Economic Assessment and Mine Production Optimization of an Open-pit Gold Mine Operation in Peru, Based on the Iterative Cutoff Grade Analysis Approach.

Open Access
Author:
Muncher Ricketts, Bruno
Graduate Program:
Mining Engineering
Degree:
Master of Science
Document Type:
Master Thesis
Date of Defense:
February 22, 2016
Committee Members:
  • Antonio Nieto, Thesis Advisor
Keywords:
  • mining
  • gold
  • operation
  • cutoff
  • grade
  • iterative
  • assesment
  • mine
  • peru
  • npv
  • optimization
  • mine design
  • capex
  • opex
  • mine life
Abstract:
Surface mining operations involve high levels of complexity and uncertainty that last for many years and require huge capital investment and risk. Each open-pit mine is unique, based on the physical characteristics of the ore deposit and on the operational parameters of the extraction method; therefore, the most profitable way to exploit a mineral deposit requires considerable evaluation and planning. However, all operations share the same priorities, the maximization of the return on the investment and the maximization of the recovery of the resource. Both are linked to the optimization of profits, which in mineral operations is done by optimizing the ore cutoff grade, considering the block model geometry. The Coriorcco Gold Project refers to an open-pit mining operation at pre-feasibility stage located at about 4100 meters above sea level in the Peruvian Andes. This mining project is currently owned by the company Management Environmental Solutions (MESSA) and is intended to begin operations before the year 2019. To have a better understanding of the project, a general description and a technical overview of the main parameters related to the development will be addressed, including, but not limited to: the open-pit design, production rate, tailing facility construction, haul road construction, blasting design, and material handling equipment selection. The present study is intended to develop the economic assessment and mine production optimization of the Coriorcco Gold Project, based on the iterative cutoff grade analysis approach. This approach represents a win-win situation for all major players in the mining industry. The company benefits from better economic results due to a 40.79% higher Net Present Value (NPV) and 24.5 % higher Internal Rate of Return (IRR). The government and nearby communities benefit from a smaller environmental and social impact, as an optimized cutoff grade reduces the mine life from 23.25 to 15.73 years, and therefore, the presence of the company in the region. Furthermore, the economic viability of the project will be thoroughly analyzed in distinct operational and economic scenarios. Three different sensitivity analysis regarding alternative values of processing capacities, gold prices and dilution rates will be evaluated. Finally, results will be analyzed and discussed, revealing the advantages and disadvantages of the optimization method, as well as the economic impact that a change in these variables could cause.