January 24, 2023

Mine Planning


Article 2: Step 2 ­– Climb the Hill of Value

Once a mine planner has determined the best-starting region and corresponding mining direction for the next set of pushbacks of an open pit mine, it’s time to start thinking about the scale of production and the size of the production plant. But again, the same questions arise: how can you plan for a reliable production scale when you do not yet know what is beneath the earth and metals prices and resource costs are not constant?

In mining planning, the hill of value approach measures and analyses a variety of possible production scales to determine optimal production and then attempts to define a production scale plan capable of adapting to shifts in strategic definitions and variables over the Life-of-Mine (LOM). Do it the right way, and the production scale plan could result up to a 20% increase in NPV.

Mine Planning and the hill of value approach

Because any mineral deposit exists within a specific geographic, social and economic environment, mine planners generally have three major decisions to make: mining methods (which includes the sequence), production rate and cut-off grade. Since these three decisions are tied together, altering any one of them will alter the value of the other two.

For example, because the quantity of ore, and therefore mining method and feasible production rates, may vary significantly with the cut-off grade, the cut-off grade becomes a key driver of the value of the operation.

The Hill of Value is an approach that assumes:

  • based on the widely-known cut-off grade optimization theory, the standard break-even or incremental cut-off grade may not be suitable for every project
  • different production scales have different capital and operating expenses, therefore higher mining and processing capacities will be more capital-intensive, and
  • the optimal mine project is one that achieves the correct balance between cut-off grade and production rate.

To put it another way, the Hill of Value maximises value by setting the most appropriate production capacity (making both the mine and the processing plant, and their corresponding costs, the right size) and by optimising the cut-off strategy.

Production scale and de-bottlenecking

To establish the most appropriate production capacity, the mine planner must generate a production plan that will ensure the deposit is extracted on a scale that takes full advantage of its value. In general, when ore processing is required and not sold directly, mine planners define the processing plant throughput as the bottleneck because the processing plant complex has the highest capital expenses and marginal cost.

Traditionally, mine planners have de-bottlenecked by expanding either mining or processing capacities to increase throughput, while considering other strategic design parameters (such as cut-off grade) as constants. However, this kind of optimisation is limiting, because it does not take into account the fact that, by modifying other design strategies like cut-off grade, the mine could potentially achieve a higher NPV.

From: Illuminate your mine’s long-term value, Dassault Systèmes Energy & Materials. Based on the work published by Brian Hall “How Mining Companies Improve Share Price by Destroying Shareholder Value”

Climbing the Hill of Value

Using GEOVIA Whittle strategic mine planning software and SIMULIA process-automation tools, mine planners can chart and climb the Hill of Value by automating thousands of possible scenarios based on mining rate, production capacity, their corresponding CAPEX and OPEX, and cut-off grade. Each scenario then results in a new mine plan with a new production schedule.

After defining a pushback sequence (see Article #1), the planner must first define a range for the domain of the model, usually constrained by the company’s definitions of maximum investment and minimum operation size. An advanced modelling program, like GEOVIA Whittle, can help the planner produce multiple mine-plan scenarios, where each scenario will calculate the NPV for a different plant capacity and corresponding cost, then evaluate it against processing ore defined from marginal cut-off grades. This, in turn, will provide a range of plant capacities that could maximise value.

The planner can also choose to apply noise from an external variable to each scenario. For example, by using different possible commodity prices, the planner could generate the average (or other) results and variability for each strategic design parameter configuration – key to measuring the robustness of the selected processing ranges in relation to the commodity price.

The next step is to evaluate fixed ranges of processing rates against varying mining rates and cut-off grades in order to adjust the sequence and prioritise the extraction of high-grade ore. From this, the mine planner can use advanced modelling to visualise a value surface by showing the relationship between cut-off grade, production capacity and value and, finally, identify the point in that value surface that will generate maximum value.


Advanced modelling allows mine planners to identify high (maximum or average) value and low variability scenarios in search of a robust plan, while keeping track of other relevant KPIs. With that comparison in hand, the planner will be able to find the best possible balance between investment and value, and to create a future-proof production scale plan.

More specifically, this approach allows the planner to:

  • accurately define production scales by comparing thousands of scenarios
  • assess all available options through an intuitive 3D-surface Hill of Value
  • include risk assessment by adding noise from uncontrolled variables into the process
  • provide the necessary inputs for the next step, production schedule optimization, and
  • depending on the current level of optimization, deliver up to 20% increase in NPV.

Strategic Mine Planning 

In Article 3 in this series, learn how to optimise the strategic production schedule through multiple scenarios. To learn more about Strategic Mine Planning during times of uncertainty, click here​​​​​​​.

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