Active filters :
Discard Filter

Mining Scenario Analysis and Mine Variable Value


Want a discount? Become a member!

Author A J Hills, B E Hall and J Poniewierski


Following a review of life-of-asset work at MMG’s Rosebery mine in which a proposal to increase production from 0.8 Mt/a to 1.2 Mt/a was mooted, questions were raised as to the seemingly arbitrary reasoning for the production increase. They included: Did the proposal actually add value? Was the production rate from the mine sustainable? Was it the best identifiable value-adding configuration?

A multiple scenario analysis study commenced to model how various cut-off grade values against mill throughput, along with associated capital expenditure, would impact on the potential value of the operation. This was carried out utilising the ‘hill of value’ approach promoted by AMC Consultants.

The traditional approach to these studies uses a constant cut-off value (NSR – net smelter return) for the whole mine analysis. This was thought to potentially introduce a large amount of variability to the model as different ore types were thought to have different processing costs and different underground lenses were thought to have different mining costs. With the aim of developing a consistent value measure that would be comparable between the lenses, an alternative measure was suggested for all ore block values in this model, irrespective of lens location.

The new measure used was a mine variable value (MVV). This allowed for the variable factors of final metal concentrate production to be removed from the ore value. From a mining point this was the haulage distance from ore source to run-of-mine (ROM). For the mill it was the amount of reagents required, varying based on grade together with the amount of power required for crushing, grinding and tailings handling.

From the initial run of the model, preliminary results lead to a conclusion of increased value being gained by either increasing cut-off grade or increased mill throughput rate. The validity of the result was tested using alternative price scenarios, which although changed the absolute value achieved did not significantly change the identified value-adding strategies. The realisation of these value increases identified are however contingent on higher sustainable development rates being able to be achieved mine-wide, higher backfilling rates being able to be achieved and overcoming recognised ventilation constraints. Further detailed studies are being put in place to identify the practicality of overcoming these recognised constraints and achieving the higher-value strategies identified.

The ongoing objective of the hill of value model built is to keep the model alive as a life-of-asset planning tool and to continue refining the foundation data, such that various mining strategies can be analysed with increased confidence.


Hills, A J, Hall, B E and Poniewierski, J, 2014. Mining
scenario analysis and mine variable value, in Proceedings 12th AusIMM
Underground Operators’ Conference 2014
, pp 111–118 (The Australasian Institute of Mining and Metallurgy: Melbourne).