Strategic Design of an Underground Mine under Conditions of Metal Price Uncertainty

dc.contributor.authorMcIsaac, Georgeen
dc.contributor.departmentMining Engineeringen
dc.contributor.supervisorPelley, Charlesen
dc.date2008-04-25 12:42:24.623's University at Kingstonen
dc.descriptionThesis (Ph.D, Mining Engineering) -- Queen's University, 2008-04-25 12:42:24.623en
dc.description.abstractLong-term mine plans are based on forecast future metal prices. By the time the development is put in place, the forecasts may have been proved wrong and the production plan might not meet the company's financial objectives. At that point, the common reaction to this situation is to create a new revised long-term plan and spend more capital, only to find out at a later time that the metal prices have changed again. This results in an inefficient use of capital with low returns to the investors. The objective of this thesis is to develop a methodology to determine the cut-off grade and production rate of a narrow-vein underground mine such that the long-term strategic plan is robust. As a requirement to do so, it is necessary to have a good understanding of the resources, revenues, capital and operating costs as a function of the design parameters. Also, the operational limits of the mine must be determined so that the solution is practical. Afterwards, annual metal prices are randomly generated with a Monte Carlo process on stochastic metal price models, and the combination of production rate and cut-off grade yielding the highest net present value is identified and recorded. This process is repeated many times, and the probabilities of the solutions occurring at any given design combination are calculated. The results are plotted on a bubble graph, where the size of a bubble is directly proportional to the probability a solution occurs at that point. Finally, the combination with the largest bubble is the solution, as this point has the highest probability of yielding the highest net present value in most circumstances. The model was first tested on an actual gold-copper orebody where very detailed resource and cost information was available. The methodology was applied with success and the solution reflected the important impact of the copper milling and roasting process on revenues. Other tests were then done on a hypothetical gold orebody and the results showed a great degree of sensitivity to the average grade of the deposit.en
dc.format.extent2688369 bytes
dc.relation.ispartofseriesCanadian thesesen
dc.rightsThis publication is made available by the authority of the copyright owner solely for the purpose of private study and research and may not be copied or reproduced except as permitted by the copyright laws without written authority from the copyright owner.en
dc.subjectproduction rateen
dc.subjectcut-off gradeen
dc.subjectmetal pricesen
dc.subjectunderground mineen
dc.titleStrategic Design of an Underground Mine under Conditions of Metal Price Uncertaintyen
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