Moving forward from traditional optimization: Grade uncertainty and risk effects in open-pit design

Abstract

An economic argument is presented for the incorporation of quantitative modelling of the uncertainty of grade, tonnage and geology into open-pit design and planning. Two new implementations of conditional simulation - the generalized sequential Gaussian simulation and direct block simulation-are outlined. An optimization study of a typical disseminated, low-grade, epithermal, quartz breccia-type gold deposit is used to highlight the differences between the financial projections that may be obtained from a single orebody model and the range of outcomes produced when, for example, fifty deposit simulations are run. The effects on expectations of net present value, production cost per ounce, mill feed grade and ore tonnage are presented as examples and periods with a high risk of negative discounted cash flow are identified. Further integration of uncertainty into optimization algorithms will be needed to increase their efficacy. © The Institution of Mining and Metallurgy 2002.