PLANIFICACIÓN MINERA

Lane algorithm
ASIEH HEKMAT
SESSION 9
Different theories of cut off grade calculation

No. Researcher Year Method

1 Callaway 1954 Constant mine life
2 Callaway 1958 Economical relation between mine production and grade
3 Tessaro 1960 Cut off grade calculation with the objective of maximizing NPV
4 Henning 1963 Cut off grade calculation with the objective of maximizing profit
5 Lane 1964 Defining cut off grade based on three operational constraints
6 Taylor 1985 The importance of stockpiles in reaching the optimum cut off grade
7 Lane 1988 Cut off grade considering economical parameters of mine
8 Dagdalen 1992 Cut off grade optimization
9 Whittle , Wharton 1995 Development a software to define cut off grade
10 Whittle , Vassiliev 1998 Recovery prediction and optimize cut off grade
Lane algorithm (1988)- Introduction
Lane presented the principles which determine the best choice of cut-off grade under different
circumstances.
A mining operation is considered to consist of three stages:
Mining
Concentration
Refining
Each stage has its own associated costs and a limiting capacity.
The operation as a whole will incur continuing fixed costs.
The algorithm focuses on choosing a cut-off grade to maximize the present value of the cash
flow from the operation.
 Parameters
Material Material Maximum capacity Unit costs
Unit costs
Mine Ore M m

Concentrator Concentrate C
k
Refinery Product R
r
Market Quantities

T: the length of the production period

Fixed costs (f)
Qm: The quantity of material to be mined
Other factors Selling price (S)
Qc: The quantity of ore sent to the concentrate
Recovery (y)
Qr: The amount of product
The basic equation
Total Cost
Tc  mQm  kQc  rQr  f .T
Revenue
R  SQr
Profit
P  R  T  (S  r )Qr  mQm  kQc  f .T
Example: Within the pit outline are contained 1000 tons of material. The grade distribution and
other information:
Grade (lb/t) Quantity (t) Costs Maximum Capacities
0-0.1 100 Mining m = $1 / ton M = 100 t/year
0.1-0.2 100 Concentrating k = $2 / ton C = 50 t/year
0.2-0.3 100 Refining r = $5 / lb R = 40 t/year
0.3-0.4 100 Concentrator cut-off grade: 0.5 lbs/ton
0.4-0.5 100 Fixed costs: f = $ 300 / year
0.5-0.6 100 Price: S = $ 25 / lb
0.6-0.7 100 Recovery: y = 100%
0.7-0.8 100 Qm = amount to be mined (tons)
0.8-0.9 100 Qc = amount sent to the concentrator (tons)
0.9-1 100 Qr = amount of concentrator product sent for refining (lbs)

Qm = 100 t/year
Qc = 50 t/year with average grade of 0.75 lbs/ton
Qr = 0.75 x 50 = 37.5 lbs/year
Yearly profit and NPV
Profit per year:
P= (25 – 5)x 37.5 - 2x50 – 1 x 100 – 300
P = $ 250 / year
Assuming an interest rate of 15%

NPV 

250 1.15  1
10

 $1245.7
0.151.15
10

Is there any other combination of mine production rate and concentrator cut-
off grade which yield a better profit from this deposit????
Determination of the economic cut-off grade
Step I. One operation constraining the total capacity

P  (S  r )Qr  mQm  kQc  f .T

Calculate cut-off grade assuming that the mining rate is the governing constraint.

The time needed to mine material Qm

Qm
Tm 
M
Cut-off grade assuming that the mining rate is the governing constraint

To find the grade which maximizes the profit under this constraint one first takes the derivative of
with respect to g.

The quantity to be mined is independent of the grade

Cut-off grade assuming that the mining rate is the governing constraint

The quantity refined Qr is related to that sent by the mine for

concentration Qc by

The average grade sent for

concentration
Cut-off grade assuming that the mining rate is the governing constraint

 S  r gy  k  c
dP dQ
dg dg
The lowest acceptable value of average grade is that which makes
Cut-off grade assuming that the concentrating rate is the governing constraint
If the concentrator capacity C is the controlling factor in the system, then the time required to mine
and process a Qc block of material (considering that mining continues simultaneously with
processing) is :
Cut-off grade assuming that the concentrating rate is the governing constraint
Differentiating with respect to g and setting the result equal to zero:

Like before:

&
Cut-off grade assuming that the concentrating rate is the governing constraint

The cut-off grade when the concentrator is the constraint is:

f
k
gc  g  C
S  r y
 Cut-off grade assuming that the refining rate is the governing constraint

If the capacity of the refinery (or the ability to sell the product) is the
controlling factor then the time is:
Cut-off grade assuming that the refining rate is the governing constraint
Lane algorithm- Step I- Example
Substituting the values from the example yields:
The cut-off grade when the mining rate is the constraint is:
2
gm   0.1 lbs / ton
1 25  5
The cut-off grade when the concentrator is the constraint is:
300
2
gc  50  0.4 lbs / ton
1 25  5
The cut-off grade when the refining rate is the constraint is:
2
gr   0.16 lbs / ton
 300 
1  25  5  
 40 
Profit calculation under mining rate constraint
1000
Tm   10 years
100

g m  0.1 lbs / ton

Qc  900 tons with an average grade : g  0.55 lbs / ton

Qr  900  0.55  495 lbs

Pm  (25  5)  495  2  900  1 1000  300 10  $4100

Profit calculation under concentrator limit
g c  0.4 lbs / ton
Qc  600 tons with an average grade : g  0.7 lbs / ton

600
TC   12 years
50

1000
Qm   83.3
12
Qr  600  0.7 1  420 lbs

Pm  (25  5)  420  2  600  11000  300 12  $2600

Profit calculation under refining limit
g r  0.16 lbs / ton
g  0.58 lbs / ton
Qc  840 tons

Qr  840  0.58  1  487.2 lbs

487.2
Tr   12.18 years
40

Pm  ( 25  5)  487.2  2  840  1 1000  300  12.18  $3410

Total profits as a function of concentrator cut-off with mine operating at capacity
Total profit as a function of
cutoff grade under different
constraints
 Step 2. cutoff grade by balancing the operations

Determination of the economic cutoff grade by balancing the operations

A second type of cutoff is based simply on material balance. To be able to

calculate this one needs to know the distribution of grades of the mined
material.

The average grade of the treated material can be found as a function of the
chosen cutoff.
Step 2. cutoff grade by balancing the operations
Concentrator feed as a function of concentrator cut-off with mine operating at capacity
 Step 2. cutoff grade by balancing the operations

Refinery product as a function of concentrator cut-off with concentrator operating at capacity

 Step 2. cutoff grade by balancing the operations
Refinery feed as a function of mine cut-off with the mine operating at capacity
Total profit as a function
of cutoff grade under
different constraints
Step 2. cutoff grade by balancing the operations
C
g mc  1 g mc  1 
50
 0.5 lbs / ton
M 100

R 40
g mr  1 g mr  1   0.45 lbs / ton
0.5  M 0.5 100

R
g rc  1 g rc 
40
 1  0.6 lbs / ton
0.5  C 0.5  50
Step 3. Determining the overall optimum of the six cutoff grades

are based simply upon the

g mc & gcr & g mr grade distribution of the mined
material and capacities

are based upon capacities,

g m & gc & gr costs and the price
Step 3. Determining the overall optimum of the six cutoff grades
The objective is to find the cutoff grade which produces the overall maximum profit in light of
the mining, concentrating and refining constraints.

g m if g mc  g m g m if g mr  g m
 
G mc  gc if g mc  g c G mr  g r if g mr  g r
g g
 mc otherwise  mr otherwise

 gr if g cr  g r

Gcr  gc if g cr  g c
g Gopt  Middel(Gmc , Grc , Gmr )
 cr otherwise
Step 3. Determining the
overall optimum of the six
cutoff grades