 13 - Construction of a combined production planning

Open pit production

The first step in generating the planning differentiates between the benchwise and the yearwise transition. In
the case of a transition on a set bench all rows, containing the production data of the benches, from the
surface to the transition point are copied from the OP planning to the combined production planning. For a
transition in a year all columns, containing production data for the years, from the first year to the last OP
production year are copied. In this case a check is performed to make sure the potential waste stripping does
not continue below the last bench producing ore. Besides data on the tonnages the grades per year are also
copied from the OP planning to the combined planning.
Stripping and production decline

An important change of operation in the last years of open pit production is the decreasing stripping ratio.
Depending on the stripping policy applied, this decrease compared to the set schedule can start as early as
15 years prior to pit closure. Because the pit production is set up for mining the total orebody by the same
method while the model only copies part of this schedule, this copied pit production has to be changed to
reflect this decrease. This is done by selecting the waste production data of the last years of OP production
and reducing all figures by a user-defined percentage for every year.
In the last years of pit production the ore production will often decrease as well, although the time span of
this decrease is much smaller. Therefore the ore production data of the last years are reduced by a user
defined percentage. In this way the production schedule of every scenario is automatically altered to reflect
reality.
Incremental mining costs

Due to reduced efficiency in smaller working spaces and increased haulage distance the open pit mining
costs generally increase with depth. In smaller pits this might not be a problem, but operations discussing a
transition from open pit to underground obviously will be big pits if mining continues without going
underground. The increasing open pit mining costs therefore have to be included in the model. This is done
by multiplying the tonnages hauled by the number of benches they have to be hauled below a defined
starting bench of the incremental costs. The resulting number is multiplied by a fixed incremental cost per ton
hauled per bench.
Underground production
When the schedule for the open pit production has been finished, the underground production data have to
be added. Here the division, made in chapter 2, between limited and unlimited vertical extent of the orebody
is of major importance. This division led to the categorization of transition considerations of fixed lift heights
or variable lift heights. The user of the model has to choose one of these cases.
When the vertical boundary of the orebody is clear, the lowest level of the cave will be at this boundary and
the lift height is variable. The underground production data are copied from the separate production planning
to the combined planning from the lowest level of production upwards. Starting year of the UG production is
set at the year following the last year of OP production minus a set production overlap. Because the

production ramp up is the same for all transition scenarios, this is included in the data copied from the
separate underground production planning.
For orebodies with an unlimited vertical extent (in the perspective of the operation) the lift height is taken
constant. In this case the underground production data are both switched to the right year, depending on
termination of OP production and the overlap, and to the right depth, depending on the ultimate pit depth and
the fixed lift height. For example; the production for an underground mine with a fixed lift height of 20
benches will start at bench 55 in the scenario where the open pit ends at bench 35, but will be shifted down
to bench 65 if the open pit continues operation to bench 45.
Yearly grades of the underground production are imported from the separate planning and set for the right
years in the combined planning.
Crown pillar and pit wall mining

When all production data have been copied, interdependence of open pit and underground mining is not yet
reflected. If a permanent crown pillar will be established, first the underground production in the benches in
and above this pillar is deleted. If no crown pillar is established the model takes care of the fact that ore that
has been mined in the open pit, can not be mined again by the underground mine. The underground
production per bench is limited to the total ore per underground bench (that is; the ore within the borders of
the potential cave) minus the open pit production on the same bench. In this way the underground mine can
draw ore from the pit wall, but not the material that has been mined before.
c. Investment planning
The investment planning algorithms contain planning of development and replacement capital investments,
decommissioning and reclamation expenditure and depreciation calculations. Various depreciation policies
are available for the investments. As with the production planning the algorithms for the investments are fully
automated.
Capital investments
The investment planning algorithms contain planning of development and replacement capital investments,
decommissioning and reclamation expenditure and depreciation calculations. Various depreciation policies
are available for the investments.
The capital investments are split up into OP Development Capital Expenditure (CapEx), UG Development
CapEx and General Investments, which include the replacement capital and other capital investment
programs during normal mining operation. From the production planning the years of first and last production
for open pit and underground projects are determined. Subsequently the development CapEx for both
methods is inflated and copied to the right years, depending on the set start of production before the end of
development expenditures. Open pit development will only be needed for greenfield operations.
The inflated general investments for OP and UG are set for every year in which ore is produced by these
methods. In years of combined OP and UG production the general investments of both methods are
summed up. Because general investments for the open pit are decreasing in the years prior to pit closure
and general investments for underground mining are decreasing in the years prior to mine closure the values

of the investments in the last years of production for a method can be reduced by a given percentage per
year.
Depreciation
Calculation of the depreciation of capital investments is important because of the big influence it can have on
the taxed paid. Especially in the case of a transition, where a very big capital expenditure is made during a
running operation, the benefit from the resulting tax cover can be substantial. For specific cases detailed
study of the national or regional tax law is required to determine which capital investments qualify for this tax
cover. The impact of the depreciation regime to the transition optimum will be discussed extensively in
chapter 7.
The model supports four depreciation methods for the investments, but does not allow differentiation of the
method over various types of investments. The full amount of capital investments, from which a set
percentage can be subtracted to reflect the salvage value, is depreciated at the same rate and with the same
regime. The supported methods are; straight line depreciation, declining balance, reserve depletion and
accelerated depreciation.
In straight line depreciation the value of the investment minus the salvage value is depreciated in equal
amounts over a number of years. Declining balance depreciation speeds up the rate of depreciation by a
factor. The model uses a factor of 2 (double declining balance), resulting in a yearly depreciation of 2 divided
by the total depreciation period multiplied by the book value of the asset.
In the accelerated method the investment is depreciated as fast as the operating profit will allow. Reserve
depletion depreciation is specific to the mining industry and is calculated as the part of the undepreciated
balance equal to the ratio of the reserves mined over the total remaining reserves at the beginning of the
year.
The yearly depreciation of the investments is calculated for each year of investment using the selected
method and depreciation rate. Starting in year 1 the calculated amounts for each year are summed. If the
summed amount is smaller than the operating profit for the year, it is accepted as the depreciation.
Otherwise the depreciation is set at the value of the operating profit or 0 (if the operating profit is negative)
and the remainder of the summed amount is added to the depreciation of the next year.
Other investments
Apart from the capital investments, the closure of the mine, involving decommissioning and rehabilitation
works, requires a big special expenditure. The model includes the inflated value of these expenditures
starting in the last year of production. To define this last year the model searches for the first year which has
two consecutive following years without production. The closure costs are not incorporated in the capital
investments but in the operating expenditure. The planning of rehabilitation expenditure is highly dependant
on government policy. Some nations require operations to set apart a yearly sum. In this case the closure
investments have to be incorporated in yearly investments or converted to a part of the production costs.

The last part of the investment planning is concerned with the working capital. For greenfield operations (no
production in the first year of analysis) both the working capital expenditure in the first year of operation and
the working capital income in the last year of operation are set. For brownfield operations just the working
capital income is set. The amount is derived from a predefined number of months of operating expenditure.
d. Mass flow
Construction of the mass flow overview is a relatively simple operation because of the detailed production
planning. The calculations start with the hauled ore; the grade of the plant feed is calculated, after which the
amount of product is derived from the processing indicators.
During the last years of underground production the dilution tends to increase dramatically. Especially in
block cave mining the caving pit walls cause a great amount of waste material to be mix with the ore.
Therefore the standard dilution set for underground mining can be increased by a user-defined percentage
over the last years of production. These modified dilution (d) figures are used in the calculation of the
tonnage (T) and grade (g) of the plant feed (f), which are given in equations 17 and 18.
T f = TOre ,OP (1 + dOP ) + TOre ,UG (1 + dUG ) (17)
TOre,OP gOre ,OP + (TOre ,OP dOP ) gWaste ,OP + TOre,UG g Ore,UG + (TOre,UG dUG ) gWaste ,UG
gf = (18)
Tf
The calculations for tonnages and grades are made for three separate products. With the overall processing
recovery (r) and the grade of the product (p) the tonnage of the product can be calculated from equation 19.
Tf g f r
Tp = (19)
gp
e. Cash flow
With Mass flow and Investment planning set, the construction of a cash flow is a regular spreadsheet
operation. Figure 14 gives a full overview of the calculation of the yearly cash flow. The values in this cash
flow are modified yearwise by time-dependent multipliers. The most important of these multipliers are the
escalator for the product prices and the inflator for costs.
To enable the model to cope with the importance of currency devaluation in some cases a third multiplier has
been included, called the local currency depreciator. Depending on the part of the costs and the revenues
that are incurred in the local currency and the relative depreciation of the local currency compared to the
dollar (in which unit prices are expressed), the costs and revenues are multiplied by the exponential factors
given in equation 20 and equation 21Error! Reference source not found.. The economic data required for
calculation of these multipliers are the part of cost incurred locally (Clocal), the part of revenues incurred
locally (Rlocal) and a yearly relative devaluation of the local currency compared to the dollar (Dlcoal).

Local revenue multiplier:
( )
M Re v ,n = 1 + (1 Rlocal ) (1 + Dloc ) 1
n (20)
Local cost multiplier:
(
M Cost ,n = 1 + (1 Clocal ) (1 + Dloc ) 1
n
) (21)
The resulting cash flow is the 'apparent cash flow'; it gives the results per year in 'Money of the Day'-terms.
For analysis purposes this cash flow is deflated to give all values in 'Real'-terms, that is, in base-year-dollars.
Besides the cash flow for the combined open pit and underground project, a separate cash flow is created
for the underground project. This cash flow can be constructed including or excluding the effects the project
will have on the open pit cash flow, most important of which is the tax cover supplied by the underground
development capital.
To enable comparison of the transition scenarios with the option of abandoning the orebody after the
optimized pit is reached, the projected cash flow including decommissioning and closure costs for this
optimized open pit scenario have to be available as well.
f. Financial analysis
The cash flow created for the various scenarios has to be analyzed in order to select the optimum scenario.
Most investment decisions are based on standardized financial indicators like the NPV and the Internal Rate
of Return (IRR). These indicators include or calculate a cost of capital or discount rate based on the project
risk. Furthermore the cumulative cash flow and various types of unit costs and cost-benefit ratios are
calculated by the model. Ideally, all these indicators give an optimum result at a certain transition bench.
The analysis is split in an analysis of the combined cash flow and analysis of the separate cash flow for the
underground project.
Underground project analysis

The traditional feasibility study on going underground involves analyses of the cash flow for the
underground project. The first calculated financial indicator is the cumulative real cash flow of the project.
The Net Present Value of the integrated project cash flow is the cumulative deflated cash flow discounted by
a cost of capital, the height of which depends on the level of perceived risk and the required earnings from
the project. The cost of capital can be varied in the model. The Internal Rate of Return is defined as the
value of the cost of capital that gives a NPV value of zero.

Figure 14 - Cash flow calculations

Integrated project analysis

When determining the optimum transition point between open pit and underground mining, analysis of the
UG project alone is not enough. The underground project has serious impact on the cash flow of the OP
project. Therefore the NPV and IRR are as well calculated for the integrated project cash flow. In most
brownfield operations the IRR can not be found, because the cash flow starts with positive numbers and is
definitely positive; a high cost of capital reduces the values, but does not give a negative value.
Various types of Unit costs and Cost-benefit ratios are calculated for every ton of product produced; including
and excluding capital expenditure, the average over the full time of the project and the incremental values
per year. The optimum level of these parameters shows the scenario with the lowest production costs or the
highest profit margin per ton of product, regardless of further financial project results.
An important goal of transition project analysis is to answer the go/no go-question. In most cases this
depends on the sign of the NPV at the set cost of capital. In the case of a possible transition, the alternatives
are to mine the open pit up to the optimum pit shell and close the mine or to make the transition at the
optimum point. Therefore, to support the decision to go underground the net present value of the difference
between closure and transition has to be positive. This difference is build up from a different production
scenario for the bottom of the pit, the full cash flow of the underground mine, the impact of the underground
mine on the open pit cash flow (mainly the tax cover) and the postponement of decommissioning and
rehabilitation expenditure.
A full subtracted cash flow displaying these items is generated in the model by subtracting the optimized OP
cash flow from the optimized transition scenario cash flow. The NPV and IRR of this subtracted cash flow are
likely to be more attractive than the previously calculated NPV and IRR for the UG project, because in most
cases a significant tax cover is generated by the underground development capital expenditure, which is not
included in the separate cash flow.
g. Sensitivity analysis
By manipulation of parameters in the cash flow calculation the model creates a spider diagram showing the
impact on the integrated project-NPV of a relative change in the input. These spider-diagrams are created for
variation of the cost of capital, the inflation, the escalation, the product prices, tax rate and royalty rate,
dilution parameters and fixed and variable costs for both open pit and underground mining.
Apart from the analysis of the sensitivity of the NPV within a given scenario an inter-scenario sensitivity
analysis can be performed to evaluate the impact of the changes on the optimized transition point. However,
this analysis is not automated in the model but has to be performed manually over multiple runs of the
model.
A further analysis between various scenarios can be done by plotting the NPV of the project for increasing
cost of capital. In this way the change in optimum for varying financial requirements is displayed. These
financial and sensitivity analysis methods will be applied and further discussed in chapter 7.

2. Geotechnical module
a. Module setup
The objective of the geotechnical module is optimization of the pit slope angle from a set point in depth. This
point can either be at the collar level or on some bench in the pit. The optimization is based on cost-benefit
analysis. Steep slopes yield high recoveries or low stripping ratios at high stabilization costs, while flat slopes
are very stable and result in low stabilization costs at high stripping ratios. The module analyses the costs
and benefits for every slope design to choose the most profitable design, which is consecutively used for
transition optimization.
The probabilistic cost-benefit analysis methodology is mainly derived from CANMETs Pit Slope Manual
(Coates, D.F., 1977).
Components of the module

To perform an analysis of the costs and benefits of a certain slope design, all significant costs and benefits
involved should be assessed. If all costs and benefits are included, the minimum cost-benefit ratio over the
full lifetime gives the optimum slope.
The benefits of every slope design are defined as the value of the extracted ore. The amount and value of
this ore are imported from general mine design software. The benefits and costs are analyzed compared to a
base scenario.
Costs are split into the general mining costs for mining additional ore and waste and the costs associated
with the steepening of the slope. These steepening costs include both capital expenditure and slope
maintenance costs, including costs due to slope failure.
The module starts with calculation of the effect of preventive slope stabilization, based on design data,
structural and mechanical rock data and data on the applied stabilization methods. With the resulting slope
characteristics probabilistic stability calculations are performed. The calculated slope reliability is required to
assess the instability response costs. All calculated costs are then structured and used for the overall cost-
benefit analysis.
Optimization process
The pit slope design normally varies for the various parts of the pit, due to different rock mass characteristics,
orebody geometry etc. The total slope design is formed by multiple slope sectors, all with individual size and
characteristics, for each of which the design can be changed. The model accepts the input of multiple slope
sectors, for each of which the stability assessment has to be performed to calculate the costs. The sum of
the costs for all slope sectors is the total cost used in the cost-benefit analysis.
Calculation of the cost-benefit ratio for one scenario is not enough for slope angle optimization. In the
optimized slope the cost-benefit ratio is as low as possible. Starting at a base case design, normally the
original slope design, the analysis is therefore performed for multiple other slope angles. Because there can
be only one optimum slope and the proximity of the financial result of other design to the optimum result
depends upon the difference in slope angle, the iterative analysis process could be stopped as soon as the

value of the cost-benefit ratio decreases. Further analysis of sub-optimal slopes gives a better overview of
the sensitivity of the results.
The optimum slope angle can be either higher or lower than the base case slope angle. Thus first a slightly
higher angle is analyzed; if the result of this analysis is better than the base case result the next analysis run
is for an even higher slope angle. If the result of the first analyzed indicates a deteriorating result the
optimum slope angle will be lower than the base case. Figure 15 - Slope optimization process diagram
gives a schematic overview of the full optimization process. In this diagram SA is the slope angle and n is the
number of the scenario run. Instead of stopping the analysis at the optimum point it is possible to continue
calculation for some extra runs to get a good overview of the results for a deviation of the slope angle.
Figure 15 - Slope optimization process diagram
Output
The output of the optimization module is organized as a graph showing the cost-benefit ratio for various
slope angles. From this graph the minimum value of the ratio can be read to determine the optimum slope
angle. For the individual scenarios the breakdown of the costs per slope sector can be seen.
b. Slope stabilization
Preventive slope stabilization methods decrease the probability of failure of the pit wall. Therefore, before
performing the stability calculations, the effect of these actions has to be determined. The stability
calculations work with a limited number of input parameters. Additional stability of the wall has to be reflected

in these parameters to be taken in account in the stability assessment. Because a prevention method is
seldom applied to a full wall, a factor can be set to indicate scale of the area of application of the method
compared to the full slope.
Algorithms
The actions that can be taken in order to prevent or limit slope failure all have a different effect on the slope
stability. Bolting and coating (e.g. shotcrete, gunite) increase the forces resisting failure, draining reduces the
driving forces and controlled blasting both reduces the fracturing of the wall and the seismic activity in the pit.
A special topic is the incident-prevention by monitoring of the pit walls. The algorithms applied in the module
are described in the following paragraphs.
Bolting
Installation of bolts or anchors increases the force resisting failure. This increase can be seen as an increase
of the component of the weight of the failure volume on the failure plane. The factors influencing the increase
of the resisting forces (Fincrease) are the density of bolting (number of bolts (#bolts) divided by wall surface
(A)), the average bolt tension (Fbolt) and the angle of the bolt relative to the failure plane, which is build up by
the angle relative to the horizontal () and the dip of the failure plane (). Because the safety factor is
calculated as a ratio of all forces over 1 meter along the slope length, the height of the slope (H) is divided by
the surface per bolt.
H
Fincrease = * Fbolt *sin ( + ) (22)
A
# bolts
Costs of bolting are the installation costs and in some cases maintenance costs. The installation costs are
calculated from the installation costs per bolt, while the maintenance costs are expressed as costs per bolt
per year, which will mostly be calculated from the total reinforcement maintenance costs divided by the
reinforced area.
Coating
Coating limits the possibilities for initial movement of a failure volume. Once the coating is broken, all
strength is lost. Therefore coating can be seen as increased internal friction of the rock mass. The increase
of this friction angle is expressed in degrees.
Costs of coating are mainly installation costs, divided into labor costs and material costs (including
equipment costs). Maintenance costs, like repair of cracks in a shotcreted surface, are separately included
as costs per reinforced square meter per year.

Draining
Drainage is a very important preventive measure in slope stabilization. By reducing the water pressure in the
rock mass the safety factor is often dramatically increased. However, drainage can be applied in many ways
and with an endless variation in design. For the case of simplicity the module regards all drainage methods
as drilled drainholes with a fixed cost per meter. The costs of draining are thus calculated by multiplying the
number of holes, the average length of the hole and the average cost per meter.
The effect of draining can vary as much as the applied methodology. The module assumed full drainage of
the failure volume, which results in a Zw/Z-ratio of 0 (the ratio expressing the height of the water column in
the potential tension crack) in planar failure and wedge failure. For circular failure stability calculations the
Hoek and Bray circular failure charts situation, as explained in the previous chapter, is set to chart 1.
Controlled blasting
Controlled blasting, in the form of presplit blasting or sequenced detonation, increased the reliability of slopes
in a twofold way. In the first place the reduced intensity of shock waves in the rock mass lead to less
fracturing of the wall, so that the internal friction does not decrease. In the second place the seismic activity,
mainly important for planar and wedge failure is reduced.
The effect of controlled blasting is modeled as a percentage increase of the failure resisting forces and a
percentage decrease of the seismic coefficient. Incurred costs are split between the capital costs (e.g.
additional blasthole drilling, additional explosive costs) and additional labor costs, both per meter of slope
width.
Monitoring
Monitoring of slope movement has the advantage of the increased safety of personnel and equipment and
the possibility to take preventive action to prevent failure. Monitoring can be applied in many ways, ranging
from extensometers to satellite image analysis. Because of this wide range of possible activities the model
only accepts a cost per square meter of monitored slope. Distinction is made between initial labor and
material costs and maintenance costs.
The effect of monitoring in reducing costs is calculated by applying an accuracy factor for the monitoring (the
percentage of slides expected to be predicted by the monitoring system). For this part of the slides the
personnel and equipment is assumed to be evacuated from the unstable area, so that no damage will occur.
Furthermore the instability response model, discussed in paragraph d, will change, favoring the cheaper
unloading to the cleaning and repair caused by a failure.
c. Stability calculations
The settings on slope reinforcement and preventive stabilization are used as input data for the kinematic
stability analysis. Basic theory of this assessment on planar, circular and wedge failure has been discussed
in Chapter 3. The algorithms that are applied to calculate the safety factor are calculated using the
algorithms in this paragraph. However, safety factors can not be used in a cost benefit analysis. The factor of
safety indicates either stability or failure. Stability would lead to zero failure related costs, while failure would
lead to maximum costs. A probabilistic reliability of each slope is required to forecast failure behavior.

The required probabilistic reliability is determined by applying Monte Carlo analysis to the stability
calculation. Input data are set as input distributions, most of which are normal distributions. A random value
is taken from the random distribution, which is formed by a mean and standard deviation (68% of all values
lie within the mean plus or minus 1 standard deviation). Some input values (e.g. distance to potential tension
crack) are derived from a uniform distribution, in which a random value between two boundary values is
taken. In Monte Carlo analysis the calculation is performed many times with a different set of random input
values, so that a distribution of safety factors is calculated. The size of the Monte Carlo dataset can be
defined by the user of the module.
The analysis determines the distribution total failure resisting and inducing forces as depicted in Figure 16. A
single safety factor calculation would give the mean resisting forces divided by the mean inducing forces as
answer. This safety factor would indicate failure or stability.
Figure 16 - Probabilistic failure criterion
The probability of failure as calculated by the model is the part of the results where the inducing forces are
higher than the resisting forces. The reliability as calculated by the model is the percentage of the surface
below the curve of inducing forces that is not in the failure area.
The slope reliability is calculated for every defined slope sector and for every year the slope stands. Besides
the slope reliability the failure volume is of major importance for the cost-benefit analysis. Therefore the
stability assessment includes the calculation of the failure volumes. The most important probabilistic input
data are rock characteristics and rock mechanical data. However, slope geometrical data can be treated
probabilistic as well.

Algorithms
Besides the stability assessment algorithms for the various failure types an additional algorithm has been
created to include the influence of pit wall curvature in the calculations.
Wall curvature
Wall curvature influences slope stability only to a minor extent in big regularly sloped pits. In the limited area
around the pit bottom with a high curvature of the pit wall the influence can become important. The more a
wall is curved inward, the higher the stress that has to be overcome by failure inducing forces. This stress
can be expressed as a decrease in the natural friction angle and depends on the ratio of curvature radius
(RC) and slope height (H). An empirical algorithm has been developed to define the decrease in friction angle
(incr), stated in equation 23.
3
incr = (23)
2 RC
3
H
Planar failure
The theory of the calculation of a planar failure factor of safety is explained in Chapter 3.1. The additional
force on the failure plane caused by bolting is included in this calculation. All input values are taken randomly
from the input distribution. For the maximum distance from the crest of the slope to a tension crack the width
of a bench or ramp is normally taken in the cases where not the full slope is analyzed. The maximum
additional load on the slope or bench is also taken as a uniform distribution.
The total of failure inducing forces is obtained by summing the component of weight and seismic activity
along the failure plane and the water pressure, which is calculated from the water depth ratio in the tension
crack. This water depth ratio is derived from the Hoek and Bray charts or set manually. For Hoek and Bray
situation 1 a ratio Zw/Z of 0 is taken, for situation 2 Zw/Z=0.05, for situation 3 Zw/Z=0.2, for situation 4
Zw/Z=0.5 and for situation 5, where the slope is fully saturated, Zw/Z=1.0.
Total resisting forces are calculated from the vector components normal to the failure plane and the resulting
friction plus the natural and reinforcement cohesion.
Due to the probabilistic determination of input values it often happens that the dip of the potential failure
plane is higher than the dip of the slope. Planar failure is not possible in these cases and it becomes
impossible to calculate a safety factor. The module sets the safety factor to a value of 2 for these cases, so
that they will be taken into account in the reliability analysis.
Circular failure
Total rock mass cohesion and friction, including alterations caused by reinforcement, slope face angle, rock
weight and slope height make up the dimensionless number required to determine the circular failure factor
of safety from the failure charts. These charts have been encoded and are incorporated in the model. Based
on the calculated dimensionless number and the slope angle the module looks up the four values of the
safety factor closest to the real input data in the chart for the correct groundwater situation and calculates the

weighted average of these values. The transition point of calculation between the slope angle function and
the slope height function is set at 0.225
Wedge failure
Wedge failures in an open pit are hard to predict, because of the small scale and the amount of potential
failure planes in the rock mass. Fracturing due to blasting, resulting in backbreak at the crest of benches,
often has the characteristics of wedge failures. The scale of wedge failures is very hard to predict due to the
progressive nature of this type of failure and the stepped path a failure plane can have.
The module requires the user to supply the dip direction, dip and spacing of the three discontinuity sets most
likely to cause wedge failure in a slope. The stability of a wedge resting on all three potential combinations of
these sets (1-2, 1-3 and 2-3) is analyzed with the kinematic method described in the previous chapter. After
the geometric vector product calculations on plane orientations and lines of intersection the module makes
use of the altered friction and cohesion parameters to calculate a factor of safety for all three potential
wedges. The lowest factor of safety is then taken for the reliability calculation.
The spacing of the discontinuity sets is important for the prediction of the scope of the failure. Therefore the
major spacing is required, indicating the distance from persistent discontinuities. The height of the resulting
wedge is estimated by taking the distance between the lines of intersection of the two failure planes.
Failure volume calculation

The volume of a rock failure is of major importance to the costs of the failure response. The failure volume of
wedge and circular failure is obviously strongly related to the height of the failing slope. Empirical research
3
defined the average failure volume of major slope failures as 0.08*H . This formula is based upon the failure
height (H), width (0.4*H) and depth (0.2*H).
Wedge failure geometry requires a different estimation of the failure volume. Slope height again is the major
2
parameter, but the wedge height (HW ) also plays a role. The average volume is found to be 0.5*HW *0.04*H .
However, the variation in volume is very large, especially for high slopes.
d. Instability response model

Many ways of response to instability are imaginable. Preventive action, like unloading of an unstable slope or
changing the slope design to leave a strengthening buttress in place, is possible. Failure reaction is required
in the form of cleaning the failure material and repairing the ramps. In general, prevention of slope failure
results in lower costs than cleaning and repair. If a slope failure can be predicted by monitoring the failure
response will therefore normally differ from an unpredicted situation.
Every operation has a different way of handling slope instability. The module requires this response to be
modeled in an instability response model (Girard, J.M., 2001). This model determines the share of
instabilities that is handled in every way. Because this behavior changes in the case of slope monitoring, a
special model is requested for monitored slopes. The model asks for the percentage of instabilities that is
unloaded, cleaned after failure for which a step-out, resulting in loss of ore, is made. Apart from this division

the probability of serious damage to a haul road, so that the haul road would have to be reinforced or
changed is requested.
The instability response model does not perform cost calculations, but prepares the response data for the
cost calculations. These cost calculations accept probabilistic data, so all data stated below can be inserted
with mean values and standard deviations.
Removal of instable material

Removal of instable material can be done at two points in time; before failure or after failure. In the case of
removal before failure the instable slope is unloaded. Although the unit costs for unloading are generally
higher than for cleaning of failure material, the volume that has to be unloaded to create a stable slope is
normally much smaller. Apart from these unit costs for both methods, the size of the volume required for
unloading has to be determined. This size is defined by an unloading depth, width and breadth, all relative to
the slope height.
Stepping out - Loss of ore

The amount of lost ore caused by a step-out to stabilize a wall is determined by the width of the buttress, the
step-out distance or breadth and the height of the buttress. The height is normally defined by the pit
geometry and is therefore determined in a cost calculation. Width and breadth have to be defined in the
response model.
Loss of ore is a special topic in open pit mines that are developing a transition to an underground caving
method. Because of the caving of the pit walls the ore in the buttress is in this case not really lost, but the
production is extremely delayed. Cost calculations as discussed later in this paragraph take this situation in
account.
Haulage system
Costs associated with the haulage system occur on two areas. Damage of the ramps has to be repaired, but
in some cases this will result in an increase in haulage distance and therefore increase the haulage costs.
The costs of repairing the ramps depend on the unit repair costs and the size of the ramp area to be
repaired. The ramp can either be reinforced or stabilized by widening the ramp with reinforced waste
material. Therefore a potential step-out distance, the grade of the ramp, the dump material density and
reinforcement costs per cubic meter are required. The volume of the reinforced part is determined in the cost
calculations based on the height of the failure.
Increased haulage costs are determined on a yearly base by the amount of hauled material and the
additional haulage costs.
Delayed production
Besides delayed production due to design of buttresses an operation can have a considerable financial
disadvantage from failure due to a decrease in productivity. This decrease results in a partial or full
production stop. The cost of this delay is calculated from the extent of the delay and the daily production.

e. Cost-Benefit analysis
The objective of all assessments on prevention, reliability and response is the calculation of the costs of
steepening of the base case slope by a number of degrees. These costs consist of the initial prevention
capital and yearly costs on maintenance and instability response.
Because not only rock characteristics but also cost and response factors have a high variation, the model
gives the opportunity to perform the cost calculations by Monte Carlo analysis. Because not every slope
sector has the same size and probability of failure is directly linked to the surface are of a slope, the surface
area is incorporated in all cost calculations. This is done by assigning a number of unit cells to the slope
defined as the ratio of the width of the slope along the perimeter divided by the slope height.
Cost calculation is run per slope sector. The initial costs (year 0) for stabilization are set, after which the
Monte Carlo analyses for stability analysis and cost calculation are run for every year until the end of open pit
production. All results are stored in a matrix stating the costs per year and sector. The sum of the values in
this matrix gives the total cost of stabilization and instability response. The calculation of prevention costs
has been explained in paragraph b and will thus not be discussed in this paragraph.
In order to compare these costs with the benefit from the additional ore mined by slope steepening the
original costs from the base case have to be subtracted from this cost value. The remaining costs,
specifically incurred for the steepening, should be lower then the benefit to support the steepening decision.
Cost calculations
All response costs are based on the reliability of the slope sectors. If a slope is stable, no response costs are
incurred. The costs for every type of response are calculated by multiplying the probability of occurrence of
the response in a certain year by the cost of the response. The probability of occurrence can be limited by
the user in all cases by changing a factor of probability in the input screen. This factor is included to enable
the user to rule out certain failure types that are very improbable in reality but could occur based on
theoretical data. If unaltered this factor does not affect the model output.
Mining costs
The major part of the incremental costs for steepening a pit compared to the original design will be direct
mining costs for the additional amount of ore and waste that has to be mined. These costs are calculated by
multiplying the additional amount of ore and waste with their respective unit mining costs.
Removal of unstable material

The removal of unstable material is divided in unloading and cleaning. Cleaning of slide material is further
subdivided into cleaning of planar or circular failure slides or cleaning of wedge failure material.
The probability of the occurrence of cleaning of planar or circular slide material is defined as:
PCl , P ,C = PCl (1 RP RC ) (24)

Where PCl is the probability of cleaning as defined in the response model and Rp and Rc are the slope
reliabilities for planar and circular failure. This probability is multiplied by the number of unit cells for the
slope, the volume and density of the failure material and the unit cost of cleaning per ton.
Cost of cleaning the material for wedge failure is calculated in the same way, where the probability of
cleaning a wedge failure is:
PCl ,W = PCl (1 RW ) (25)
Cost of unloading of the material is defined by taking the probability of instability and multiplying this number
by the response model probability of unloading, the unit cost of unloading per ton and the tonnage of
unloaded material, which is defined by the size of unloading, set in the response model.
Stepping out Loss of ore

Like the unloading of an instability the decision of stepping out depends on the general probability of
instability, defined by the reliability of a slope for all failure methods:
PInstability = 1 RP RC RW (26)
This probability is multiplied by the likelihood of the choice of stepping out as response to get the likelihood
of occurrence. This likelihood is multiplied by the tonnage of ore lost, which is defined by the geometrical
step-out parameters and the height of the slope. This height is calculated by subtracting the height of the
slope mined from the final slope height. The height of the slope mined is assumed to be linearly related to
the year of operation. After calculating the probabilistic amount of lost ore, a value has to be ascribed to this
ore. In general open pit cases this can be simply done by multiplying the tonnage of ore by the unit value of
the ore. In the case of a future transition to underground mining the loss of ore is in fact a delay of
production. Therefore the future value of the ore is calculated using the expected remaining life of the open
pit and the expected life of the underground mine and a user-defined discount rate. The lost value of the ore
is then multiplied by the probabilistic tonnage to find the cost of stepping out.
Haulage system
The costs of restoration of the haulage system are based on the likelihood of the occurrence of the response
multiplied by the restored volume and the unit costs per restored cubic meter. The volume is calculated from
the height of the ramp, which is determined in the same way as the height of a potential step-out, and the
inclination of the ramp. Because the volume is based on an average height of the ramp, the full slope height
is divided by two for this calculation.
Increased yearly haulage costs are calculated with the increased length of the haulage road, the yearly
tonnage of production and the haulage costs per ton per meter (which is easily calculated from the total

haulage costs and the length of the haul road). Obviously these costs are multiplied by the likelihood of
occurrence of this response option.
Delay of production
Production delay due to cleaning of failure material is calculated in a similar way as the value loss due to
stepping out. The likelihood of occurrence is the same as the likelihood of unloading. The average delay in
days is converted to a delay in years. The value of the delayed ore is then discounted for this short period of
time and the loss of value is multiplied by the probability of occurrence to find the lost value. In reality a much
larger cost can be involved by insufficient feed to the plant, resulting in temporary closure. However, this
geotechnical module is not designed to go into this amount of detail and assumes a sufficient feed stockpile
so that this risk can be neglected.
Fatalities, injuries and damage

The category of potential costs that is hardest to express in values is the potential damage to personnel and
equipment. However, neglecting this category cannot be justified. Changes in the slope angle op a pit wall
do affect the risk of people or equipment being caught by a slope failure. Therefore, this category has to be
incorporated in the module.
The risk of a person or piece of equipment being caught by a slope failure can be calculated by multiplying
the probability of a target being on the location of the failure and the probability of a failure taking place. This
probability of impact is then multiplied by the average cost of an event like this. A distinction is made
between personnel and equipment, so that separate values of damage to a person and a piece of equipment
can be set.
Benefit calculations
Steepening of a pit slope makes no sense if no additional ore can be extracted in the new design. The
additional benefit is calculated from the tonnage and grade of additionally mined ore, which is determined by
block model analysis in a mine planning software program (e.g. Datamine, Surpac Vision, Gemcom).
Figure 17 - Design of a steepened pit slope

Figure 17 displays the additional area between the two pit shells which is gained by a slope steepening of
two degrees. Using a blockmodel the tonnage and grade of this volume can easily be defined. Once all
additional benefits and costs have been determined, the cost-benefit ratio for the case is defined. All cost
results are stored as probabilistic values, so that a probabilistic output function can be created.
3. Platform
Microsoft Excel has been chosen as the platform for both the general transition model and the geotechnical
module. This spreadsheet program has the great advantages of simplicity, flexibility and a broad customer
base. All data in the model can be altered manually by everybody with basic knowledge about Excel.
Although many calculations can be performed by the program itself it is not possible to base the full
functionality of the model on standardized spreadsheet functions. For the automation of the algorithms and
to perform calculations that are not possible in the general Excel-interface Microsoft Visual Basic for
Applications (MS VBA) has been used. This object-oriented programming language can be used to expand
the possibilities of all MS Office-products. The programming code of all macros run in the program is printed
in Appendix B.
MS VBA has also been used to create the interface for the general transition program. Although the program
can be run easily without using this interface, for inexperienced users it can be very helpful in the editing of
data en general analysis.
The generation of the production planning required for the general model and the benefit-analysis of the
geotechnical module are conducted in mine design and planning software. Most of these modern design
programs allow custom text files and spreadsheets to be created with the output of blockmodel analysis and
planning.

5. Assumptions and limitations

Although the objective of the model is to enable pre-feasibility stage optimization considerations for all mines
considering going underground, some assumptions have been made and limitations are build in that could
affect the accuracy of the output in specific cases. This chapter discusses the methodological limitations in
paragraph 1, the assumptions that have been made to create the model in paragraph 2 and in the final
paragraph the physical limitations of the model.
1. Methodological limitations
The methodology that is applied to optimize the transition point from open pit to underground mining does
have some financial and engineering weaknesses. The occurrence and potential solution of these subjects
are described in this paragraph for the two parts of the model.
a. General transition model
NPV based timing-optimization

Optimization scenarios, whether depth or time based, are all time dependent. As will be shown in chapter 7,
the use of the Net Present Value to perform timing-optimization does result in time-dependent output.
The calculated cash flow is evaluated with the use of a method that applies an exponential risk function, the
discount factor, to calculate a perception of the present value. This discount factor is used to reflect the risk
involved in future returns. When a project is evaluated long before the optimum transition moment, the cash
flow of the underground project is only taken into account to a small extent, because the cash flow of this
period is discounted much more than the flow of the earlier years. If the same project, which did run exactly
on budget and on schedule, is evaluated again ten years later, the underground project cash flow is
discounted much less. If this underground project would be highly profitable compared to the open pit
project, this would suddenly yield an optimum transition point that is higher then in the earlier analysis.
To mitigate this time-dependency of the analysis by NPV various other financial analysis methods which do
not include the time-dependent risk factor are used in the model, including the non-discounted cumulative
cash flow. Based on a combined analysis of these financial indicators a choice of the optimum transition
point can be made.
Production planning continuity and generalization of transition

By attempting to model a discontinuous phenomenon like the closure of an open pit mining operation one
encounters a range of complications. By discerning trends in the operational and financial changes before
mine closure these complications have been mitigated. However, the applied generalization will not give a
realistic view of the OP/UG transition for every scenario.
The two most important limitations are the applicability of an unlimited production planning for the full
orebody for open pit mining and the generalization applied at the transition parameters. To enable
optimization of the design based on a transition depth the model assumes the mining of the orebody at an

increasing stripping ratio. This planning is created per year and per bench and can contain any pushback or
sink of the operation. To create a transition scenario the model cuts off the unlimited planning at the right
point and changes the bottom end of the planning to reflect a realistic transition situation. The algorithms
applied to reflect a realistic situation for end of life of the pit will deform the planning of an irregular operation.
Furthermore, in case the extracted orebody is not completely opened up from the top but partly from the side
(e.g. from a valley beside a mountain or from a previous pushback) the increasing stripping ratio is not valid.
Cutting of the production planning at a set bench to create a scenario will result in benches that are partly
mined. These operations can only be evaluated by the model if the planned stripping ratio is more or less
continuous.
Social and environmental factors

Optimization of the transition point from a financial point of view in a mathematical and financial model does
imply exclusion of social and environmental factors in the consideration. In reality, many regional social,
political and environmental factors play a major role in the decision of a mining company to leave an area or
go underground and also in the timing of this transition to a new mining method that will likely imply a
reduction of the workforce. The financial solution of the developed model should never be adopted as the
overall optimum transition point without assessing the social and political consequences of the transition
timing.
Parameter sensitivity analysis

A minor methodological limitation of the model is the impossibility of application of sensitivity analysis for
specific design parameters (e.g. lift height) in a single optimization run. Investment planning and other fixed
cash flow items do not allow changes in the design during the run. Therefore, to perform a sensitivity
analysis of the design and planning parameters various runs of the model have to be executed.
b. Geotechnical module
Generalization of prices
Slope failures are very hard to catch in a model, because no situation or failure is ever the same as a
previous one. Depending on the size of a failure, the depth in the pit, the location relative to the production
area and the operator of cleaning (contractor or own personnel) unit prices for response costs can vary
greatly within a mining operation. Although this variety is partly mitigated by allowing probabilistic cost data
input, the generalization can still affect the outcome of the analysis. Costs of a single major slide can have
big impact on the optimized result of the geotechnical optimization module.
The cost input of stabilization activities is not as variable as the response costs, but the area over which
reinforcement is applied can influence the result greatly. In general it can be said that slope stability of
discontinuous rock masses can best be done by probabilistic methodology, but even if this is applied, a fully
accurate cost prediction remains impossible.

Special cost factors

Breakdown of the failure prevention and response costs does not include all costs involved with for example
the reduced efficiency due to failing of a slope and the learning costs resulting from applying a drilling and
blasting methodology or changing the procedure loading and hauling teams. Because it is impossible to
include all these minor costs, the costs of slope steepening will likely be underestimated. Therefore it is
important to make conservative estimates of the unit costs of preventive stabilization.
Monetary valuation
Optimization of slope design requires expression of risk in monetary values. The most difficult monetary
valuation is for the risk of injury or even fatalities occurring due to instability of a slope. Although general
company policy is to minimize the number of accidents and prevent all casualties by a zero-tolerance policy
to risk, it is not possible to exclude the risk from these design considerations. The risk of failure is real, and
so is the risk of people being hit by the failing rock mass. Because the slope design does affect this risk, it
has to be taken into account. Obviously, apart from the financial considerations, attention has to be paid to
many ethical considerations.
The normal method of valuation a lost-time injury is a summation of the medical costs and the lost time
costs, either calculated from the tonnages produced per man hour or from the salary of the injured person.
Valuation of a casualty could be seen as a life-long lost time injury, with special attention to the non-
monetary costs for the victims family. Generally this valuation is done based on the age and the salary of the
person.
2. Model assumptions
Every model is based on the set of assumptions. The most important prerequisite for performing the
calculations is the availability of input data, which assumes the existence of the data and the ability to specify
and collect it. Some other minor assumptions important for parts of the model are listed as well in this
paragraph.
Availability of data
Data is required to perform calculations. The user of the program will need to fill in all required data and has
the opportunity to add some optional data in order to improve the analysis. These data will have to be
collected within the organization or reasonable estimates have to be made, using information from other
operations and experience from similar situations. Much of the data has to be derived from analysis of similar
operations. Other data, especially the creation of the production planning for open pit mining for the full
orebody, has to be extrapolated from existing files by skilled personnel.
However, the assumption of the availability of the data and the capability of the user to specify and collect
this data is not unrealistic. Considering a transition to underground mining is not the first step in project
evaluation. Most required data will be used in an earlier stage at the feasibility study for surface mining. The
underground cost data and production forecasts have to be specified and estimated to perform financial
analysis.

With all models the rule Rubbish in, rubbish out is very important. The more the supplied data resembles
reality, the better the analysis will be.
Independent production system

Many external events exert influence on the production of a raw materials producer. However, because it is
impossible to model the whole world including commodity trading, worldwide economics and trade unions the
mining operation has been modeled as an independent production system. The mine produces a predefined
amount of ore and this ore is processed by the plant without further consideration of over or under capacity,
production valleys at transitioning and many other factors that will have to be taken into account in reality.
Basic assumption in that the mining operation will be profitable enough to continue production regardless of
external influences.
Continuity
Setup of the cash flow depends on the supplied operation-specific data combined with time dependent
parameters. These time dependent parameters, like the commodity prices and unit costs, are driven by ratios
like the inflation and escalation. Continuity of these ratios has to be assumed to make reasonable estimates
of cost and benefit trends in the future. When more specific data has been collected on these trends, this
continuity can be altered manually in the model for a specific period (e.g. a more detailed short term
commodity price prognosis).
Depreciation regime
Corporate accounting legislations varies in most countries. The model makes use of the common
assumption in which depreciation of assets is cumulatively build up. In case the operating profit in a certain
year does not support the calculated depreciation level for the year, leaving a specific amount non-
depreciated, this amount is added to the balance of non-depreciated assets and depreciated in the next year
if operating profit allows.
Orebody geometry
An important assumption for the generation of the combined production planning is that all ore mined by
underground mining would otherwise be mined in the open pit. Because the cut-off grade in underground
mining will normally be higher than in open pit mining, this rule is not reversible. Operations in which this
assumption is not valid can not be analyzed with the model without modification of the data.
3. Model constraints
Generic computer modeling does require imposing certain constraints to the model input and output, in order
to limit the physical size of the model and the complexity of calculations. The most important model
constraints for the transition model and slope stabilization geotechnical module are explained in this
paragraph.

a. General transition model

The most important constraint to the transition analysis is the maximum time span of 35 years over a
maximum of 75 benches or bench equivalents in underground mining. Financial analysis over a period of
more than 35 years is both highly inaccurate due to long term estimates and does not increase the accuracy
of many financial indicators due to the reduction of the future values by the discount rate.
The maximum of 75 benches is enough to perform the analysis for all current massive mining operations.
Taking into account that most mines looking to optimize a transition point will have mined out many open pit
benches it is not expected that situations will occur with the current generation of mining methods in which
analysis over 75 benches will not be sufficient.
Analysis of the transition to underground mining is limited to evaluation of the first lift of underground mining.
It is this first lift that determines the transition point. Potential further extension deeper in the deposit after
exhaustion of the first lift should be analyzed separately. Deposits consisting of multiple lenses with separate
pit bottoms need to be analyzed separately as well.
The depreciation of all assets and the calculation of the salvage revenues have been limited to one regime
and depreciation rate. Separate calculation for various assets would require the specification of all types of
assets and depreciation regimes and rates, which would complicate data collection. Moreover, the separate
calculation would involve considerable programming work during the iteration, which is not directly the scope
of this thesis work.
Because the depreciation regime and rate can be set in such way that the output resembles reality best
(focusing on the major assets), the impact on the yearly depreciation can be limited.
The main other constraints to the model are:

a. Maximum 10 years OP development
b. Maximum 10 years UG development
c. Maximum 5 years Reclamation expenditure
d. Maximum 15 years Stripping Ratio decline prior to transition
e. Maximum 5 years OP production decline before transition
f. Maximum 5 years UG dilution increase before end of mine life
g. Maximum 3 products/concentrates
Loans and interest

An additional remark has to be made about the level of detail of the project cash flow. Some operations
require incorporation of yearly income and expenditure for loans and interest on the cash flow. Although this
opportunity has been supplied in the basic format of the models cash flow, it is not possible to set these data
in the simplified interface. If loans and interest form a significant part of the projects cash flow, the relevant
figures have to be supplied manually in the spreadsheet.

b. Geotechnical module
Major physical constraints to the slope stabilization module are limited to a maximum of 16 slope sectors and
a maximum of 20 years to the stabilization analysis. Both constraints will not pose a problem in analysis of
potential steepening of part of the pit slope in the last years of open pit life.
The stability analysis of wedge failures is limited to analysis of the 3 most important potential failure planes.
This can be justified by the knowledge that wedge failure in rock masses heavily jointed by more than 3
discontinuity sets is simply to irregular to assess by mathematical methods and can thus not be performed in
a mathematical model. These walls can only be included in the model by entering the expected stabilization
costs modified by the expected failure-related costs.

6. Transition Optimization Results
A generic computer model on OP-UG transitions is likely to give results that are scenario-specific but also
collectively meaningful. The developed transition optimization model was extensively used to analyze
potential general conclusions that could be helpful in the transition considerations. This chapter discusses
the results of this analysis. The first paragraph describes the output data generated by the model and
identifies the most critical financial and engineering parameters influencing the financial result and the
transition optimum. Paragraph 2 translates these parameters into a set of key points on the open pit, the
transition and the underground operation to be considered while performing a pre-feasibility study on a
potential transition.
All units in this chapter are metric.
1. Financial and engineering parameters

The analysis of the influence of financial and engineering (planning and design) parameters on the financial
result has been performed using a standardized fictional dataset and back analysis of the transition of
Palabora Copper Mine (South Africa). The impact of changes in the input varies greatly between the
situations with fixed or variable lift height, linked to a limited or unlimited vertical ore extent. These situations
are therefore described separately in this paragraph. The paragraph ends with a discussion on the
composition of a valid set of optimization indicators.
a. Standardized dataset
The so called 0-dataset represents a 14Mt/y metallic ore open pit transitioning into a 10Mt/y underground
block cave mine in a massive orebody. The project is evaluated over the total life of the mine. Standard base
year of the evaluation is 2006, at which the open pit operation has just started.
Average yearly ore grade for open pit mining is 1.0% and waste grade 0.3%. Underground grades are 1.2%
for ore and 0.4% for waste.
All input settings are listed in Table 2 - 0-dataset input data on the next page. Analysis runs changing single
parameters are run both with a fixed 20 bench high lift and a with variable lift height to identify the critical
parameters and compare the two categories. In the variable lift height case the lower ore limit is at bench 56.
Bench height is 15m.

Table 2 - 0-dataset input data

b. Result presentation
The output of the model can be displayed in various formats. Apart from the table in which all data are
stored, various curves displaying the values of the financial indicators over the various transition points are
constructed.
The calculated indicators are the NPV for the total project, the NPV and IRR for the underground project, the
cumulative unit costs including and excluding capital expenditure. The transition scenarios can be based on
a transition in a specific year or on a specific bench. All transition optimization comparisons are shown for
transition on a specific bench in this chapter. The standardized charts for project analysis are a cash flow
diagram, a cumulative cash flow curve, a net present value curve and a spider sensitivity diagram for the full
project, a cumulative cash flow curve for the underground project. For project comparison the standard
charts are a comparison of NPV and unit costs per transition point, the NPV and Cumulative cash flow per
transition point, the integrated and the UG NPV per transition point and the integrated NPV and UG IRR for
every transition point. The most meaningful charts for the analyzed case are discussed below.
Cash flow diagram

The first available output format for every transition scenario is the cash flow diagram. This diagram shows
the yearly in- and outflow of cash, including both capital and operating expenditure. The situation in Figure
18 is the optimized transition scenario for the 0-dataset, with a transition in bench 41 in 2026. The decline of
income in the years around the transition is caused by the production valley. The reducing outflow of cash in
the years 2020-2025 is the effect of the reduced stripping in these last years of open pit production. In these
years the Cash Out is at the same time increased by the underground development expenditure, but the
effect of this expenditure is limited by the developed tax cover. A negative cash flow is thus only experienced
in the years 2025-2027.
Figure 18 - Cash Flow Diagram

A peculiar characteristic of this optimized scenario is the short underground mine life of only 12 years,
despite high operating profits for the UG mine. The reason for this situation can be found in the optimization
criterion; NPV optimization at a discount rate of 12%. Short term revenue is preferred over long term
revenue, so that the cash flow of the first years of underground operation is already discounted by a factor of
10. The open pit development capital is regarded as sunk cost, so it is not included in the evaluation.
Cumulative Cash Flow

Summation of the deflated yearly cash flows results in the curve depicted in Figure 19. Besides the optimized
transition scenario curve this graph also shows the cash flow for the optimized open pit scenario. This
situation is calculated by the model by searching the optimum transition bench if all underground production
data are set to 0. The result is an optimized open pit, mining until bench 47 and terminating all operation in
2028. As you can see the cumulative cash flow is similar until 2019, when the mine planning a transition
starts to decrease the stripping ratio. When the underground development start the cumulative cash flow dips
for a short time, until the underground production ramp up is completed and cash flow continues to be
positive until mine closure. Both curves show a small dip in the final years of operation, which is caused by
the costs concerned with decommissioning, closure and rehabilitation.
Figure 19 - Cumulative cash flow of the optimized open pit and transition scenarios
Cumulative Net Present Value Curve

By applying the cost of capital to the real cash flows used in the cumulative cash flow curve the net present
value of the cash flow is obtained. The final value of this cumulative net present value is the NPV which is
used as a financial investment indicator. The discount rate applied to calculate the NPV is often included in
the notation between square brackets or in superscript. This report will use brackets to indicate the applied
factor (e.g. the NPV calculated with a cost of capital/discount rate of 12% is denoted as NPV[12]).

The NPV curve is very similar to the cumulative cash flow curve. Because the future values are discounted
by the cost of capital, the curve tends to flatten. While the difference of the cumulative cash flow in the
applied example is over 600M$, the difference for the NPV[12] is less then 30M$. To give a better view of the
situation Figure 20 gives a close-up of the timeframe 2015-2040.
When the NPV is taken as the only decision criterion, the 0-dataset-operation should go underground in
2026, because the resulting NPV is higher than the NPV of the optimized open pit scenario.
Figure 20 - Cumulative Net Present Value of optimized transition and open pit scenarios
Transition scenario comparison

The primary objective of the model is the financial optimization of the transition depth. To facilitate this
decision the financial indicators can be plotted with the transition scenario on the x-axes. In this way the
optimum and the relative impact of a deviation from this optimum can easily be derived.
Normally the NPV transition curve will be bell-shaped; a low NPV for mining the total orebody by
underground (transition on bench 0) and mining the total orebody by OP (no transition or transition on the
deepest bench) while the transition scenarios in between result in a higher NPV. A relatively flat optimum of
the bell shaped curve, forming a plateau, provides the ideal decision situation. In this case the transition
optimization can be tuned on changes in the main input parameters without major financial consequences;
the relative sensitivity of the result is very low.
Figure 21 displays the NPV[12]and the overall average unit cost per ton of product over the transition
scenarios. The unit costs are calculated by dividing the sum of the total operating and capital expenditures
by the total tonnage of produced product. The difference in the transition point with the highest NPV[12] and
the transition point with the lowest unit costs can be explained by neglecting the tax costs and the fact that
the unit costs are calculated from the non-deflated and non-discounted cash flow figures. Due to the inflation
the cash flow figures get higher over time, which results in an overall unit cost increasing with operation

duration. At a fixed lift height a quick transition leads to a shorter project life time, and thus to a lower overall
unit cost. Thus the non-deflated unit cost is not a good decision parameter.
Figure 21 - Bell shaped UC and NPV curves
It is not possible to calculate accurate project parameters for the scenarios transitioning on the very first and
last transition benches, because the development expenditure will only partly be included in the analysis.
The minor oscillation of the curves that can be seen in this and other graphs in this report is caused by the
low resolution of the production planning matrix (full years and benches). The OP production planning is cut
off at a specific bench. The last year of production at this bench is seen as the transition year and the yearly
costs are based on the resulting mass flow. If the transition bench happens to be mined at the start of a new
year, the full fixed mining costs for open pit mining are incurred for this year. The oscillation can be avoided
by analyzing the trendline calculated from the moving average of the number of benches average to the
yearly sinking rate of the pit.
Figure 22 shows the combined optimization curves of the NPV[12] and the IRR for the 0-dataset with
variable lift height. This graph demonstrates that the NPV of the overall project and the IRR for the
underground project do not necessarily give the same transition optimum. It is possible that the choice for a
less profitable underground mine causes the open pit mine to generate an additional profit that is larger than
the underground opportunity costs.
The Internal Rate of Return of the operation decreases dramatically from a transition depth of bench 37.
Because it the lower orebody limit is set on bench 56 the lifetime of the underground mine is very limited at a
transition at a late stage, so that the initial capital expenditure will not be justified by the return in the
operational years.

Figure 22 - IRR and NPV curves for a transition with variable lift height
Sensitivity analysis
The financial sensitivity of an investment calculation is an important decision criterion. Especially the
influence of the commodity price fluctuations is enormous for raw materials investment decisions. This
sensitivity is displayed in a spider sensitivity diagram, in which the relative sensitivity of multiple parameters
can be compared. Figure 23 displays the sensitivity of the optimized transition scenario of the 0-dataset. The
parameters that can be analyzed in this way by the model are the cost of capital, the inflation, escalation,
royalty rate, tax rate, fixed and variable operating expenditure, capital expenditure, product prices and
dilution percentages.
Figure 23 - Spider diagram with price and cost categories

A second method of sensibility analysis, in which multiple projects can be compared, is the investment
valuation chart. The NPV for multiple projects is evaluated as a function of the cost of capital. In this way the
projects can be ranked for various estimates of the cost of capital. Figure 24 displays a comparison between
the optimized transition project and the projects in which the transition occurs 10 benches earlier or later.
Because of the long period of open pit production before the transition the differences of the NPV[12] are
very small at high cost of capital.
Figure 24 - Investment valuation for various transition scenarios
c. Model validation
Prior to using the Transition Optimizer for general analysis of the OP/UG transition and drawing general
conclusions the model has been validated using data from Palabora Copper Mine (South Africa). The full
analysis of this case can be read in Appendix 4. Figure 25 shows the projected cumulative cash flow from
the actual feasibility study and the results from the model for the same situation.
The blue line represents the cumulative cash flow projected in the feasibility study, the red line the
cumulative cash flow excluding the tax cover predicted by the model and the green line the cumulative cash
flow including the tax cover as calculated by the Transition Optimizer. The results of the model do fit very
well to the actual curve. Two main areas of deviation can be identified; one during the development around
2001-2002, the other in the course of the production, where the feasibility study gets a higher cash flow
during the early years and a lower during the later years.
The reason for the first deviation, linked to the development costs, has not been found. The feasibility report
and other sources do not indicate what costs are booked here except the normal development and
production costs, which are identically reflected in the model. However, the resulting deviation is negligible
because a positive and a negative deviation are combined.

Figure 25 - Model and real case cash flow comparison
The deviation during the production years can be explained by the production planning that has been used
for the different analyses. The feasibility study expects a high grade during the first years, slowly diminishing
until around 2020. The input data for the model are derived from the 1996 3D block model used in mine
planning, in which this grade variation is not reflected. However, because the average grade is identical for
both cases, the difference is finally very small.
The Internal Rate of Return calculated for the actual situation by the transition model approaches the IRR
calculated in the feasibility study to 0.3%. Therefore, it can be concluded without doubt that the accuracy of
the transition model is sufficient for pre-feasibility analysis.
d. Variable lift height results

A significant difference exists between the financial impact of transition planning and design in cases with a
vertically limited orebody and cases in which the lifetime of an underground operation is not influenced by the
open pit operation. Therefore the consequences of changing parameters in the situation of a fixed orebody
with a variable underground lift height governed by the open pit depth have been analyzed and are
compared to the results of the analysis of the situation of a vertically 'unlimited' orebody (that is, an orebody
with a vertical extent that is larger than the depth of the optimized open pit plus the lift height of the optimized
underground mine), in which the lift height is optimized without influence of the open pit depth.
The analysis includes relative changes to a large group of parameters. These relative changes allow a
multivariate sensitivity analysis of the transition depth optimization and the financial performance of the
analyzed operation. The influence of underground and open pit capacity, development and replacement
capital expenditure, fixed and variable mining costs, processing costs and other costs, UG development

duration, product prices and incremental mining costs are all analyzed. In the fixed lift case lift height
changes have also been applied.
The most important characteristic of the variable lift height scenarios is the limitation on the UG production
time imposed by the pit limit. In the standard situation the transition optimum is located at bench 37, which is
60m higher then in the case of an unlimited vertical extent of the ore.
The capacity of the underground operation also plays a big role in the optimization; a 50% decrease of the
capacity shifts the transition optimum to bench 43 and makes mining the total orebody by open pit mining
more attractive, while a 50% increase, ceteris paribus, shifts the optimum up to bench 27. Likewise a change
of the open pit production capacity has a dramatic increase on the transition optimum. A 50% decrease in
open pit capacity would lead to the development of an underground mine for the full orebody.
Changes in the mining costs for either open pit or underground mining result in the obvious small changes in
transition optimum that can be explained with the traditional unit cost approach. However, it is noteworthy
that in increase in general costs leads to a minor upward shift of the transition optimum, because these
higher costs have more effect on the open pit operation due to the limited rate of discounting in the first
years. Underground development CapEx is largely discounted by the 12% cost of capital, and does therefore
not influence the NPV[12] of the total project very much. A 50% overspending of budget does not change the
transition optimum, although a 50% decrease in capital costs pleads for a transition on bench 35, an upward
shift of 2 benches.
Increasing product prices or grade of the ore by 20% results in a downward shift of the transition optimum of
2 benches. Further increase leads to the abandoning of the transition plan and optimization of an open pit
operation. Incremental open pit mining costs are very specific to every mining operation. In the case of the
standardized dataset the incremental costs are only a small part of the overall mining costs and thus the
effect of a 50% increase is only a small upward transition optimum shift.
Depreciation impact
By far the most important general characteristic of the combined open pit and underground cash flow is the
impact of the depreciation of capital investments for the underground project. Depreciation of the assets and
development capital has to be planned according to national legislation. If this legislation allows so, which it
does in many countries, the development for the underground project can be depreciated fully or partially
while the open pit is still producing and generating operating profit. However, the policies for capital
allowance and depreciation policies vary greatly throughout the world. Overall tax rates generally are in the
order of 25-55%, while depreciation rates for mine development varies from 100% in many African countries
to 7% Declining Balance in the USA (New, G., 2005; Parsons, B., 1998). Normally the tax rate would be
applied to the full amount of this profit minus the depreciation of the capital expenditure required for the open
pit project. If the depreciation of the underground project can be subtracted from this operating profit before
taxation as well, this generates a tax shield that can add up to the value of the tax rate multiplied by the total
operating profit during underground development in the best case. This effect has a major impact on the
feasibility of a transition and also on the optimization of the planning of a transition.

Planning of the underground development can be tuned to increase the benefit from the tax cover. Normally
a delay in the UG development duration leads to a financial disadvantage. However, if the open pit
production continues during the development until the cave breaks through in the pit, the stretching of the
development could as well lead to a considerable financial advantage. The depreciation of the underground
development capital expenditure can be used as a tax shield to protect the operating profit from the open pit
operation. In this way the capital expenditure can result in a tax shield, the worth of which can equal up to
two years of operating profit, depending on the tax rate and regime.
Mine closure
Due to the transition to underground mining the reclamation of the open pit, tailings area and probably also
the dumps is postponed until the closure of the underground mine. Furthermore, the condition of the open pit
after block caving or sublevel caving took place underneath will be very different than at the end of open pit
operation. If the pit will be filled with water to create a lake this will not alter the reclamation pattern to a great
extent, but if the pit is naturally dry, the reclamation will take another form. The changes in reclamation costs
are generally incurred at the very last of the cash flow and will be similar for every transition scenario.
Therefore they will never play an important role in the transition optimization.
e. Fixed lift height results

The transition optimization in an unlimited orebody can basically be described as the process of finding the
transition depth at which the underground cash flow plus the tax benefits caused by the underground
development are larger that the open pit cash flow for the same year. The cash flow of the underground
project is very much independent of the open pit project, which results in a straight line for the internal rate of
return (Figure 26). The direction coefficient of this line is governed by the inflation, escalation and the local
and foreign part of expenditure and revenues.
Figure 26 - NPV and IRR as function of the transition bench for a fixed lift height

The influence of production capacities on the transition optimum is again the major engineering parameter.
Because of the relative independency of the underground project to the open pit project the influence is not
as big as in the variable lift scenarios.
Because the transition is not governed by time pressure to prevent a too short UG project life, the
incremental mining costs play a slightly larger role in the case of a fixed lift, especially in postponing a
transition at lower costs. Product price fluctuations and grade differences are also slightly more important.
The lift height of the block cave or sublevel cave mine is of major importance to the transition optimum and
the finances of the mine. A higher cave leads to a more attractive underground mine and thus to a shallower
transition optimum. The main factor in this attractiveness is the lengthening of the underground lifetime.
In general it can be said that the production capacities of open pit and underground methods are the most
important parameters. In orebodies with a clear vertical boundary this dominance is stronger than in cases
where the underground production depth can float freely with the depth of the open pit. In the latter case the
design of the lift and the corresponding lifetime of the underground mine (at fixed footprint of the cave)
becomes an important factor.
f. Optimization criteria discussion

Optimization of the transition point requires clarity about the optimization criteria that are used to choose the
best scenario. A single indicator can be used, but in most decisions a combination of financial indicators
forms the foundation of a decision. The combination of the NPV and the IRR is often used for investment
decisions; the NPV gives an idea of the size of the project, while the IRR indicates the profitability of the
investment. Besides the financial indicators many other issues can be put in indicators that can be used in
optimization, for example the total resource recovery or the total footprint of a project.
For financial transition decision making the combination of NPV (of the cash flow resulting from the
subtraction of the UG cash flow from the overall cash flow) and the IRR can be used for the go/no go
decision, but they do not reflect the performance of the total project, which is required for the transition
optimization. What indicator or combination of indicators has to be used to define the optimum transition
point?
The NPV has inherent disadvantage that it favors short term gain over long term gain. Time optimization with
the use of this method could therefore lead to shortsighted decisions. At the same time, the evaluation of
time-dependent risk by the NPV is important for the eventual investment decision.
A good illustration of the time dependency of the NPV-optimum of the transition point is given in Figure 27.
This figure shows the optimization curve for the NPV and the UC for an operation with a difference in the
base year of the evaluation. The first evaluation gives an optimum transition on bench 45. The operation
continues exactly like the data used in the first evaluation. The evaluation is performed again 10 years later,
and because of the increased importance of the UG cash flow in the renewed analyses the transition point
has shifted up 8 benches, indicating the operation should move underground as quick as possible.

Figure 27 - NPV Base year shift
The cumulative real cash flow does not include the cost of capital. Therefore, the result of this analysis is
not time dependent. Because all yearly cash flow data have the same weight, the optimum transition point
indicated by the cumulative cash flow will normally be shallower than the NPV optimum, especially if the
transition is in the far future. The shorter the remaining lifetime of the project, the closer the result of both
analyses will come together. Results of both indicators can be displayed in a combined curve as in Figure
28.
For the final investment decision the cumulative cash flow is too ignorant of the time risk and the required
return on the investment to qualify as optimization tool. However, the tool can give a very good indication of
the range of the optimum transition point in the long term.

Figure 28 - NPV and Cumulative cash flow optimization curve
The values of the IRR and the NPV for the underground project are of minor importance to the optimization
of the transition point. In fact, a scenario with a marginally profitable or even slightly unprofitable
underground mine could be the optimum transition scenario if the resulting tax cover and reclamation
benefits result in a higher overall NPV for the project. Therefore it is important to make a clear distinction
between the net and the gross indicators for the underground project, excluding and including the effect on
the overall cash flow. Underground IRR and NPV can be important for the direct fund raising and project
financing, but should not dictate the transition optimization.
As discussed earlier in this chapter the real, deflated, figures of the unit costs are required to avoid a to
shallow indicated transition optimum. When properly deflated the overall unit costs and cost-benefit ratio,
including all income and expenditure (incl. taxes), can function in the same way as the cumulative cash flow.
As a conclusion it can be said that the NPV is not suitable for long term transition optimization. If a transition
optimum range is predicted in the early stages of a project or for a greenfield project the real cumulative
cash flow will give a good analysis. However, once preparations are going to be made for the transition and a
pre-feasibility study is started up, the overall project NPV has to be used to determine the transition point.
Underground project NPV and IRR should, which are used as indicators in the traditional transition approach,
are only of secondary relevance.
2. Process optimization
Optimization of the total OP/UG transition process is a challenge that can not be tackled by the tuning of
some engineering parameters only, but in which the full process of exploration, design, production and
closure and the financial consequences of a transition for each of these stages have to be taken in account.
Concluding from the optimization results presented above, and acknowledging the importance of social and

environmental factors as discussed in chapter 2, a list of transition rules has been compiled. All of these
rules deal with key points that could exert a major influence on both the transition decision making, including
both the go/no go decision and the transition depth decision, and the financial result of a potential transition.
The categorization of the transition rules is based on the involvement of various departments and task forces
in the overall transition process, which runs from the first assessment of reserves to the moment the
underground mine reaches full production and completed all development activities.
The planning of the transition will mainly be set up by the feasibility-team in combination with mine
management. They will as well perform a crude mine design, which will be used by the engineering
department to create a full mine design for the ultimate pit and the underground mine. During the whole
process, the financial department and mine management should be involved to assess the financial issues of
design and planning decisions and thus create an iterative design process. Further task of the feasibility
team in combination with management is the incorporation of social and environmental issues in the decision
making process.
Transition planning
The planning of a potential transition to underground mining starts with the assessment of the reserves.
Although basic geology can provide crude estimates of the continuity of the orebody, the rate of accuracy
required in the resource estimation for an underground feasibility study can only be reached through an
extensive exploration drilling program.
Timing of the exploration program is of major importance to the progress of a feasibility study. In some cases
a full assessment of the reserves will have been made before open pit mining commenced. If this is not the
case, it is crucial that potential underground reserves have been investigated before an underground
feasibility study starts. In order to allow a good timing of a diamond drilling program, an estimate has to be
made of the ideal transition depth for the specific orebody. Therefore, for all ore deposits potentially allowing
an OP/UG transition, a transition depth estimate has to be made during the feasibility study for open pit
mining, considering the advantages and disadvantages of both mining methods. This estimate could be
made with the use of the model presented in this report or a similar optimization process. The range should
be defined with the method of the real / deflated cumulative cash flow to avoid time-dependency of the
result.
Transition rule 1 - Transition depth estimation

During all open pit feasibility studies in orebodies allowing a transition to underground mining an estimate
should be made of the optimum transition depth and year using the deflated cumulative cash flow method.
Generally it will take at least 4-5 years to start production after the start of the pre-feasibility study (7-9 years
before full production is reached) and 1-3 years to conduct a full exploration program. Compared to the initial
transition point calculated from crude estimated orebody data the optimum transition point could be shifted
several years due to deviation from the data used in the first calculation. Therefore, if the status of the
orebody reserves under the pit is unknown, an exploration program should be started at least 8-12 years
before the start of underground production, which is generally 6-10 years before the end of open pit

production. Because it is hard to predict the duration of underground development before the feasibility study
is performed, it is better to choose the conservative side of this estimate.
Transition rule 2 - Exploration planning

If the status of the orebody reserves below an open pit is unknown, an exploration program should start at
least 9-10 years prior to the end of open pit mine life as determined in a crude transition model.
When the open pit operation is reduced and finally terminated while the underground production has not yet
reached full production, the overall production can temporary fall to a level that is below the planned capacity
of the underground mine. This can have serious consequences for the processing facilities of the mine,
which normally require a minimum throughput. These consequences can range from temporary shut down to
explosive increase of the processing costs.
The production valley needs to be minimized by careful planning and bridged by feeding ore from other
sources. Minimization can be done by a fast ramp-up of underground production or a long period of
combined open pit and underground production. Bridging can be done by either buying ore or concentrate
from other operations or processing stockpiled ore from stockpiles that have been build up during previous
open pit overproduction.
Transition rule 3 Production valley

A production valley can be minimized by a fast underground ramp up of production and prolonged production
from the open pit during underground development. The remaining shortage of feed for the plant has to be
bridged by processing from stockpiles created during previous open pit production and or by importing ore or
concentrate from other operations.
The period over which production in the open pit can proceed while the cave initiation has started is hard to
predict. The height of the lift, cave propagation and slope stability are important factors in the consideration.
In general a safety zone should be used between the proceeding cave and the production in the open pit.
Because open pit production at the pit bottom is most attractive, this production should move upwards while
the cave proceeds to leave the safety zone intact. In case the pit wall stability is monitored and as long as
the walls are stable, production could continue until half a year before the predicted breakthrough of the cave
in the pit.
Transition rule 4 Combined production

Open pit production can continue during ramp up of underground production until half a year before
predicted breakthrough of the cave in the pit when a safety margin between the production bench and the
cave is sustained and slope movement is monitored.
Mine design
The design of the open pit and the underground mine can be optimized for maximum financial gain from the
transition. The most important design factor for the underground mine is the lift height, which determines the

mine life. In some operations this lift height will be limited to by a vertical ore boundary and the bottom of the
open pit, in other operations the ore depth below the optimized open pit is larger than the maximum lift
height. In this case the lift height can be optimized independently and taken as a fixed parameter for the
transition depth optimization.
Transition rule 5 Lift height optimization

If the reserve is not limited by a vertical ore boundary, the lift height can be optimized independently and
introduced as a fixed parameter in the transition depth optimization. If the lift is constrained by an ore
boundary the lift height has to be taken as a variable.
Capacity optimization of mines normally starts with the amount of reserves in place. However, in the case of
a transition the starting point of the choice of production capacity is the processing capacity installed. In most
cases the plants capacity will exceed the capacity that would be calculated from the reserve estimation,
limiting the underground project life, which is often constrained to a minimum by company policies. Important
factor for the determination of the capacity is the possibility to process ore or concentrate from other
operations. Transportation costs, linked to the geographic location and exchange rates will often play an
important role in these considerations. If concentrate is imported from other mines the risk of agreeing on
long term delivery contracts at volatile commodity prices is high. Apart from the processing ore from other
operations the opposite contract, selling the ore to another plant and closing down the own plant, could be
considered too.
Transition rule 6 Underground production capacity

Determination of the production capacity depends upon the plant capacity, the underground reserves and
the availability and costs of ore or concentrates from other mines.
The shape of the bottom of the open pit and the pit walls influences the failure of the pit walls and the
resulting composition of ore and waste during the final years of the underground operation. The dilution
envelope implies that the pit wall will fail partly or completely. This material caves in and is ultimately
produced from the underground mine. Waste material from the pit walls leads to an increase of the dilution.
The design of final pit should therefore include the weakening of the pit walls holding the highest grades of
ore or waste so that these volumes will be the first to cave. In the same way slopes that are projected not to
fail but that hold valuable material can be blasted or undermined to promote failure and increase overall
recovery. The opposite action, temporary reinforcement of the low grade walls, can be considered as well.
Transition rule 7 Final open pit design

Cave planning should be incorporated in the final open pit design to ensure that the walls holding the highest
grade material will fail first. Dilution in the final years of the underground operation will be limited and overall
recovery from the deposit can be maximized.

Financial transition optimization

The effects of the financial planning of the transition are probably as important as potential influence of best
practice engineering. Most important financial factor influencing the transition finance is the tax shield that is
generated by the depreciation of underground development capital expenditure. In normal operations this
depreciation first starts when the underground mine starts generating operating profits. However, in the case
of a transition the depreciation can start immediately because the open pit mine is still generating the
operating profit. Depending on the tax rate and depreciation regime, which are influenced by national and
local legislation, the combined project cash flow will show both the underground capital expenditure and the
reduction of tax expenditure. If development CapEx is fully tax-deductible, the effect of the tax shield will be a
reduction of the CapEx by the tax rate times the CapEx value. Financial optimization implies maximizing the
gain resulting from the UG CapEx by spreading this CapEx so that as much open pit operating profit is
shielded as possible.
Transition rule 8 Underground CapEx tax shield

Underground development capital expenditure can be spread to form a shield of depreciation reducing tax
expenditure for the open pit operation, in this way effectively reducing the burden of the underground
development costs.
At the evaluation of an undeveloped ore deposit which can potentially host an open pit mine and an
underground mine an evaluation has to be made of the range in depth in which a transition would need to
take place. Because of the time dependency of the results of the NPV and the IRR for the integrated project
evaluation the initial assessment of the transition range has to be performed by methodology excluding the
discount rate but deflated to real terms. The combined cumulative cash flow, which can be split up in a part
for the underground and a part for the open pit project, gives the best overview the transition finance and
sensitivity. Apart from this cash flow overall unit costs and cost-benefit ratios can be evaluated, all of which
will theoretically yield the same transition optimum.
The optimized transition scenario will always be compared to optimized stand-alone open pit scenario. In
order to evaluate the profitability of an additional investment for an underground project the net effects of this
investment have to be extracted from the overall cash flow. This is done by subtracting the cash flow for the
optimized open pit scenario from the overall cash flow for the optimized transition project.
Transition rule 9 Transition investment decision making

The underground investment decision has to be based on the underground cash flow including all changes
of the underground project to the optimized stand-alone open pit cash flow, which can be produced by
subtracting the optimized stand-alone open pit cash flow from the optimized combined transition cash flow.
As mentioned above the initial assessment of the transition depth has to be performed by analysis of the
cumulative cash flow. However, once a feasibility study is performed in order to decide upon the actual
design an planning for an imminent transition, the NPV of the integrated project should be used as the
optimization criterion, because the time dependent investment risk has to be incorporated in the decision

making process. Financial indicators for the underground project are helpful for project financing purposes,
but are not relevant to the transition optimization.
Transition rule 10 Transition point optimization decision making

The transition point optimization should be based on an integrated approach, combining the cash flow of the
open pit and the underground project. Initial long term range definition should be done by optimization of the
cumulative cash flow, while the short term feasibility optimization has to be based on the overall NPV.
Social and environmental issues

Transition decision making does not require evaluation of the financial indicators alone. The potential closure
or continuation of a big project like a mining operation is of major importance to employees, contractors, local
retailers, government, politicians, etcetera. Besides the macro- and micro-economical consequences the
environmental effects of the decision can be of major importance. Although not all stakeholders will benefit
from a continued operation of the mine, in general the region around the mine is helped by it. For most
operations in remote areas the prolonged operation can give the community more time to prepare for
sustainable development without the mine in the area. Self-sufficiency for certain raw materials is especially
important for metals in some countries.
Transition rule 11 Regional economic transition consequences

employment, governmental tax income and self-sufficiency for raw materials.
An underground mine generally causes less damage to the environment than an open pit mine. Therefore
many people will prefer to live close to an underground mine over living next to an open pit mine. On the
other site, in the case of a transition this initial benefit of the mine moving underground has the disadvantage
of a prolonged operation of the mine, which leads to a postponed rehabilitation of the area, a larger tailings
volume and in the case of cave mining subsidence of the surface. Thus, the environmental consequences of
a transition from open pit to underground mining will lead to different opinions.
Transition rule 12 Environmental transition consequences

Environmental impact is smaller for a transition than for optimization of the open pit in the short term, but is
larger in the long term because of the increasing tailings volume and subsidence.

7. Slope optimization relevance
The optimization of the open pit slope angle has a direct influence on the cash flow of the open pit.
Paragraph 2 describes the analysis of the parameters and points out which of these parameters have the
biggest influence on the mine's financials. Changes in this pit cash flow could also influence the optimum
transition point from open pit to underground mining. These effects will be evaluated and discussed in
paragraph 3. The relevance of the analysis depends to a great extent on the accuracy of the results as
calculated by the model. Therefore the first paragraph describes the accuracy of the applied methodology
and its consequences.
1. Result accuracy
The accuracy of the results from the geotechnical analysis is constrained by various practical and
methodological issues. The most important factor influencing the trustworthiness of the results is the quality
of the input data, as discussed in paragraph a. Furthermore the generalization of complex discontinuous rock
characteristics limits the applicability of the model by the regarded failure geometry. The value of the
generated results and the process decisions that can be founded on the results are discussed in paragraph
b.
a. Input limitations
The quality of the input data is limited both by restricted availability and by the physical limitations set by the
model. These physical constraints are most evident in the number of slope sectors and the number of
discontinuity sets that can be entered. If the steepening of a pit is considered over the full perimeter of the pit
or system of benches, for each slope sector a slope orientation and dip have to be supplied. However, even
with probabilistic data input, including an average value and a standard deviation, the real situation can only
be reflected partly by a large number of slope sectors, each with their specific slope orientation. Especially
for planar failure, in which the combination of slope orientation and discontinuity orientation is of major
importance, this can lead to underestimating the risk. The limited number of discontinuity sets that can be
supplied for the wedge failure calculation leads to an underestimated risk for wedge failure in heavily jointed
rock masses.
The limited availability of the input data is a big concern to the applicability of the output. In many operations
the data collection including friction angles and rock cohesions for the various slope sectors, the assessment
of discontinuity characteristics and the definition of the most important planar failure discontinuity will cause
problems. However, all of these data are required for normal slope stability assessments.
Collection of probabilistic input data requires analysis of a large dataset. Because this dataset will not be
available in most cases, an estimate has to be made for the standard deviation of the parameters. If this
standard deviation is set to zero, the probabilistic analysis will be reduced to a normal kinematic stability
analysis and mathematical cost calculation, thus eliminating the concept of slope reliability from the model. In

order to give a realistic estimation of the standard deviation a thorough knowledge of the pit geology is
required.
Slope analysis
The methodological concept, taken from CANMET's Pit Slope Manual (Sage, R., 1976), in which both
stability and cost calculations are linked to the surface area of a slope and failure volumes are calculated
with the slope height as main parameter does include some disadvantages influencing the output reliability.
Most important, the failure volume calculation appears to give unrealistic results for large slope heights due
to the assumption that failure will take place over the total slope height. In reality most major slope failures
are limited to the upper part of the slope and have a limited depth. The large volume leads to very high
cleaning costs, which would most probably lead to early closure of the pit.
Linking the stability calculations to the number of unit cells (length around perimeter divided by the slope
height) does lead to very good results if the number of unit cells for a slope sector is large, but is limited in its
applicability for high and narrow sectors due to the same problem described above; the assumption that
slope failure will occur over the total slope height is not valid for large heights.
The fact that cost calculations for prevention measures are linked to the slope surface has a minor effect on
the results. In reality the monitoring costs will increase in monitoring a steep slope because of the increased
slope activity and reduced reliability. Because the surface of a steepened slope decreases compared to the
standard situation, the costs calculated by the model for bolting, coating and monitoring decrease slightly.
However, this effect does not account for a deviation of the costs of more then 10%.
Potential failure volume improvements

In order to perform an accurate cost-benefit analysis for large slope heights an accurate estimate of the
failure volume will have to be made. The estimation based on the relation to the slope height in combination
with geometrical sizing parameters is not sufficiently accurate to allow production decisions to be based on
the model output. Therefore, a possible improvement of the estimation requires further specification of the
parameters defining the failure volume.
For planar failure geometrical calculation of the failure volume as defined by orientations and spacing of
discontinuities and the expectations of failure depth and potential tension cracks could lead to a solution.
However, this method does not take the irregularities of large slope failures, which cause the inaccuracy of
the applied method, in account. The equivalent for circular failure would be the calculation based on
geological boundaries, which would require definition of the layer thicknesses and corresponding failure
depth.
Linking the failure volume to an empirical slope failure database holding failure volumes in combination with
slope characteristics would probably give the second best estimate (the best being a slope-specific estimate
by a geotechnical expert), but both options would require a vast amount of additional work. The big
advantage of a slope-specific analysis is the possibility to include the position of the likely failure plane
relative to the slope in the volume calculation, which is impossible in the applied model without introducing a
3D coordinate system.

b. Failure geometry constraints

In some cases, in which an unfavourable major discontinuity exists in the pit wall, a large part of the
response cost is caused by planar failure cleaning. Apart from the positioning of the discontinuity, which can
not be included in this type of model, the difference between the slope angle and the failure plane angle is of
major importance for the slope angle optimization.
It is assumed that failure plane daylights in the pit wall. Planar failure is possible if the orientation of the plane
is more ore less parallel to the orientation of the slope. Because the pit wall will generally be concave
inwards, this parallelism occurs only over a limited part of the slope. The 'real' discontinuity dip perpendicular
to the slope can be calculation by vector calculations from the dip and azimuth of the failure plane and the
azimuth of the slope sector concerned. This dip in combination with the slope geometry defines the size of
the block and the forces inducing slope failure. The larger the dip of the discontinuity, the larger the portion of
the weight included in the vector parallel to the failure plane, increasing the failure inducing vector
component.
By decreasing the slope angle of the slope to find the optimum cost-benefit point it can happen that the dip of
the discontinuity plane is larger than the dip of the slope. In this case a planar failure along the discontinuity
is not possible. Daylighting of the discontinuity in the pit wall is assumed, so in reality the only failure
mechanism possible in this case is toppling. Because the possibility of planar failure is suddenly eliminated
during the optimization process, the overall response cost drop significantly. Therefore the cost-benefit ratio
in the steeper slope will be favourable to the shallower scenario. The optimization curve for a slope sector
will therefore show a discontinuity at the slope angle of the planar failure discontinuity plane. The overall
optimization curve is a weighted summation of the results from the various slope sectors, so that this curve
will reflect discontinuities for the dip of every potential failure plane for planar failure.
This greatly increasing reliability of the slope by decreasing the slope angle below a critical point is not
unrealistic. However, because the three dimensional positioning of the discontinuity governs the possibility of
evading the potential failure, this preventive unloading will pay out only in very specific cases, in which the
failure plane daylights low in the slope so that the potential failure volume is large.
c. Result application
As with all generic models the statement; 'rubbish in, rubbish out' is very important for the use of the
optimization module. The results of the module will never be more accurate than the input supplied. As
discussed above, for analysis of the response costs for large slope heights (in the order of hundreds of
meters) the estimation of the failure volume requires a more slope-specific approach than the generic
algorithm used in the module. For these cases it will always be the rule applies that the potential relative
deviation from the supplied estimate increases with the slope height. Furthermore, the larger the analyzed
slope and the resulting increase or decrease of the excavated volume, the larger the impact of the mining
costs versus the ore value in the consideration. This increasing impact is caused by the increasing
incremental excavation volume for increasing height.
For analysis of the effects of slope steepening or flattening of smaller slopes or slope sectors the module
proves to deliver accurate results. If the increase or reduction of the excavation volume and the ore/waste
ratio of the additional volume can be assessed accurately, these can be compared by changing costs

derived from the stability assessment and response cost calculation. For the stability assessment the effect
of discontinuity of the results around the dip of a potential failure plane has to be observed carefully with
respect to the validity of the expected increasing slope reliability.
If the conditions set above are met, the modules results can give a good indication of the relevance of a
further study into slope steepening or flattening and the order of financial impact of this operation. A detailed
new slope design, production plan and reinforcement plan in combination with a non-generic slope-specific
geotechnical analysis are required to evaluate the detailed costs on which a design change can be based.
For the purpose of this transition study the results are certainly considered to be of sufficient accuracy. The
height of slope steepening for the lower open pit benches will hardly ever exceed 100m, and only a crude
estimate of the resulting costs and benefits and the changes to the production plan is required to be imported
in the general model. Therefore, the impact of the slope steepening consideration on the transition optimum
has been analyzed and will be discussed in paragraph 3 of this chapter.
2. Parameter analysis
Apart from the insight obtained by applying the results from the geotechnical module to the general transition
module, the analysis of these results themselves leads to a better understanding of the importance of the
various parameters that play a role in the optimization of the pit slope angle. These parameters can be
categorized as rock parameters and engineering parameters, the latter including the slope design,
reinforcement and failure response methodology.
Analysis of the relative importance of each of the parameters is performed by a sensitivity analysis, in which
the model is run many times, changing one parameter per time with a specified relative deviation from the
standard run. Because much research has been done in the analysis of the critical rock parameters for slope
engineering, the sensitivity analysis also functions as a validation of the model. The analysis is performed on
a fictional dataset, which corresponds to the six lowest benches of the dataset used in the 0-dataset of the
general transition model, as discussed in the previous chapter. The data used in for this geotechnical dataset
are displayed in Figure 29.

Figure 29 - Geotechnical dataset settings
a. Rock parameters
The relative importance of the rock parameters could be expressed as the impact of relative change of the
parameter to reliability of a slope. Because this calculated reliability is the result of many probabilistic safety
factor calculations a better overview will be obtained by expressing the impact on the calculated safety factor
or safety margin for the mean case.
The analysis, performed for the west wall of the standardized dataset, includes the sensitivity of the friction
angle, the internal rock cohesion, the groundwater situation, the discontinuity dip and spacing, the difference
in orientation between the potential failure plane and the slope and the rock mass density. The effects of
these parameters to the safety factor for circular and wedge failure and the safety margin for planar failure
are depicted in the figures below.

Figure 30 - Rock parameter sensitivity for circular failure
Figure 31 - Rock parameter sensitivity for wedge failure
The most interesting outcome for circular failure is the potential negative impact of the friction angle of the
rock. An increased friction angle decreases the dimensionless number, so that a high value is read from the
circular graph. Although this effect is reduced by the slope height function, in which the value read from the
graph is multiplied by the tangent of the friction angle to get the safety factor, in some situations the resulting
safety factor is lower than the original, as depicted in Figure 30.
The stepped sensitivity curve for the groundwater situation is caused by the switch at these values to a
different chart for a different groundwater regime in this methodology.

For the wedge failure chart the importance of the discontinuity spacing is noteworthy. This influence is
explained by the algorithm defining the wedge height, which used the discontinuity spacing for the various
sets as input. In reality the condition and persistency of the discontinuities are probably more important than
the spacing.
Figure 32 - Rock parameter sensitivity for planar failure
As expected the friction angle is by far the most important rock characteristic influencing planar failure. The
negative tangent for the difference in dip direction between the slope and the failure plane which is shown in
Figure 32 is caused by the format of the applied algorithm, in which the orientation of the failure plane is
linked to the orientation of the slope. This curve could therefore as well be inverted, but is shown to indicate
an order of magnitude of the influence.
b. Engineering parameters
Rock parameters can not be changed to optimize the cost benefit ratio of slope optimization. These
parameters form the setting in which the engineer optimizes the design. This optimization basically consists
of the tuning of the engineering parameters. Apart from slope design, the applied methodology of
reinforcement and failure response are part of this optimization.
Slope angle, radius of wall curvature and orientation of the slope are the main geometrical design features
that influence the costs and benefits of slope steepening or flattening. The slope height also is of major
importance, but is not seen as a variable in many operations. Besides these parameters the design of the
benches, including width, catch ditches and berms etcetera are factors defining the costs of failure cleaning.
However, these bench-related parameters are not included in the geotechnical module because of the
limited impact of changes in the slope angle.
The main objective of the module is to optimize the slope angle, keeping all other parameters unchanged
(ceteris paribus). Changes of the design parameters have an effect on the reliability of the slope. Costs are

incurred by preventive reinforcement of the slope or by responding to a failure. The effect of changes in the
costs of reinforcement is very clear in the financial results, since they are direct financial parameters. The
effect of changing response costs are slightly more complicated, because these costs are only incurred upon
failure and only one response method is chosen for each failure. Obviously an increase of the response
costs results in a shallower optimum slope. In reality increasing preventive reinforcement costs will also yield
a shallower slope, because failure prevention is directly linked to increasing the slope reliability to an
acceptable level. However, because the reinforcement is taken as an independent variable in the model, this
effect is not reflected in the model.
The failure response methodology can be seen as a separate cost system, which defines the cost of
handling the situation formed by the geology and mine design. Optimization of the failure response is a
complicated issue that has not been included in this study. Generally in the final years of open pit operation
the importance of failure cleaning decreases, because the potential loss of ore or delayed production is very
limited. In the case of a transition to underground mining and overlapping open pit and underground activities
monitoring of slope movement is of major importance to predict cave breakthrough and failure induced by
seismic activity.
The scale of the effects of design changes to the slope optimum is very specific for each situation. It is
impossible to generate valid slope angle optimization rules for general application from the results of the
modules runs for the standardized dataset. Every situation requires a specific analysis.
The importance of the wall curvature increases with higher rock stresses, typically occurring around the pit
bottom. For slope steepening in the last years of pit production this curvature generally has to be considered.
Because the minimum radius of curvature occurs at the lowest point of the pit, the difference of dip direction
of the slope and a potential planar failure varies a lot. The importance of major planar slope failure in this
area is reduced because the dip direction of the slope failure does not correspond with the dip direction of
the slope over a wide area.
Probably the most interesting correlation that can be analyzed with the use of the model is the dependency
of the slope angle optimum to the slope height. The depth of the pit determines the total recovery of ore for
the operation, while the slope angle sets the stripping ratio for that recovery. The combination of these
parameters forms the framework for the performance of an open pit mine. In the situation of a potential
transition to underground mining the optimization of the transition depth (the ultimate pit depth) is required for
the optimization of the slope angle and vice versa. The working of this optimization is described in paragraph
3.
Deepening a pit gives the benefit of a higher recovery with the disadvantage of a decreased reliability of the
slope or an increased stripping ratio. Figure 33 shows the calculated optimum slope angle for the
standardized data set at varying pit depths. To enable the probabilistic analysis the standard deviations of
the geological parameters have been set to 15% of the average value.

Figure 33 - Optimized slope angle for pit depth
This optimization curve can be made for every open pit operation. Depending upon the financial evaluation
criteria the pit depth can be optimized by calculating the financial result based upon the recovery and the
stripping ratio. The curve in Figure 33 displays the optimized slope angle for the standardized dataset for
various pit depths. For high pit depths this optimum becomes close to the natural angle of repose of the rock
mass, while for slopes lower than 100 meters the optimum increases up to a near vertical wall.
The larger the pit depth, the larger the relative importance of the mining costs for the additional volume that
is to be excavated at an increased slope angle. The sensitivity of the optimization for reinforcement and
failure cleaning decreases in this situation, limiting the applicability of the optimization tool. Because the
failure volume is linked to the slope height, a major slope failure of a large slope involves a very big volume.
The costs that would be involved with this failure would lead to immediate closure of the pit, thus the
reliability of the slope needs to be extremely high, so that optimization of large pit slopes comes down to
finding the slope angle that will certainly be stable for the duration of the mine life.
3. Transition impact
An increase in open pit mining unit costs will generally lead to a shallower optimum transition to underground
mining, while a decrease in open pit costs leads to a deeper transition. Normal optimization of the slope
angle is aimed at minimizing the open pit operating costs. In the case of a transition to underground mining
the optimization will be aimed at providing the highest overall project NPV, which is influenced to a large
extent by the transition moment. Slope angle optimization can thus not be separated from the pit depth
optimization. This paragraph will first discuss the results for the general optimization of the total pit slope
before analyzing the advantages and disadvantages of steepening of the lower benches of an open pit.

a. Overall slope angle optimization

To find the optimized combination of transition depth and slope angle a matrix of financial results for every
potential scenario can be generated. The pit design is optimized for every transition depth and the resulting
financial and planning parameters are used as input for the general transition optimization. In this way the
output of the geotechnical module is used as input for the general transition model, which is discussed in the
previous chapter.
The definition of the optimization input is highly specific for every operation, so that a generic model is
required to perform the analysis for multiple operations. Orebody geometry defines the ratio of ore and waste
that can be found in the pit walls. This ratio is very important because it defines the potential increase of ore
recovery by steepening of the pit walls. The only way to define these amounts and grades of ore and waste
in the pit slice between original and new design is exporting the data from a mine design software program.
Besides the incremental stripping ratio the specific characteristics of the rock mass are highly variable, even
within most operations.
An orebody that can host a transition from open pit to underground mining can be assumed to have a
considerable height and thus a potentially deep optimized pit. Therefore the possibilities of variation of the
slope angle for cost-benefit optimization are very limited. The optimized slope angle will be that slope that
assures long term geotechnical stability, without additional support, over the full pit wall. Optimization results
in marginal changes of this angle for some stronger and weaker slope sectors over part of the slope height.
Although a steepening of the standard full pit wall by only 2 degrees can reduce the stripping ratio by over
10% for deep mines, the expected resulting reinforcement or cleaning costs due to large scale slope failures
and risk for personnel and equipment soon outweigh the benefit, even at a minimum incremental stripping
ratio for the pit wall slice additionally excavated.
As will be explained in the previous chapter the transition moment is governed by the orebody geometry and
financial interdependence of the open pit and underground project, that result in an alteration of the stand
alone optimized open pit scenario.
It is obvious that optimization of the slope angle is of major importance for all large open pit operations in
order to maximize the profits. However, the geotechnical module of the transition model demonstrates that
both for a stand alone open pit and for a pit transitioning to underground the slope optimum is more or less
equal to the slope angle giving long term stability without reinforcement, thus preventing major prevention
and response costs.
Steepening of the pit slope dramatically increases the slope maintenance costs, while flattening the
standardized slope increases the stripping ratio dramatically, increasing the overall mining costs as well.
Both options will therefore yield a shallower optimum transition point, but a sub-optimal overall financial
result.
b. Slope steepening
Although the module predicts that large scale slope steepening will not pay out nor change the optimum
transition point, small scale slope steepening at the lower benches of the open pit in the final years of

operation is worth a separate analysis. These changes to the initial design are often performed in order to
extend the lifetime of the open pit while underground operation is ramped up.
During the last years of normal operation double or triple benching and limiting bench and ramp width can
increase the slope angle of the lower benches. Ramp scavenging can be used to produce extra ore once the
normal production is terminated. The area around the pit bottom is normally most attractive for these
operations because this bottom is generally located in high grade ore material.
As discussed in the previous paragraph the optimum slope angle for small slopes increases dramatically.
The small scale stability of the lower benches of a pit therefore normally allows a significant steepening of
the wall. However, it is very difficult to analyze the impact of this steepening to the overall pit wall stability.
Figure 34 - Kink steepening overview
Figure 34 gives an exaggerated overview of the slope system after steepening of the lower pit benches. A
kink is created in the pit wall, creating a new overall slope angle () from the standard slope angle () over a
depth above the kink and the steepened slope angle () in the area below the kink.
The stability of this slope is very hard to analyze with normal kinematic analysis. In order to be able to
calculate a reliability in the geotechnical module the new slope angle has been combined with an increase of
the maximum additional load of the slope of the volume of the weight area multiplied by the specific gravity of
the rock. In situ stress and the quality of the rock mass determine the realistic possibilities of generating a
slope system of this sort.
Because the general transition program has a benchwise approach the analysis assumes a steepening of
the lowest 6 benches of the standardized pit by 4.5 degrees and a deepening of the pit by 1 bench, resulting
in a constant bench height and box cut size for the pit.
It appears that the deepening of the pit by 15 meters can be neglected relative to the increase of the overall
slope angle by 0.6 degrees over 47 benches and the maximum additional load of 40 million tonnes. The
steepening operation yields a total of 7 million tonnes of ore from the additional open pit bench and 3 million
tonnes from the pit walls. The full steepening operation is assumed to take place within the limits of the ore.
The incremental costs for failure prevention and response calculated by the module are 7.3M$, resulting an
increase of the cumulative cash flow for this change of the operation is 28.4M$. The increase of the NPV

depends fully on the base year of the evaluation. For a transition far in the future the difference in the
optimized NPV will be very small, while the increase will be clear in a concrete feasibility study some years
before the transition. Regardless of this NPV, a steepening of the lower benches of the open pit before
transitioning will pay out in this situation.
Optimization of the steepening is an interesting subject. Parameters in this optimization are the height of the
steepening and the steepened slope angle. Furthermore a minimization of the box-cut size can be evaluated.
This optimization was not thoroughly analyzed during this research project but is worth further research.
The relevance of slope steepening of the lower benches has been proven, but analysis by the geotechnical
module demonstrates a limited impact. For steepening over large parts of the pit wall or at large increases of
the angle the failure costs outweigh the benefit of the value of the produced ore. The applicability of
steepening is limited to a depth increase of 1 or 2 benches, depending on the operational characteristics.
For large operations the benefit of steepening the pit slope in the last years of operation or during a short
production overlap could amount to tens of millions of dollars and the possibility should therefore certainly be
researched. The possibilities of performing the steepening operation by own personnel and equipment will
govern a large part of the costs and thus the potential profit from the operation.

8. Conclusions and recommendations
The primary objective of this research project was the development of a generic software tool for economic
optimization of the transition depth. Minor objectives were the analysis of the relevance of slope angle
optimization for optimization of the transition and the general analysis of the transition optimization decision
making process. The conclusions from this project have therefore been divided into the categories model
development, slope optimization relevance and transition optimization. In the end of this chapter the
recommendations rising from the performed development and research are listed.
1. Conclusions
a. Model development
Methodology
The development of a generic software program for economic optimization of the transition depth has
been successfully completed. Using operational characteristics, economical data, predicted long-term
production plans and transition-specific data a cash flow overview is generated that can be evaluated
using various build-in project evaluation techniques and sensitivity analysis.
The program defines the optimum transition point (bench or year) for any operation. Analysis by the user
is supported by multiple automatically generated graphs. The accuracy of the results is acceptable for
feasibility study analysis.
Main discrimination between operations is based on the vertical continuity of the orebody. Operations
with a relatively unlimited continuity can use a fixed lift height, which is not affected by the final depth of
the pit. In orebodies with a clear vertical boundary this boundary is fixed as the lowest point of
underground production, so that the lift height is variable.
Data collection
Collection and composition of input data for the program is not expected to be problematic, since the
required dataset consists of readily available general operational and open pit cost data and data
collected during a pre-feasibility study for underground mining, combined with an extended open pit
planning and general relative estimates on the most important transition trends; decreased stripping
activity, decreased production, and decreased replacement capital expenditure.
Constraints and limitations

The program is physically constrained to a period of 35 years and a maximum of 75 benches. Longer
analysis is not relevant for project analysis and 75 relevant benches are sufficient to analyze all existing
operations considering a transition to underground mining.
The main methodological limitation of the model is the decreasing level of accuracy at creation of a
production planning for the full orebody by open pit mining, in which small deviations of the stripping ratio

can have a big impact. However, the accuracy of generation of an extended production planning for the
relevant range of transition benches is certainly acceptable.
The second methodological limitation concerns the inability of incorporation of the important social,
regional economical, political and environmental factors in the analysis. The program economically
optimizes the transition, while in reality the non-economical factors play a major role in the transition
decision.
b. Slope optimization relevance

Methodology
The relevance of slope optimization considerations for the transition optimization has been analyzed by
developing a geotechnical module linked to the general transition model. This module performs a cost-
benefit analysis of slope steepening based on a slope stability assessment.
The potential benefit of slope steepening is the revenue generated by mining additional ore or the
decreasing costs by reduction of the stripping ratio. The costs of slope steepening are the costs for
failure prevention (including monitoring and slope reinforcement) and the costs of failure response, which
is a combination of cleaning, unloading, loss of ore, production delay, restoration of haul roads,
increased haulage costs and damage to equipment, injuries and loss of life.
A probabilistic analysis of the stability is required to enable cost-benefit analysis. The resulting reliability
of the slope can be used to calculate yearly probabilistic costs, based on the chance of failure for each
slope sector.
For all slopes a model for failure prevention and a model for failure response have to be defined.
Especially the failure response model, which changes when monitoring is applied, is very hard to
generate.
Results
The developed model does give a clear optimum of the slope angle for each sector. However, the
accuracy of these results is low, due to the difficulty of data collection and the inherent discontinuity and
lack of uniformity of the rock mass. For the scope of this project, the model does give a good view of the
level of impact of
Slope optimization for the full height of the slope of an open pit is limited to finding the naturally stable
slope angle and reinforcing the major discontinuities in the slope. Therefore, overall slope optimization is
not needed to be considered in the feasibility stage of transition optimization, although a small change of
the slope angle and corresponding change of the stripping ratio does have a big impact on the optimum
transition depth.
Slope steepening of the lower benches of the open pit relative to the overall slope angle potentially
results in a major improvement of financial performance of the open pit. However, due to the limited
height of the steepening the transition optimum is only affected to a minor extent, deepening the
optimum pit by 0-2 benches.

c. Transition optimization
Critical planning and design parameters
The production capacity and the resulting production period for open pit and underground mining is the
most critical parameter defining the transition optimum. The higher the ratio of open pit capacity over
underground capacity, the deeper the optimum transition point will be.
The influence of all planning parameters is more distinct in the variable lift case then in the fixed lift case,
in which the performance of the underground operation is relatively independent from the open pit
planning. For the fixed lift scenario the height of the lift and corresponding lifetime of the underground
mine are of major importance. Optimization of the transition in a vertically relative unlimited orebody
comes down to tuning the underground development to have the most positive effect for the open pit
optimization.
The depreciation of the capital assets for underground development can have a major impact on the
transition optimum due to the tax cover that can be created for the open pit operating profit.
Decision making process

The results of the analysis of the transition optimization decision making process have been formulated in
general transition rules, which will be applicable to most operations considering a transition to underground
mining.
Transition planning
Transition rule 1 - Transition depth estimation
During all open pit feasibility studies in orebodies allowing a transition to underground mining an
estimate should be made of the optimum transition depth and year using the deflated cumulative cash
flow method.
Transition rule 2 - Exploration planning

If the status of the orebody reserves below an open pit is unknown, an exploration program should start
at least 9-10 years prior to the end of open pit mine life as determined in a crude transition model.
Transition rule 3 Production valley

A production valley can be minimized by a fast underground ramp up of production and prolonged
production from the open pit during underground development. The remaining shortage of feed for the
plant has to be bridged by processing from stockpiles created during previous open pit production and or
by importing ore or concentrate from other operations.
Transition rule 4 Combined production

Open pit production can continue during ramp up of underground production until half a year before
predicted breakthrough of the cave in the pit when a safety margin between the production bench and
the cave is sustained and slope movement is monitored.

Mine Design
Transition rule 5 Lift height optimization
If the reserve is not limited by a vertical ore boundary, the lift height can be optimized independently and
introduced as a fixed parameter in the transition depth optimization. If the lift is constrained by an ore
boundary the lift height has to be taken as a variable.
Transition rule 6 Underground production capacity

Determination of the production capacity depends upon the plant capacity, the underground reserves
and the availability and costs of ore or concentrates from other mines.
Transition rule 7 Final open pit design

Cave planning should be incorporated in the final open pit design to ensure that the walls holding the
highest grade material will fail first. Dilution in the final years of the underground operation will be limited
and overall recovery from the deposit can be maximized.
Financial transition optimization

Transition rule 8 Underground CapEx tax shield
Underground development capital expenditure can be spread to form a shield of depreciation reducing
tax expenditure for the open pit operation, in this way effectively reducing the burden of the underground
development costs.
Transition rule 9 Transition investment decision making

The underground investment decision has to be based on the underground cash flow including all
changes of the underground project to the optimized stand-alone open pit cash flow (an integrated
project analysis), which can be produced by subtracting the optimized stand-alone open pit cash flow
from the optimized combined transition cash flow.
Transition rule 10 Transition point optimization decision making

The transition point optimization should be based on an integrated approach, combining the cash flow of
the open pit and the underground project. Initial long term range definition should be done by
optimization of the cumulative cash flow, while the short term feasibility optimization has to be based on
the overall NPV.
Social and environmental issues

Transition rule 11 Regional economic transition consequences
employment, governmental tax income and self-sufficiency for raw materials.

Transition rule 12 Environmental transition consequences

Environmental impact is smaller for a transition than for optimization of the open pit in the short term, but
is larger in the long term because of the increasing tailings volume and subsidence.
2. Recommendations
Apart from the application of the transition rules for future transitions some recommendations can be made
for the further development of the transition model.
Planning modification
Modification of the model to enable analysis of transitions between other methods than open pit mining
and underground mining by block/panel caving methods. The structure of the model can be used to
optimize the transition depth and planning for many mining methods, including an underground transition
from one method to another.
Linked to the previous recommendation, the model should be modified to enable analysis of mining in
which the sequence is not purely bottom-up for underground mining and top-down for open pit mining. In
this way the limitation of a relatively flat surface for the operation is eliminated.
The option of providing grades per bench equivalent for open pit and underground mining, instead of
entering grades per year of mining has to be included to increase flexibility.
Financial modification
Diversification of depreciation regimes should be enabled, in order to increase the accuracy of the tax
cover obtained by depreciation of underground development expenditure. This diversification should
include the possibility to modify the national capital allowance policy.
Research
Further research on the abandonment of the pit is advisable, to establish principles regarding the shape
of the pit bottom and the reinforcement or weakening of slope areas affecting the future underground
mining procedure and return.
A design-module for open pit optimization based on the trade-off between open pit and underground
mining should be developed. This design module should be based on the integrated project analysis,
contrary to regular pit planning.

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Optimization of the OP/UG transition - DRAFT 1/100

AES/GT/06-15 Optimization of the OP/UG Transition - DRAFT

Development of a Software Tool for Optimization of the Transition

June 2006 W.F. Visser

Wilfred Visser June 2006 Delft University of Technology

Title : Optimization of the OP/UG Transition

Development of a Software Tool for Optimization of the Transition Depth

Author(s) : W.F. Visser

Date : June 2006

Postal Address : Section for Resource Engineering

Copyright 2006 Section for Resource Engineering

All rights reserved.

Wilfred Visser June 2006 Delft University of Technology

Wilfred Visser June 2006 Delft University of Technology

Wilfred Visser June 2006 Delft University of Technology

1. Worldwide practice and research 13

3. Slope angle optimization 22

1. Slope design methodology 22

2. Pit slope steepening 29

Wilfred Visser June 2006 Delft University of Technology

5. Assumptions and limitations 56

6. Transition Optimization Results 62

1. Financial and engineering parameters 62

7. Slope optimization relevance 81

Wilfred Visser June 2006 Delft University of Technology

a. Overall slope angle optimization 90

8. Conclusions and recommendations 93

Wilfred Visser June 2006 Delft University of Technology

Wilfred Visser June 2006 Delft University of Technology

A Surface of failure plane

Wilfred Visser June 2006 Delft University of Technology

Wilfred Visser June 2006 Delft University of Technology

Wilfred Visser June 2006 Delft University of Technology

Wilfred Visser June 2006 Delft University of Technology

1. Worldwide practice and research

Wilfred Visser June 2006 Delft University of Technology

Table 1 - Overview of major historical and future transitions

Wilfred Visser June 2006 Delft University of Technology

Classification of design groups

Wilfred Visser June 2006 Delft University of Technology

Figure 2 - Unlimited and limited vertical ore extent

Wilfred Visser June 2006 Delft University of Technology

Availability of ore and concentrate

Wilfred Visser June 2006 Delft University of Technology

d. Social and environmental issues

Wilfred Visser June 2006 Delft University of Technology

SR = Stripping ratio (waste:ore)

DepOP FCOP DepUG FCUG ,Total

Wilfred Visser June 2006 Delft University of Technology

Figure 3 - Traditional transition optimization

Wilfred Visser June 2006 Delft University of Technology

End of life planning

Wilfred Visser June 2006 Delft University of Technology

3. Slope angle optimization

1. Slope design methodology

Wilfred Visser June 2006 Delft University of Technology

Figure 4 - Slope failure types (Hoek & Bray; 1977)

Wilfred Visser June 2006 Delft University of Technology

Figure 5 - Plane failure forces

Wilfred Visser June 2006 Delft University of Technology

Figure 6 - Sequence of steps involved in using a circular failure chart

Wilfred Visser June 2006 Delft University of Technology

Figure 7 - Wedge failure geometry

Wilfred Visser June 2006 Delft University of Technology