Cog Golden Section
Cog Golden Section
The Journal of The South African Institute of Mining and Metallurgy OCTOBER 2003 493
Determination of optimum cutoff grades of multiple metal deposits
The equivalent grades method has some flaws, but if
minerals have fairly stable values, this procedure is valid and
P = (s1 r1 )Qr1 + (s2 r2 )Qr 2 mQm cQc fT [1]
simplifies the problem. If one of the metals is subject to
Where m: mining cost ($/tonne of material mined), c: concen-
market limitation, this technique becomes invalid, because,
trating cost ($/tonne of material concentrated), r1: refinery
the production in excess of the contracts for that metal cannot
be sold and therefore ore cannot be valued on the basis of cost ($/unit of product 1), r2: refinery cost ( $/unit of
contract price. Therefore, it is the influence of capacities in product 2), f: fixed cost, s1: selling price ($/unit of product 1),
both plant and market which invalidate the combined value s2: selling price ($/unit of product 2), T: the length of the
criterion (Lane 1988). This method also has operational and production period being considered, Qm: quantity of material
economical flaws (Barid and Satchwell 2001). to be mined, Qc: quantity of ore sent to the concentrator, Qr1:
Other methods for discrimination of ore/waste in multiple the amount of product 1 actually produced over this
metal deposits are: Critical level method, Net Smelter Revenue production period, Qr2: the amount of product 2 actually
(NSR) method, Single grade cutoff approach, Dollar value produced over this production period.
cutoff approach (Annels 1991;Barid and Satchwell 2001). If d is discount rate, the difference v between the present
None of these methods is an optimized technique, because values of the remaining reserves at times t=0 and t=T is
the distribution of grade of mined material, mining operation (Hustrulid and Kuchta 1995):
capacity constraints, and the effect of time on money value
v = P VdT [2]
are not considered. These methods usually lead to sub-
optimal exploitation of the resource. In reality, there are Where V is the present values at time t =0. Substituting
potentially operational, economic and logic serious issues in Equation [1] into Equation [2] yields:
the application of these methods. Therefore determination of
optimum cutoff grades of multiple metal cutoff grade decision v = (s1 r1 )Qr1 + (s2 r2 )Qr 2 [3]
making is formidable. In this paper, selecting cutoff grades
with the purpose of maximizing NPV subject to the mQm cQc ( f + Vd )T
constraints of mining, concentrating, and refining capacities
The quantities refined Qr1 and Qr2 are related to that sent
of two metals will be discussed.
by the mine for concentration Qc by:
For an operating mine, there are typically three stages of Qr 2 = g2 y2Qc [5]
production: (i) the mining stage, where units of various
grade are extracted up to some capacity, (ii) the treatment Where: g 1 is the average grade of metal 1 sent for concen-
stage, where ore is milled and concentrated, again up to some tration and g 2 is the average grade of metal 2 sent for
capacity constraint, and (iii) the refining stage, where the concentration.
concentrate is smelted and/or refined to a final product which Substituting Equations [4] and [5] into Equation [3]
is shipped and sold. The latest stage is also subject to yields:
capacity constraints. For simplicity, assume a two metal
deposit. In this deposit, ore is sent to a concentrator and the [
= (s1 r1 )g1 y1 + (s2 r2 )g2 y2 c ] [6]
concentrator will produce two concentrates. Each concentrate Qc = m Qm ( f + Vd )T
for smelting and finally refining is sent to a refinery plant.
Each stage has its own associated costs and a limiting One would now like to schedule the mining in such a way
capacity. The operation as a whole will incur continuing fixed that the decline in remaining present value takes place as
costs. (See Figure 1). rapidly as possible. This is because later profits get
By considering costs and revenues in this operation, the discounted more than those captured earlier. In examining
profit is determined by using following equation: Equation [6], this means that v should be maximized.
m M Mine
c Concentrator
C
r1 R1 Metal 1 Concentrate 1
Refinery 1
r2 Metal 2 Concentrate 2
R2 Refinery 2
494 OCTOBER 2003 The Journal of The South African Institute of Mining and Metallurgy
Determination of optimum cutoff grades of multiple metal deposits
Equation [6] is the fundamental formula and all the
f + Vd
cutoff grade optimum can be developed from it. The time s1 r1
taken T is related to the constraint capacity. Four cases arise vr1 = R1 [13]
depending upon which of the four capacities are actually g y + (s r ) g y c
limiting factors. 1 1 2 2 2 2
If the mining rate is the limiting factor then the time T is Qc m Qm
given by: (s1 r1 ) g1 y1 +
Q
T= m [7] vr 2 = f + Vd [14]
s2 r2 R g2 y2 c
M
If the concentrator rate is the limiting factor then the time 2
T is controlled by the concentrator: Qc m Qm
Qc Now, for any pair of cutoff grades, it is possible to
T= [8] calculate the corresponding Vm, Vc, Vr1, and Vr2. The
C controlling capacity is always the one corresponding to the
If the refinery output of metal 1 is the limiting factor then least of these four equations. Therefore:
the time T is controlled by the refinery of metal 1:
Q gyQ
[
max ve = max min(vm , vc , vr1 , vr 2 ) ] [15]
0.20
0.15
molybdenum (%)
0.10
0.05
0.00
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0
Copper (%)
The Journal of The South African Institute of Mining and Metallurgy OCTOBER 2003 495
Determination of optimum cutoff grades of multiple metal deposits
Table I
guessed. In the next step, by selecting test points in the
uncertainty space and evaluating and comparing the objective
p and q values of Equation [16] for different cases function at these test points, a part of the uncertainty space
Limiting capacity p q will be eliminated. This reducing procedure is repeated until
the uncertainty interval in each direction is less than a small
Mine c c specified positive value , where is the desirable accuracy
(s1r1) y1 (s2r2) y2
for determining optimum cutoff grades (Rardin 1998).
Concentrator f + Vd f + Vd The ratio of the remaining length, after the elimination
c+ c+
C C
(s1r1) y1 (s2r2) y2 process, to the initial length in each dimension is called the
reduction ratio. The dichotomous search method, the
Refinery 1 c c
Fibonacci search method, and the Golden Section search
(s1r1 f + Vd) y1 (s2r2) y2
R1 method are examples of elimination methods. Among these
Refinery 2 c c methods, the reduction ratio of the Golden Section search
(s1r1) y1
(s2r2 f + Vd) y2 method is optimum and equals 0.618 (this number is called
R2 the golden number). In this method, the ratio of eliminated
length to initial length will be equal to 0.382. In addition,
using the Golden Section rule means that every stage of the
uncertainty range reduction (except the first one), the
process is limiting; however, when the maximum occurs at a objective function need only be evaluated at one new point
balancing point, where more than one capacity restricts (Chong and Zak 1996; Rao 1996; Bazarra, Hanif and Shetty
throughput, no satisfactory analytical technique has been 1993).
developed. The problem geometrically is one of four Figure 3 shows the Golden Section search method for a
intersecting surfaces forming hills. The peaks are compara- one dimensional function. In the first step, assume (L, U) to
tively easy to locate but the ridges and valleys where they be the initial interval of uncertainty and note that the initial
intersect are more difficult (Lane 1988). Infinite points are interval includes the optimum point. Then select two test
possible candidates for the optimum cutoff grades. For this points, g1 and g2 (Figure 3.a). The locations of these points
reason, the maximum is best located by a search process. The are:
Golden Section search technique to calculate the optimum
cutoff grades of multiple metal deposits has been found quite
g1 = L + (U L) x 0.382 [17]
effective.
g2 = L + (U L) x 0.618 [18]
Calculation of optimum cutoff grades In the next step, the objective function will be evaluated
One of the fastest methods to calculate the optimum point of in the g1 and g2 points. Depending on the objective function
unimodal functions is the elimination method. In the first value of these points, the length of the new interval of
step of this method the uncertainty space of the problem is uncertainty is successively reduced in each iteration
g1 = L + (U L) x 0.382
g2 = L + (U L) x 0.618
(3.a)
L g1 g2 U
f (g1) < f (g2)
(3.b)
L g1 g2 U
496 OCTOBER 2003 The Journal of The South African Institute of Mining and Metallurgy
Determination of optimum cutoff grades of multiple metal deposits
(Figures 3.b and 3.c). The process is then repeated by placing Example
a new observation. Repeating this in the new range will find Consider a hypothetical condition that a final pit limit has
the optimum point with desirable accuracy. been superimposed on a mineral inventory. The pit outline
This procedure can be extended for multivariable contains 15 million tonnes of material. The gradetonnage
problems. Applying the Golden Section search method for distribution and average grade of ore for each metal are
unimodal two-dimensional functions, in the first step the shown in Tables II, III and IV. The associated costs, prices,
initial interval of uncertainty for each variable must be capacities, quantities and recoveries are demonstrated in
determined. Assume (L1, U1) to be the initial interval of Table V.
uncertainty of variable 1 and (L2, U2) to be the initial interval
of uncertainty of variable 2. Then select four test points (A,
(L1, U2) (U1, U2)
B, C, D) in the uncertainty space (Figure 4).
The locations of these points are:
a1 = L1 + (U1 L1 ) x 0.382 [19]
b2
a2 = L1 + (U1 L1 ) x 0.618 [20] C D
b1 = L2 + (U2 L2 ) x 0.382 [21]
b1
b2 = L2 + (U2 L2 ) x 0.618 [22] A B
In the next step, calculate the amount of the objective
function for each four test points. By comparing the objective
function values of these points, the optimum point in this (L1, L2) a1 a2 (U1, L2)
iteration and a new space of uncertainty is determined:
If point A is optimum then U1 = a2 and U2 = b2 and a Figure 4Golden Section search method for one-dimensional function
part of the uncertainty space is eliminated.
The remaining space is shown in Figure 5.a.
If point B is optimum then L1 = a1 and U2 = b2 and a Table II
part of the uncertainty space is eliminated. Grade-tonnage distribution of copper and
The remaining space is shown in Figure 5.b. molybdenum
If point C is optimum then U1 = a2 and L2 = b1 and a
part of the uncertainty space is eliminated. Molybdenum (%)
The remaining space is shown in Figure 5.c. Copper (%)
00.05 0.050.1 0.10.15 0.150.2 >0.2
If point D is optimum then L1 = a1 and L2 = b1 and a
00.1 1400000 900000 285000 315000 510000
part of the uncertainty space is eliminated. 0.10.2 400000 300000 250000 135000 60000
The remaining space is shown in Figure 5.d. 0.20.3 800000 530000 300000 210000 30000
0.30.4 1500000 570000 375000 135000 60000
In the remaining space for finding the optimum point, 0.40.5 410000 255000 75000 60000 60000
only one test point is left. In the next step, three new test 0.50.6 510000 300000 210000 105000 110000
points must be selected. This operation is repeated until the 0.60.7 375000 270000 210000 90000 90000
> 0.7 645000 690000 570000 500000 400000
optimum point is found with desirable accuracy (Kim 1997).
b1 b1
C D C D
b2 b2
A B A B
b1 b1
C D C D
b2 b2
A B A B
Figure 5Elimination of a part of the uncertainty space by the Golden Section search method
The Journal of The South African Institute of Mining and Metallurgy OCTOBER 2003 497
Determination of optimum cutoff grades of multiple metal deposits
Considering Equations [19] to [22], the possible space Test point Objective function value
498 OCTOBER 2003 The Journal of The South African Institute of Mining and Metallurgy
Determination of optimum cutoff grades of multiple metal deposits
Table VII methodology outlined in this paper is Golden Section search
Result of repeat operations for first year of mine life method. This method provides a fast procedure to determine
the optimum cutoff grades for multiple metal deposits. For
Iteration Cutoff grades Objective function (ve)
Copper (%) Molybdenum (%)
this purpose hypothetical data of one Cu/Mo ore deposit was
used to find the optimum cutoff grades and maximize the
1 0.2674 0.0764 13400582 present value. The total deposit is assumed to be 15 million
0.2674 0.1236 7263290
0.4326 0.0764 10043473 tonnes. Based on the Golden Section method and grade-
0.4326 0.1236 5176957 tonnage distribution, the uncertainty space of problem was
2 0.1652 0.0472 15609347 found. By selecting test points in the uncertainty space and
0.1652 0.0764 14557106
0.2674 0.0472 16886550 calculating the amount of ore, amount of waste, average
0.2674 0.0764 13400582
grade of ore for each metal, amount of total mined material,
3 0.2674 0.0292 16336005
0.2674 0.0472 16886550 amount of mined material that must be sent to the concen-
0.3305 0.0292 18010784 trator, amount of metals product of refinery 1 and 2, amount
0.3305 0.0472 15404960
of Vm, Vc, Vr1, Vr2 and Ve (objective function) for each four
4 0.3305 0.0180 16949965
0.3305 0.0292 18010784 test points were determined. Based on the result of the
0.3695 0.0180 17467282 objective function at these points, a part of the uncertainty
0.3695 0.0292 16555937
5 0.3064 0.0292 17299971 space can be eliminated. These operations were continued
0.3064 0.0361 17904442 until the optimum cutoff grades (0.001%) were found with
0.3305 0.0292 18010784
0.3305 0.0361 17167138 high desirable accuracy .
6 0.3305 0.0249 17637253
0.3305 0.0292 18010784 Reference
0.3454 0.0249 18026841
0.3454 0.0292 17557996 ANNELS, A.E. Mineral Deposit Evaluationa partial approach, Chapman &
7 0.3454 0.0223 17838465 Hall, London, 1991. pp. 114117.
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BARID, B.K. and SATCHWELL, P.C. Application of economic parameters and
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0.3546 0.0249 17679804 cutoffs during and after pit optimization, Mining Engineering, February
8 0.3397 0.0249 17905342 2001, pp. 3340.
0.3397 0.0265 18041904 BAZARRA, M.S., HANIF, D.S., and SHETTY, C.M. No linear programming theory
0.3454 0.0249 18026841 and algorithms, John Wiley & Sons, Inc., New York. 1993.
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9 0.3362 0.0265 17946174 CHONG, E.K.P. and ZAK, S.H. An introduction to optimization, A Wiley-
0.3362 0.0276 18030117 Interscience Publication, John Wiley & Sons, Inc., New York, 1996.
0.3397 0.0265 18041904 p. 409.
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HUSTRULID, W. and KUCHTA, M. Open-pit mine planning and design, vol. 1,
10 0.3397 0.0259 17990464
0.3397 0.0265 18041904 A.A.Balkema, Rotterdam, 1995. pp. 512544.
0.3419 0.0259 18049111 KIM J. Iterated grid search algorithm on unimodal criteria, Ph. D. Dissertation
0.3419 0.0265 18015664 in statistics, Blacksburg, Virginia, 1997. p. 115.
11 0.3419 0.0255 18017498
0.3419 0.0259 18049111 LANE, K.F. Choosing the optimum cut-off grade, Quarterly of the Colorado
0.3432 0.0255 18053530 School of Mines Quarterly, 1964. vol. 59 (4), pp. 811829.
0.3432 0.0259 18036136 LANE, K.F. The economic definition of orecut off grades in theory and practice,
12 0.3432 0.0253 18034062 Mining Journal Books Limited, London, 1988. p. 145.
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0.3441 0.0253 18056247 LIIMATAINEN, J. Valuation model and equivalence factors for base metal ores,
0.3441 0.0255 18047846 Proceeding of mine planning and equipment selection (ed.) Singhal J.,
13 0.3441 0.0252 18044244 A.A.Balkema, Rotterdam, 1998. pp. 317322.
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RAO, S.S. Engineering optimization (Theory and Practice), Third edition, A
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0.3437 0.0254 18055211 Rardin R. L. 1998. Optimization in operations research, PrenticeHall
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International, Inc., p. 919.
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15 0.3441 0.0254 18061286 TAYLOR, H.K. Cutoff gradessome further reflections, Trans. Inst. Min. Metall
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ultimate pit design, Mining Engineering, July, 1998. pp. 7377.
Table VIII
Optimum cutoff grades for different years of mine life
Year cutoff grade Qm Qc Qr1 Qr2 Profit NPV
Copper (%) Molybdenum (%) (tonne) (tonne) (tonne) (tonne) ($) ($)
The Journal of The South African Institute of Mining and Metallurgy OCTOBER 2003 499
Sasol director appointed chairperson to the
National Science and Technology Forum*
The NSTF Executive Committee and its stakeholders are The NSTF welcomes Marriott as the chairperson of the
proud to announce the appointment of John Marriott as the NSTF and looks forward to his expertise in issues of science,
new chairperson of the NSTF from 1 June 2003. Marriott engineering and technology to ensure continued growth of
succeeds Dr S.J. Lennon, who successfully served as the discipline in South Africa. Marriott stated that he was
Chairperson of the NSTF for the past three years. honoured by the appointment and looked forward to being
Marriott, is currently a director of Sasol Technology and able to contribute to the activities of the NSTF.
is also the general manager of Sasol Ltd. A chemical The NSTF wishes both Lennon and Marriott success in
engineer by training, he has spent several years at the their new challenges in uplifting the economic growth
highest level in the corporate world and has simultaneously through science, engineering and technology.
maintained an outstanding reputation in the technical
world. He has forged close associations with higher
education institutions in South Africa, where his
management skills and technical expertise helped provide * Issued by: Office of the Chief Executive Officer, National
marked insights into alliances between education and Science and Technology Forum (NSTF)
industry to ensure the provision of technical and scientific For more information contact:
skills. Mrs Wilna Eksteen on 082 442 4983.
500 OCTOBER 2003 The Journal of The South African Institute of Mining and Metallurgy