Interpreting VALP Results © 2012 Dr. B. C. Paul Note – MineSight and VALP are both trademarked names belonging to Mintec Inc. These slides suggest ways

Interpreting VALP ResultsInterpreting VALP Results

© 2012 Dr. B. C. Paul© 2012 Dr. B. C. PaulNote – MineSight and VALP are both trademarked names belonging Note – MineSight and VALP are both trademarked names belonging to Mintec Inc. These slides suggest ways of using VALP to improve to Mintec Inc. These slides suggest ways of using VALP to improve the NPV of surface mining operations. VALP was designed for this the NPV of surface mining operations. VALP was designed for this

purpose by Mintec. Thus, many of the ideas in this presentation purpose by Mintec. Thus, many of the ideas in this presentation come from Mintec. The presentation also contains screen shots come from Mintec. The presentation also contains screen shots taken from the MineSight program. Credit is given to Mintec for taken from the MineSight program. Credit is given to Mintec for development of the software and ideas associated with its use.development of the software and ideas associated with its use.

What Am I Looking to DoWhat Am I Looking to Do

• I will take my pit sequence to run VALPI will take my pit sequence to run VALP• I will set VALP up in a multi-run to try to I will set VALP up in a multi-run to try to

find the best production rate and cut-offfind the best production rate and cut-off• I will use my pit tonnage and mining rate I will use my pit tonnage and mining rate

to consider several basic mine livesto consider several basic mine lives• I will consider what happens if I size my I will consider what happens if I size my

processing to keep up with mining and processing to keep up with mining and what happens as I let it fall behind.what happens as I let it fall behind.

I Need a Peak at My Ore and I Need a Peak at My Ore and WasteWaste• I will do a single VALP run and tell it to I will do a single VALP run and tell it to

only disclose resources to me.only disclose resources to me.• I’ll set up VALP pretty much the way I will I’ll set up VALP pretty much the way I will

run it – then I’ll tell it not to really run but run it – then I’ll tell it not to really run but only to count resources.only to count resources.

The Resource Count ControlThe Resource Count Control

Don’t Dirty Your Pants YetDon’t Dirty Your Pants Yet

• When you run it pops up a message window When you run it pops up a message window that the program did not run to completion – that the program did not run to completion – then it just ends.then it just ends.

• You sit there with nothing to show and You sit there with nothing to show and thinking you did something wrong.thinking you did something wrong.• Actually it ran just fineActually it ran just fine• It did not run to completion because you told it to It did not run to completion because you told it to

just count resources but not to schedule themjust count resources but not to schedule them• VALP does not produce graphics – it produces VALP does not produce graphics – it produces

reports – you need to read them.reports – you need to read them.

Finding Those ReportsFinding Those Reports

Some files just echo input.(may be useful forDocumenting what you did)

Some files are just asciiDumps of codes and reservesIn the block model.

More Review of ReportsMore Review of Reports

Some of the reports areActually feed files forGraphics charting programs

Then there are the Ones We Then there are the Ones We WantWant

The Basic Table rptvalContains what weNormally need.

If we need a detailedBreak down there is aDetailed version.

Lets Look at that ReportLets Look at that Report(Windows often does not know what program to (Windows often does not know what program to use to open the file – Notepad works well)use to open the file – Notepad works well)

What you put info into inGetting ready to run theProgram is a graphical userInterface.

The actual program runs asA “batch file”.

We start out looking at a listOf control parameters forThe batch file execution.They can be useful forAdvanced users – but we areNot there yet.

Getting to Some Better StuffGetting to Some Better Stuff

After getting past the variables andCode jibberish we see tables that

Identify the size limits for our blockModel.

And this table that echoes ourEconomic input. (This is importantFor documenting the economicAssumptions of our run. Its also aGood thing to check to make sureYou got your economic conditionsEntered correctly).

Then We Start Getting Our Then We Start Getting Our Reserve NumbersReserve Numbers

This table shows how muchOf each type of rock goesTo each destination.

In this case I have 6 oreTypes that can go to a mill,The leach, or a dump.

I could add things manuallyAnd get the total tonnagesI want but there is anotherReport on tonnage that willGive me what I want.

Near the Bottom is the Amount of Near the Bottom is the Amount of Mill, Leach and Waste in Each of Mill, Leach and Waste in Each of My Pit PhasesMy Pit Phases

At the Bottom is My PrizeAt the Bottom is My Prize

All total I will be moving 387,000,000 tons of waste and 442,000,000 tons of ore

That’s 828,000,000 tons to move over the mine life

The table above broke my ore down to 400,000,000 tons going to the mill and 42,000,000 tons to the leach

Now to Plan My Optimization Now to Plan My Optimization StudyStudy• I pick the following approximate mine livesI pick the following approximate mine lives

• 50 years50 years• 40 years40 years• 30 years30 years• 25 years25 years• 20 years20 years• 15 years15 years• My selection was a guess based on common lives My selection was a guess based on common lives

for open pit mines – it was arbitrary – not magic.for open pit mines – it was arbitrary – not magic.

Consider Optimization of a CaseConsider Optimization of a Case

82800000050 16,560,000 16,500,00040 20,700,000 20,750,00030 27,600,000 27,500,00025 33,120,000 33,000,00020 41,400,000 41,500,00015 55,200,000 55,250,000

With a little Excel Work I can see about what mining ratesTo try.(These numbers suggest annual tons of hauling capacity)

Woow- That’s Impressive But Woow- That’s Impressive But Where Did It Come From?Where Did It Come From?• I assumed the truck was a Cat 793 for I assumed the truck was a Cat 793 for

which I got the tonnage capacity from which I got the tonnage capacity from the Cat Handbookthe Cat Handbook• (I also knew this appeared to be a big mine (I also knew this appeared to be a big mine

so I picked Cats second largest truck)so I picked Cats second largest truck)• I knew an average truck trip is about ½ I knew an average truck trip is about ½

hour and most loaders can handle 4 or 5 hour and most loaders can handle 4 or 5 trucks and most mines have about 2 to 4 trucks and most mines have about 2 to 4 load points – so the guess came out a load points – so the guess came out a plausibleplausible

I CouldI Could

• Do cycle time estimates (I know how to use Do cycle time estimates (I know how to use FPC)FPC)

• I could try several different types of trucksI could try several different types of trucks• I may very well have already done some I may very well have already done some

calculations in a project in which I had calculations in a project in which I had assumed a certain truck size – so I could assumed a certain truck size – so I could draw off of that data depending on the project draw off of that data depending on the project and what I have already done.and what I have already done.

How Did I Know the Cost?How Did I Know the Cost?

• After assuming a basic truck shovel After assuming a basic truck shovel match I took the specifications to match I took the specifications to Western Mine Cost ServiceWestern Mine Cost Service• Western Mine Cost Service has tables of Western Mine Cost Service has tables of

equipment costsequipment costs

The ResultThe Result

828000000 trucks loaders truck $ loader $50 16,560,000 16,500,000 $45,750,000 7 2 2,500,000 6,500,00040 20,700,000 20,750,000 $49,500,000 8 2 2,500,000 6,500,00030 27,600,000 27,500,000 $70,500,000 11 3 2,500,000 6,500,00025 33,120,000 33,000,000 $87,750,000 13 4 2,500,000 6,500,00020 41,400,000 41,500,000 $93,000,000 10 3 3,500,000 9,000,00015 55,200,000 55,250,000 $127,500,000 14 4 3,500,000 9,000,000

I assumed we scaled up to Cat 797s at 41.5 million tons per year.

Now I Need to Go After the MillNow I Need to Go After the Mill

400000000 tpy tpd Millions $50 8,000,000 8000000 24615.38462 25000 142 14240 10,000,000 10000000 30769.23077 31000 173.2 17330 13,333,333 13250000 40769.23077 41000 224.75 22525 16,000,000 16000000 49230.76923 50000 267.5 26820 20,000,000 20000000 61538.46154 62000 324.72 32515 26,666,667 26750000 82307.69231 82000 419.5 420

More Excel work was done to interpolate and estimate the size and costOf mills for various mine lives and 400,000,000 metric tonnes of mill ore.

It Was Based Off Western Mine Cost It Was Based Off Western Mine Cost Service Models of Typical Mill CostsService Models of Typical Mill Costs

We Now Deal With the LeachWe Now Deal With the Leach

• We assume the ore will be crushed and We assume the ore will be crushed and stacked on leaching pads.stacked on leaching pads.

• Need Costs for CrushersNeed Costs for Crushers• Assume a 200 tph jaw crusher for $170000Assume a 200 tph jaw crusher for $170000• Assume costs double for other equipmentAssume costs double for other equipment• We will do two sizesWe will do two sizes

• 200 tph for $340000200 tph for $340000• 400 tph for $680000400 tph for $680000

Matching Equipment SetsMatching Equipment Sets

• We could assume we have balanced on We could assume we have balanced on average mining, milling, leaching average mining, milling, leaching capacitycapacity

Life Mining Cap Milling Leaching50 16,500,000 25,000tpd 200tph $188,090,00040 20,750,000 31,000 200 $222,840,00030 27,500,000 41,000 200 $295,840,00025 33,000,000 50,000 400 $356,430,00020 41,500,000 62,000 400 $418,680,00015 55,250,00 82,000 400 $548,180,000

We can also try to optimize by We can also try to optimize by allowing mining to outstrip millingallowing mining to outstrip milling• This allows us to use artificially high cut-off This allows us to use artificially high cut-off

grades and move revenue forward in time.grades and move revenue forward in time.• Consider Mine Outstrips Mill byConsider Mine Outstrips Mill by

• 10%10%• 25%25%• 40%40%• 60%60%• 75%75%• Again these selection are arbitraryAgain these selection are arbitrary

Compiling Capital Cost ResultsCompiling Capital Cost Results

Life +10% Mining Cap Milling Leaching millions for mill Total50 16,500,000 22,500 200tph $129 $175,090,00040 20,750,000 27,900 200 $157 $206,920,00030 27,500,000 36,900 200 $204 $274,720,00025 33,000,000 45,000 400 $244 $332,180,00020 41,500,000 55,800 400 $295 $388,730,00015 55,250,00 73,800 400 $381 $508,730,000

These are figures for Milling at 90% of Mining Capacity

With Milling at 75% of MiningWith Milling at 75% of Mining


Milling at 60% of Mining CapacityMilling at 60% of Mining Capacity


With Milling at 40% of Mining With Milling at 40% of Mining CapacityCapacity


With Milling at 25% of Mining With Milling at 25% of Mining CapacityCapacity


A Comment on CostsA Comment on Costs

• The costs here are clearly rather unsophisticated in The costs here are clearly rather unsophisticated in their compilationtheir compilation• Specific costs were done for trucks and loaders with a rough Specific costs were done for trucks and loaders with a rough

allowance for support roads and equipment and service allowance for support roads and equipment and service centerscenters

• Mills were costed inMills were costed in• Leaches were specifically costs with crushers with rough Leaches were specifically costs with crushers with rough

estimates for pads and stacking conveyorsestimates for pads and stacking conveyors• Much general support and service for a mine has been Much general support and service for a mine has been

ignoredignored

• The point of these slides is not detailed cost The point of these slides is not detailed cost estimates but rather how VALP can be used to estimates but rather how VALP can be used to optimize mine size and capacity.optimize mine size and capacity.

Go to Compass and Setup a New Go to Compass and Setup a New Multi-RunMulti-Run

After selecting newClick on the open fileIcon.

We Name Our Package, Pick the We Name Our Package, Pick the Routines to Run and Say How Routines to Run and Say How Many Time to Run ThemMany Time to Run Them

Note – to put the routine in this field place the curser inThis field and in another window look at the menu ofRoutines and click on the one you want – in this caseMS-VALP.

Next enter setup to give your inputs to the program.

My First PanelMy First Panel

I wanted to look at the whole block model. I did need to make sure I selected theBlock model that was used to run MSOPIT when my pit shells were developed.

Make Sure I Select the File 13 Make Sure I Select the File 13 That Contains My Pit ShellsThat Contains My Pit Shells

Input My Sequence of Pit ShellsInput My Sequence of Pit Shells

Note my first pit should be the undisturbed topo. The pit shells are then listed inExpanding order. Just in case a rounding error causes a smaller pit not to be fullyContained in a larger pit I select “Rationalize the pits” – it will correct the larger pit toContain the smaller.

I Need to Identify the Block I Need to Identify the Block Model Item that tells me what % Model Item that tells me what % of a block is rock.of a block is rock.

I Input My EconomicsI Input My Economics

In this case I simply imported the same economics file I had used to run MSOPITFor the Ultimate Pit.

I Make One ChangeI Make One Change

I add Valpt (where I stored my value per ton into the block model when I ran MSOPIT)I need to do this because I will use this variable to adjust my cut-off grade (since itAccounts for all my polymetalic ore values).

The Program Will Try Different Cut-The Program Will Try Different Cut-Off Grades – Note VALPT is my Cut-Off Grades – Note VALPT is my Cut-off Grade Control Item.off Grade Control Item.

I tell it to start with blocks of 0 value (just barely enough to pay processing cost) andThen try increasing the cut-off grade by $2 increments for 50 tries (ie up to $100/ perTon).

I Fill In the Remaining ItemsI Fill In the Remaining Items

Schedule tonsIs about 1 weeksProduction atThe smallestMine Size I willTry.

The program runs in iterations to find aSolution. I pick a nice big numberTo let it find a solution.

I need to identify the discountRate I will use for the NPV(15% is common in mining).

This is the Panel Where I Put in This is the Panel Where I Put in My Variable Process and Mine My Variable Process and Mine Size Limits.Size Limits.

Note that I enter a number that will change each timeThe program runs in the Multi-Run as a question markAnd two character identifier (usually 01, 02 ect.)

VALP has a maximum run of 99 VALP has a maximum run of 99 periods (usually 99 years)periods (usually 99 years)

Warning – time 0 is an instant in time when an investment is started. If you claimYou can start a mine as soon as you make an investment decision before you build,Buy or prepare anything the program will fail the run. Make that first number at least1.

I will optimize on PVR (Present Value Ratio) – if I keep my capital investmentNumbers to myself and hold them back from the program the program will report theNPV of the earnings which is the numerator in a PVR calculation.

If You Check the Top Box then If You Check the Top Box then that Process Must be Fed all it that Process Must be Fed all it can eat.can eat. You must have 1 such process to pace the mine.

Checks down here indicate the process is available for the time period.

?01 and ?02 indicate there is limited capacity for the processes. I am makingThem variables in this multi-run because I want to see what the best size is.

I Define My Mining Capacity I Define My Mining Capacity (Obviously this too is a variable when I’m doing a multi-(Obviously this too is a variable when I’m doing a multi-run to right size the mine)run to right size the mine)

Total mining capacity isThe total materialsHandling fleet capacityFor how much materialCan be moved.

Ore Mining Capacity isThe subset of totalMining capacity devotedTo ore – it often (and inThis case does) matchMill capacity.

I Indicate that Stockpiles for both I Indicate that Stockpiles for both Mill and Leach Exist.Mill and Leach Exist.

I have identified my rehandle cost as 45 cents per ton.

When I’m Going to Run 36 Times When I’m Going to Run 36 Times there is little point in Over-writing there is little point in Over-writing Audit File RepeatedlyAudit File Repeatedly

I Will Give Each Report a Unique I Will Give Each Report a Unique Number Identifier so I can match Number Identifier so I can match each of the 36 runs to their each of the 36 runs to their conditions.conditions.

I Then Save My Responses and I Then Save My Responses and Exit the Multi-Run Set-UpExit the Multi-Run Set-Up

Multi-Run Now Wants Me to Multi-Run Now Wants Me to Provide the Numeric Values to Provide the Numeric Values to Use In Each RunUse In Each Run

Note it has returnedMe to the variablesTab.

Note that it has aBlank for everyVariable I definedDuring my set-up.

I Enter My Report Names and I Enter My Report Names and Capacities for the First RunCapacities for the First Run

Note that I am puttingIn capacities in1000’s of tons becauseThat is the unit ofVALP.

After that I click theAdd value tab to addThe values for theSecond and later runsOf the multi-run.

In the Comment Field I Put In the Comment Field I Put Identifiers for What the Variable Identifiers for What the Variable Values AreValues Are

I don’t have to do this but I will have a much better abilityTo keep track of what I’m doing if I do.

Eventually I’ll have Entered the Eventually I’ll have Entered the Values for All 36 Runs.Values for All 36 Runs.

It can be tedious but not nearly as tedious as manually running 36 times. Multi-runsAlso provide a documented history of what you did in developing your mine plans.This is vary helpful in making work consistent and reproducible.

I Will Then Save My Multi-Run I Will Then Save My Multi-Run Plan and All My ResponsesPlan and All My Responses

Then click Run to execute the Multi-Run

The Multi-Run Begins to ExecuteThe Multi-Run Begins to Execute

VALP’s Product Is ReportsVALP’s Product Is Reports

Remember – You run a graphicInterface that fills in parameters forA batch run program. The first part ofThe basic Rptval is a list of variablesThat have meaning mostly toProgrammers looking at the deepArchitecture of the program.

After Echoing Input the First Meat After Echoing Input the First Meat Reports Gives the Destination Reports Gives the Destination and Value of the Material Mined.and Value of the Material Mined.

The First Table is Summary of The First Table is Summary of Destination AssignmentDestination Assignment

Note that both the Mill and Leach Processes have two categories M and O

M means the block had enough value to pay for processing it but not enough toPay for the mining. You would never go dig up this rock to make money – but ifIt was in the way and you had dug it up to get to profitable ore you would of courseGet what you could out of it. O means it pays for both mining and processing. You Would go out to get this material.

Note the report tells you howMany blocks were mined

And the tonnage

I Also Get the Total Value, The I Also Get the Total Value, The Value Per Ton and the Average Value Per Ton and the Average Grade.Grade.

I Get the Same Break-Down By I Get the Same Break-Down By Ore Type Under “Summary By Ore Type Under “Summary By Material and Destination”Material and Destination”

I Get A Break-Down Next for I Get A Break-Down Next for Each of My Nested Pit ShellsEach of My Nested Pit Shells

Table is “Reserve Summary byPushback and Process”

Near The Bottom Is What We Near The Bottom Is What We Were After.Were After.

We get the CashFlow Present ValueOf our EarningsUnder 3 differentMining strategies.

The Three StrategiesThe Three Strategies

• Base Case – Mine Each Phase from the top Base Case – Mine Each Phase from the top down and use break-even cut-off grades to down and use break-even cut-off grades to determine where material went.determine where material went.

• Constant Cut-Off – Try different cut-off grades Constant Cut-Off – Try different cut-off grades and pick the one that gets the highest NPV. and pick the one that gets the highest NPV. Process only ore above that grade until you Process only ore above that grade until you run-out and then process the left overs in the run-out and then process the left overs in the stock-pile.stock-pile.

• Best Case – Similar to Constant Cut-Off only Best Case – Similar to Constant Cut-Off only drop the cut-off grade over time to optimize drop the cut-off grade over time to optimize NPVNPV

Closing In On My PVRClosing In On My PVR

My Optimized NPV earnings is $3,084,138,240.

For this report I know I mined for a 50 year rate with my mill undersized to 75% ofThe average ore for my mining capacity. My capital cost was $155,840,000.

78.19000,840,155$

000,000,084,3$

entNPVinvestm

sNPVearningPVR

And There Is the Result – Our And There Is the Result – Our Best Mine Life is 40 yearsBest Mine Life is 40 years

PVR as a Function of Mine Life

19

19.2

19.4

19.6

19.8

20

20.2

20.4

20.6

20.8

21

21.2

50 40 30 25 20 15

Mine Life in Years

PV

R

PVR

Remember – PVR isThe dollars of earningsPer dollar of investmentAfter your investmentHas been paid theRequired rate of interest.

Commentary on ResultsCommentary on Results

• We had only the capital cost for the We had only the capital cost for the truck fleet, the mill and the crushers and truck fleet, the mill and the crushers and pads for the leach.pads for the leach.• There are many other costs which is why There are many other costs which is why

we appear to make so much moneywe appear to make so much money• Usually these other costs will be Usually these other costs will be

somewhat fixed and tend to make the somewhat fixed and tend to make the mine life optimize at a shorter time mine life optimize at a shorter time span.span.

Now What the Crap is that Now What the Crap is that Double Hump?Double Hump?

PVR as a Function of Mine Life

19

19.2

19.4

19.6

19.8

20

20.2

20.4

20.6

20.8

21

21.2

50 40 30 25 20 15

Mine Life in Years

PV

R

PVR

Remember when the mineGot so big I switched up toA larger more cost effectiveTruck? The jump is whereI sized the truck up.(Of course some people willWant to go back and considerDifferent truck sizes).

Documents

Interpreting VALP Results © 2012 Dr. B. C. Paul Note – MineSight and VALP are both trademarked names belonging to Mintec Inc. These slides suggest ways