Technical Papers

Risk management and

long-term production schedule optimization
at the LabMag iron ore deposit
in Labrador, Canada
by M. Spleit and R. Dimitrakopoulos

Abstract ■ A long-term mine production schedule optimization based on stochastic integer

programming is presented that manages the risk due to geological variability and uncertainty
while jointly considering mine profitability, truck fleet requirements and waste management.
The evolution of the pit is controlled so that space within the mined-out pit is continuously
provided to allow for tailings and waste rock to be replaced, thus minimizing the project’s
environmental footprint. The method is applied at a taconite iron ore deposit and has a project
net present value that is 16.9 percent higher than that of a conventional schedule and has a
higher chance of meeting production forecasts. The stochastic schedule reduces equipment
requirements by delaying waste mining and by mining selectively in order to meet plant ore
feed requirements without stockpiling material, resulting in 23.7 and 26.2 percent lower mining
capital and operating costs, respectively.

Mining Engineering, 2017, Vol. 69, No. 10, pp. 47-53.

Official publication of the Society for Mining, Metallurgy & Exploration Inc.
https://doi.org/10.19150/me.7807

Introduction (3.6 billion st) of proven reserves at ally being realized.

The LabMag iron ore deposit is
part of the Millennium Iron Range, a
210-km (130-mile) belt of taconite in
northern Quebec and Labrador, Can-
ada. LabMag has significant economic
potential. It contains more than 3.3 Gt
M. Spleit, member SME, was
formerly at New Millenium Iron
Corp., Montreal, Quebec, Canada,
and is currently research engineer
at Ecole Polytechnique de Montreal,
Montreal, Quebec, Canada. R.
Dimitrakopoulos, member SME, is
professor at COSMO – Stochastic
Mine Planning Laboratory,
McGill University, Montreal,
Quebec, Canada. Email: roussos.
dimitrakopoulos@mcgill.ca. Paper
No. TP-16-034. Original manuscript
submitted August 2016. Revised
manuscript accepted for publication
June 2017. Discussion of this peer-
reviewed and approved paper is
invited and must be submitted to
SME Publications by Jan. 31, 2018.
www.miningengineeringmagazine.com Mınıng engıneerıng    october 2017
an average total iron content of 29.8
percent and is very low in impurities.
However, on a project basis of 23 Mt/a
(25 million stpy) of product, the re-
quired capital expenditure is estimated
at more than $5 billion (SNC-Lavalin,
2014), which necessitates careful evalu-
ation of all sources of risk. Resource es-
timation is one of the main sources of
risk in a mining project as knowledge of
the orebody is primarily based on drill-
ing, which is often sparse because it is
expensive. If the expected ore tonnages
and qualities are not obtained when
mining, the project cash flows are di-
rectly affected. The expected quantities
and qualities of ore and waste are de-
fined by the mine production schedule,
which specifies the sequence of extrac-
tion and is dependent on the resource
estimation. The goal of mine produc-
tion scheduling is thus to maximize the
expected profit, while also meeting all
production targets and constraints, by
creating an extraction schedule that is
robust in the face of geological risk and
has the highest chance possible of actu-
Conventional mine planning opti-
mization methods are based on a single
deterministic orebody model and can
yield misleading results because they
do not account for the likely deviation
from the model in reality (Ravenscroft,
1992; Dowd, 1997; Dimitrakopoulos,
Farrelly and Godoy, 2002; Godoy and
Dimitrakopoulos, 2004; Montiel, Dimi-
trakopoulos and Kawahata, 2016). In
order to consider the geological risk of
an orebody, a set of different scenarios
can be created that are all equally prob-
able representations of the orebody
and which all reproduce the orebody’s
spatial variability (Goovaerts, 1997;
Remy, Boucher and Wu, 2009; Soares,
Nunes and Azevedo, 2017). Such geo-
statistical simulations can be used to
quantify the various elements of risk
associated with a mining project: oper-
ating costs, capital costs, royalties, com-
modity prices, taxation, tonnage and
grade (Dowd, 1997; Godoy and Dimi-
trakopoulos, 2011; Montiel, Dimitrako-
poulos and Kawahata, 2016). Geologi-
cal uncertainty can then be managed
47
Technical Papers
by directly incorporating stochastic simulations within the
mine scheduling framework.
One flexible method for long-term production schedul-
ing is based on stochastic integer programming (SIP) (Birge
and Louveaux, 1997), a type of mathematical programming
and modeling method that considers multiple, equally prob-
able scenarios and generates the optimal result for a set of
defined objectives within the feasible solution space bound-
ed by a set of constraints. SIP for mine scheduling is intro-
duced in Ramazan and Dimitrakopoulos (2005, 2013) and
Dimitrakopoulos and Ramazan (2004, 2008). It proposes a
formulation that maximizes the net present value (NPV)
while minimizing deviations from production targets using
a different penalty for each target. In Leite and Dimitrako-
poulos (2014), this formulation was applied at a copper de-
posit and produced a risk-robust NPV that was 29 percent
higher than that of a conventional schedule. In Benndorf
and Dimitrakopoulos (2013), an SIP formulation that inte-
grated joint multi-element geological uncertainty was ap-
plied at an iron ore deposit. Additional considerations are
easily incorporated into the modeling framework: two other
relevant studies use SIP to optimize the NPV while simul-
taneously optimizing the cut-off grades (Menabde et al.,
2007) and incorporating simulated future grade control data
at a gold deposit (Jewbali, 2006). Boland, Dumitrescu and
Froyland (2008) demonstrated stochastic formulations for
mine production scheduling with endogenous uncertainty,
in which decisions made in later time periods can depend
on observations of the geological properties of the material
mined in earlier periods. Most recently, they characterized
the minimal sufficient constraints for such formulations so
that solving them is more efficient (Boland et al., 2014). Re-
lated extensions of stochastic formulations for the simulta-
neous optimization of mineral value chains can be found in
Montiel and Dimitrakopoulos (2017) and Goodfellow and
Dimitrakopoulos (2017).
In the present work, an SIP formulation extending the
one in Benndorf and Dimitrakopoulos (2013) is presented
to manage risk and control the risk profiles of mine produc-
tion in terms of four underlying metallurgical properties:
(1) head iron, designated as FeH, (2) Davis Tube weight
recovery, as DTWR (Schulz, 1964), (3) concentrate iron, as
FeC, and (4) silica grades, as SiC. The existing conventional
schedule has two classifications of ore, with the lower-grade
ore being stockpiled. The stochastic optimization seeks to
avoid stockpiling and lower costs by deciding dynamically
to which of two destinations to send each block — the waste
dump or the process plant — while still meeting grade con-
straints. In addition to aspects included in past SIP formula-
tions and applications, constraints are added to smooth the
annual haul truck fleet requirements in order to avoid pur-
chases that lead to underutilized equipment. Furthermore,
and unlike past formulations, the SIP formulation presented
here seeks to maximize the space available for in-pit tailings
disposal, which is roughly two-thirds of the ore to be mined
at LabMag, in order to reduce the environmental footprint.
An SIP formulation for long-term production scheduling
with equipment and tailings management is then presented.
This formulation is applied in a case study at LabMag, and
the scheduling results are compared with conventionally
scheduled results.
48 october 2017    Mınıng engıneerıng www.miningengineeringmagazine.com
Stochastic integer programming (SIP) formulation
The following objective function is defined as maximiza-
tion of the NPV minus various penalty terms that control
the geological risk profile, minimize fleet requirements, and
promote mining adjacent blocks in the same period in order
to generate a practical schedule.
Notation
The constant and variable factors used in the SIP model
are defined below:
• i, N — Index variable and total number of blocks in
the orebody model.
• s, S — Index variable and total number of orebody
simulations.
• t, P — Index variable and total number of time pe-
riods.
• d, D — Index variable and total number of destina-
tions.
• q, Q — Index variable and total number of metal-
lurgical qualities.
• Vi,d,s — Value of block i in simulation s going to des-
tination d in time period t.
• THd,t — Total truck hours in period t for destination
d.
• CtTH — Operating cost, in $/h, for trucking, discount-
ed by period t.
• bi,d,t — Binary variable with a value 1 if block i is
mined in period t and sent to destination d, and 0
otherwise.
• Penconc — The penalty per tonne of deviation, in $/t
concentrate, from the target concentrate production
in each period; constant.
• Penq — The penalty per tonne of quality content, $/t
quality q, in each period above or below the associ-
ated upper or lower limits, respectively; constant.
• devtconc — Concentrate tonnes in excess of the upper
limit.
• devtconc — Concentrate tonnes less than the lower
limit.
• devtq — Tonnes of metal or mineral, q, in excess of
the upper limit, where q = 1, … , Q considered quali-
ties.
• devtq — Tonnes of metal or mineral, q, less than the
lower limit.
• ct = 1/((1 + r)t − 1) — A function for discounting prof-
its and costs with the discounting factor r according
to the period t when the block is mined.
• gt = 1/((1 + GRD)t − 1) — A function for discounting
geological risk with the discounting factor GRD ac-
cording to the period t when the block is mined.
• NRi,s — Net revenue.
• OCost, WCost — Mining cost of ore and waste, re-
spectively, excluding truck haulage, which is penal-
ized directly in the objective.
• PCost — Processing cost: Crushing, concentrating,
filtration, pelletization, transportation, administra-
tion.
• ROM — Run-of-mine tonnage.
• eWR — Effective weight recovery: Considers ideal
weight recovery as well as plant efficiency parameters.

Mining block economic value. The undiscounted value
for each block is defined as:
{
NRi,s − CONCi,s * PCOST − ROMi,s *
(1)
Vi,d,s = OCOST − Wi,s * WCOST, if d = 1
− (ROMi,s * Wi,s  ) * WCOST, if d = 0
CONCi,s = ROMi,s * eWRi,s (2)
Objective function. The objective function of the SIP
model is constructed as the maximization of a profit func-
tion, defined as the total expected NPV minus penalties
for deviations from planned production targets and pen-
alties for not mining the blocks adjacent to a mined block
(Ramazan and Dimitrakopoulos, 2005, 2013; Benndorf and
Dimitrakopoulos, 2013), as well as truck operating costs.
This objective function includes four distinct terms:
Maximize Obj = Stochastic orebody models at LabMag. Geological vari-
(3a)
(3b)
(3c)
(3d)
The first term is the primary term and represents the NPV of
all blocks mined in the optimization. The second term rep-
resents the trucking operating cost, which is minimized. The
third term acts to penalize deviations from target concen-
trate tonnes and the target silica grade and weight recovery.
The variables for the deviations are determined by the op-
timization process, based on the corresponding constraints
that are set. The fourth term is a penalty for not mining
adjacent blocks. It is desirable to mine blocks in groups in
order to generate a practical schedule. There is a trade-off
between the penalty terms, determined by the relative size
of the penalties.
Constraints. Constraints are applied to ensure equip-
ment accessibility, processing capacity, geotechnical aspects,
and blending requirements, which are detailed in Benndorf
and Dimitrakopoulos (2013). In addition, constraints are in-
cluded here to control the schedule sequence and the num-
ber of haul trucks in each period.
Sequencing constraints. In order to accommodate in-pit
tailings disposal, the strategy here is to expose the ultimate
pit floor as quickly as possible. In order to accomplish this,
mining on each bench is set to start from the shallow side of
the deposit. In addition to the standard block predecessors
needed to maintain geotechnical slope constraint, the block
cross-dip, toward where the deposit daylights at surface, is
set to be mined in the same or an earlier period.
Haulage capacity constraints. To avoid a truck being
leased or purchased and then left unused, a constraint is
www.miningengineeringmagazine.com Mınıng engıneerıng    october 2017
Technical Papers
added to enforce that the number of trucks in each period
must be equal to or more than the number of trucks in the
previous period. Leeway of half the available working hours
of one truck in one period is given as:
(4)
where t = 2, … , P and Hd is the total time required for trans-
portation of a block to destination d.
Application at the LabMag iron ore deposit
The formulation is applied at the LabMag deposit in
order to create a mine production schedule that considers
multi-element grade uncertainty as well as equipment and
tailings disposal requirements.
ability and uncertainty is represented here by 10 stochastic
conditional simulations of the deposit (Spleit and Dimitrako-
poulos, 2016). Each realization consists of a joint simulation
of the seven correlated layer thicknesses as well as the joint
simulation of four correlated ore characteristics in each layer
using the joint direct block simulation method (Boucher and
Dimitrakopoulos, 2009). Each model consists of 13,400 blocks,
measuring 100 × 100 × 15 m (328 × 328 × 49 ft).
The two primary waste types for the LabMag deposit are
overburden (OB) and Menihek Shale (MS). The OB over-
lies the entire deposit and is minimal (the underlying rock
is commonly exposed at surface). The MS layer is present
on the northeast side of the deposit, overlies the iron layers
and dips parallel to them at approximately 6 degrees (Fig. 1).
Implementation. The SIP model was implemented in Vi-
sual C++ using the ILOG CPLEX API. The initial attempts
to solve the full orebody model for all 10 periods proved
that it was unsolvable in a reasonable amount of time, as the
optimization had made little progress after several days of
running on a 64-bit Dell Precision M6500 Intel I7 quad-core
at 1.73 GHz with 16 GB of RAM. The initial 13,400 blocks
considered are the blocks contained within an ultimate pit
derived using the nested Lerchs-Grossman algorithm. As
only the first 10 years are scheduled within the optimization
and the LabMag ultimate pit contains more than 25 years
of ore at the planned capacity, the precise pit limit need not
be discussed further. To reduce the number of blocks, a new
pit was designed that takes as many blocks as possible but
avoids the MS waste layer. As the optimization targets the
first 10 years and tries to minimize trucking hours as well
Figure 1
LabMag typical cross-section.
49
Technical Papers
as unnecessary waste, it was evident that the optimization
would avoid the MS region of the deposit, anyway. This
brought the number of blocks down to 8,411. The optimi-
zation was then broken down into four sequential optimi-
zations (Fig. 2), each set to stop once there was less than a
1 percent gap between the solution and the optimal solution.
Note that the four sequential optimizations do not have an
impact on the validity of the comparisons made later in this
paper between the resulting stochastic schedule and the con-
ventional one. If anything, solving the proposed formulation
in a single optimization step, instead of as four subproblems,
will only improve the value of the objective function and
thus be in favor of the stochastic solution.
The optimization has upper and lower bounds of 23 and
29 percent for DTWR and 1.8 and 2.5 percent for SiC, and
penalizes values outside those bounds. Higher DTWR means
mining less ore for the same amount of product, but there is a
trade-off with haul distance because most of the higher-grade
DTWR material is located in the north end of the deposit,
which is further from the crusher. The average silica grade of
the single, 10-year period of optimization is 2.2 percent, which
became the new target for subsequent optimizations because
a consistent silica blend is desired across all periods.
Results
A practical mining schedule was designed based on the
block-scale optimization. The optimization considers the
first 10 years, and an additional 15 years were scheduled
thereafter to allow for full comparison against an existing
conventional schedule. Both conventional and stochastic
mine designs and production schedules are based on the
same parameters, such as pit slopes, bench height and safe
Figure 2
Schematic representation of four-stage schedule
optimization.
Figure 3
Stochastic schedule mine designs: end-of-period (a) 5, (b) 10
and (c) 15.
(a) (b) (c)
50 october 2017    Mınıng engıneerıng www.miningengineeringmagazine.com
mining width, as well as the same targets and constraints. In
the stochastic optimization, the only blocks sent to the waste
dump are located at the surface of the deposit and contain
mostly OB and/or MS waste, which means that all scheduled
material within the seven iron-bearing units is sent to the
plant. Had ore blocks with a low DTWR been sent to the
dump, this would have promoted the concept of stockpiling
ore with a low weight recovery. However, this is not the case,
so the only reason to stockpile ore would be to restrict the
silica levels. In the optimized schedule, the silica levels are
managed without the need for such a restriction.
The evolution of the pit in the stochastic optimization
schedule is along the full length of the deposit, progressively
deepening perpendicular to the strike (Fig. 3). This differs
from the conventional design that is based on slots that are
mined west to east along the full width of the defined re-
source and mining at depth already in early periods (Fig. 4).
The stochastic optimization schedule thus has shorter haul
times in earlier periods and fewer trucks as they can travel
at near top speed, whereas they are driven slower when ex-
iting the pit due to the incline. Another advantage of min-
ing along the length of the deposit is that the grades vary
primarily along the strike: higher DTWR material is found
to the north but with higher SiC as well. Having open faces
along the full length of the deposit allows for more flexibility
during operations to achieve the necessary blend.
Figure 5 shows that the truck productivity of the opti-
mized schedule is at its maximum in the earlier periods, and
steadily declines with each period as the pit is deepened and
the cycle times increase. For the deterministic schedule, the
productivity seesaws as each full-width slot is mined. The
optimized schedule ensures higher productivity in ear-
lier periods and thus lower corresponding operating costs.
Risk management. The stochastic optimization sched-
ule is compared with the conventional schedule in order to
demonstrate the effectiveness of geological risk manage-
ment. The annual concentrate product tonnages for a con-
ventional schedule, designed based on a single deterministic
orebody model, and a stochastic schedule, which considers
simultaneously several different and equally probable ore-
body models along with the local spatial variability of perti-
nent geological attributes, are shown in Figs. 6a and 6b. The
expected tonnages for the stochastic schedule are consistent
with the targets and also have a greatly reduced (narrow)
risk profile, which is shown by a tight 80 percent confidence
Figure 4
Deterministic schedule mine designs: end-of-period (a) 5,
(b) 10 and (c) 15.
(a) (b) (c)
 Technical Papers

Figure 5 Figure 6
Conventional and stochastic schedules: Comparison of truck Product tonnes in (a) conventional schedule and (b)
productivity. stochastic schedule.
(a)

range. The conventional schedule considers a single tonnage (b)

estimate for each block, essentially treating that information
as 100 percent accurate, which is not true. The actual tonnes
mined from each block may end up being lower or higher
than the estimate (an average value by construction), and
when these differences are taken together they can trans-
late to a large deviation from the expected production over a
mining period. The stochastic optimization jointly considers
the probabilistic distribution of possible values for each in-
dividual block and schedules block combinations that have a
higher probability of meeting production targets.
For the conventional schedule in Fig. 6a, the solid black
line shows the target tonnage of 22 Mt/a (24 million stpy) with
a ramp-up, and the grey points show the forecasted values
Figure 7
when evaluating the performance of the conventional sched- (a) Annual DTWR of feed ore and risk profile in the stochastic
ule using the deterministic (estimated) orebody model. The schedule and (b) annual silica grades of concentrate and risk
conventional schedule was designed based on the estimated profile in the stochastic schedule.
orebody model and, in general, Fig. 6a shows that tonnages
are reasonably consistent with the targets. Tonnages in excess (a)
of the target are due to including inferred material as pro-
cessed ore, and demonstrates the possibility of mining more
ore than necessary. However, these single estimated values
and forecasts generated by the conventional schedule are mis-
leading. This is shown by the red bounds that quantify the risk
in meeting the conventional forecasts through a range of pos-
sible tonnages for each period and with 80 percent confidence
level that the true value will be in this range. The tonnage
ranges are obtained by evaluating the conventional schedule
against each of orebody simulations (equally likely represen- (b)
tations of the actual deposit). Note that the dashed light blue
line in Fig. 6a shows the expected value for each production
year, calculated as the average from the set of values obtained.
The probabilistic evaluation (risk analysis) shows that the de-
terministic model systematically overestimates the quantity
of concentrate tonnes. There are two reasons for this overes-
timation: (1) the deterministic model does not assume any lo-
cal variability and has smoothed out estimates of the weight
recovery, and (2) to account for uncertainty, the simulations
have different values of FeH and the density of each lithology
is dependent, and calculated using regressions, on the FeH in
each layer, whereas the deterministic model assumes a fixed 7b to demonstrate the effectiveness of the stochastic schedule
average density for each lithology. to control the qualities and their risk profiles. The DTWR val-
The annual values for the stochastic schedule for the two ues vary by only 0.4 percent on average. High DTWR values
primary qualities, DTWR and SiC, are shown in Figs. 7a and in earlier periods were expected because a greater weight re-

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Technical Papers
covery means less ore is required for the same product ton-
nage, which means lower costs. That is not the case here be-
cause the optimization seeks the greatest profit, and there is a
balance between the value of higher DTWR material and the
higher cost of mining at depth and/or further from the plant.
However, this may be an artificial result: processing costs and
plant efficiencies are variable with respect to feed material,
yet they are assumed as fixed in this study. With the inclusion
of more detailed variable processing costs and efficiencies, it
is likely that higher DTWR material would be scheduled in
earlier periods before the process plant is fully commissioned
and operating consistently. The SiC range for each year in
the stochastic schedule (Fig. 7b) can be seen to fall within the
specified upper and lower limits of 2.5 and 1.8 percent, respec-
tively, hovering around the target of 2.2 percent and demon-
strating the ability of the stochastic modeling to ensure low
risk of not meeting targets.
Financial impact of stochastic scheduling. In addition
to controlling the qualities and tonnages, and thus minimiz-
ing the deviations from targets, the stochastic optimization
Figure 8
Conventional and stochastic schedules: Comparisons of (a)
expected waste and stockpile tonnes, (b) major equipment
fleets and (c) cumulative discounted cash flows (DCF).
(a)
(b)
(c)
52 october 2017    Mınıng engıneerıng www.miningengineeringmagazine.com
maximizes the discounted cash flows. This can be accom-
plished by minimizing waste mining, minimizing haulage
cycle times and scheduling higher-grade material. The sto-
chastic optimization not only maximizes the discounted cash
flows, but also ensures a greater certainty in financial fore-
casts by managing the geological variability and uncertainty.
Compared with the stochastic optimization schedule,
there is a significant amount of MS waste mined in the con-
ventional schedule as well as additional ore that is stockpiled
instead of being sent to the plant. Mining these two materi-
als requires a significant amount of additional equipment,
which translates to higher costs than those for the stochastic
schedule. The expected annual waste and stockpile tonnages,
based on evaluating the schedule with the simulations, are
shown in Fig. 8a for both conventional and stochastic sched-
ules. Low-grade ore is stockpiled in the conventional sched-
ule based on a fixed cut-off in order to ensure the desired
ore qualities going to the plant. There is no stockpile in the
optimization schedule, which seeks instead to meet the de-
sired ore quality constraints by sending material only to ei-
ther the process plant or the waste dump. Figure 8a shows
that the combined tonnage of waste and stockpiled ores is
roughly between 20 and 50 Mt/a (22 to 55 million stpy) for
all periods, whereas the stochastic schedule has no stock-
piled tonnes and only minimal waste. The stochastic optimi-
zation was performed on a pit that purposely avoided the
MS, and so there is minimal stripping in all years. The very
low amount of waste mining was intended, and is a crucial
component to minimizing costs in the first 10 years.
Figure 8b shows a comparison between the fleet require-
ments of the two schedules for haul trucks and primary cable
shovels. Equipment calculations take into account a variety
of factors, including mechanical availability, utilization, job
efficiency, operating delays, payload, spot times, dump times,
load times and cycle times. The new maximum number of
trucks required over the 10-year period is 20 trucks, as op-
posed to the previous 35 trucks. Fewer trucks are needed be-
cause the haul cycle times are shorter, so the trucks are more
productive. In addition, there is less waste mining, which
also contributes to the reduced number of equipment. The
necessary cable shovels was reduced by one, which is signifi-
cant because each cable shovel costs almost four times as
much as one truck. The change in fleet requirements reduces
the capital cost requirements by 23.7 percent and operating
costs by 26.2 percent.
The impact of these cost reductions and the reduction
of geological variability can be seen together in a compari-
son of discounted cash flows for the two schedules (Fig. 8c).
The dashed black line shows the estimated results from the
conventional schedule when it is evaluated using a single de-
terministic orebody model. All other results are shown rela-
tive to this. The pink zone shows the 80 percent confidence
range of the conventional schedule when it is evaluated with
the stochastic simulations. Almost all simulations result in a
lower NPV and the expected value of the simulations is 14.9
percent less than the estimated value. This is directly related
to the overestimation of product tonnes by the deterministic
orebody model. The 80 percent confidence range spans 28.9
percent of reference conventionally estimated NPV, which
indicates significant uncertainty in the NPV.
The stochastic optimization schedule, however, has an

expected NPV that is 16.9 percent higher than the reference
conventionally estimated NPV. The 80 percent confidence
range is 2.5 percent, ranging from 15.6 to 18.1 percent more
than the NPV of the deterministic schedule, which represents
a significantly reduced risk profile. This indicates that a higher
NPV is achieved with the stochastic schedule and there is a
much greater probability of actually achieving this result.
Conclusions
A new formulation for long-term mine production
schedule optimization based on stochastic integer program-
ming was applied to the LabMag iron ore deposit in order
to maximize the mine profitability and reduce the risk of not
achieving the expected financial results by managing geo-
logical uncertainty. Because past experience has shown that
actual mining production never corresponds perfectly with
forecasts, this formulation considers multiple orebody simu-
lations that capture the range of possible ore qualities and
quantities for each block and assesses the impact of differ-
ent block groupings. Furthermore, the formulation ensures
numerous standard mining constraints are respected, as well
as two new constraints that could be relevant for many other
mining projects: one constraint restricts changes to annual
equipment requirements to prevent dips that would leave
equipment unused or else require a mixed fleet of owned
versus contracted equipment, while the other restricts the
mining progression with the goal of maximizing the volume
of space available in-pit for tailings and/or waste disposal.
The optimized schedule yielded an expected NPV that is
16.9 percent higher than that of a conventional schedule and
has a higher chance of being realized due to the reduced un-
certainty in the expected concentrate product tonnages. The
optimized schedule ensures annual DTWR values are likely
to vary by only 0.4 percent on average, and that the expected
annual silica is near 2.2 percent in all years with the range
of probable values all falling within the specified acceptable
upper and lower limits of 2.5 and 1.8 percent. By effectively
blending ore to meet production targets, stockpiling is elimi-
nated from this schedule. Waste mining is reduced for all pe-
riods by completely avoiding an overlying waste unit that was
mined in the previous schedule and the combined effect of no
stockpile and very little waste mining reduced the total exca-
vation by 20 to 50 Mt/a (22 to 55 million stpy) in each year.
Compared with the first 10 years of the previous life-of-mine
schedule, the optimized schedule reduces the required num-
ber of trucks by 15, from a previous total of 35, to 20 trucks in
total, and the required number of shovels by one, to five shov-
els in total. This corresponds to reductions of 23.7 percent in
capital costs and 26.2 percent in operating costs over the first
10 years. The optimized schedule mines the orebody in a pro-
gressively deepening fashion, maintaining a larger working
area at any given time, rather than mining a slot that reaches
the full depth of the deposit. This also facilitates the eventual
disposal of dry tailings and waste inside the pit in order to
reduce the environmental footprint. ■
Acknowledgments
We gratefully acknowledge the support of New Millen-
nium Iron Corp. and the National Sciences and Engineer-
ing Research Council of Canada (NSERC Discovery Grant
239019-06).
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Technical Papers
References
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