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Cutoff grade optimization based on maximizing net present value using a computer model

Author ORCID Identifier

Mohammad Reza Ahmadi 0000-0002-7580-7146

Abstract

After designing the final range of open pit mines, one of the first essential decisions to be made in the production planning framework is to determine the cutoff grade. The cutoff grade of mines, due to interconnections with technical and economic parameters, is one of the most important parameters for the design of open pit mines. Considering the fundamental role of plant cutoff grade on the economical operation of a mine, the optimal selection of this grade is of great importance. One of the main problems in mining operations is how to determine the optimal cutoff grades of ore deposits at different periods during the life of a mine, it can be considered based on one of the goals of maximizing annual profit or net present value extraction during the mining period. Despite the existence of a range of different techniques for determining the optimal cutoff grade, Lane's algorithm is usually the most widely used cutoff grade optimization technique, which is calculated taking into account the technical and economic factors of production. Cutoff grade optimization with the goal of maximizing the net present value over the years of the mine's life, as well as the correlation with the distribution of the grade and tonnage of the remaining ore, requires a long calculation process, especially for large mines. In this research, optimal cutoff grade programming based on Lane's theory and aimed at maximizing the net present value in MATLAB software (computer model) has been carried out. Mineral operations consist of three phases: mining, processing, and refining. In single-product and single-process mode, the optimum cut-off grade and the net present value of production are calculated for each year of the mine's life. After validating the outputs of the model, the implementation of the computer model based on the data of Gol Gohar iron mine No.1 in a five-year plan was carried out. The changes in optimal cutoff grade and changes in net present value from 48.65% to 18,582 billion rials in the early years of the mine increased to 40.5% and approximately 3000 billion rials at the end of the mine's life.

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

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