Financials

• Financials
  • Costs
    • Generic Costs
      • Ore Mining
      • Waste Mining
      • Stockpiling
      • Reclaim
      • Processing
    • Variable Costs
      • Mining Cost
      • Processing Cost
  • Revenues
    • Revenues Based on Grade of Contained Product
    • Revenues based on Quantity of Product
  • Financials Varying over Time

When generating a schedule that is to be optimized by net present value (NPV) it is important to have an accurate representation of revenues and costs. In an optimization, where multiple feasible schedules exist, the schedule that returns the highest value will be selected.

Costs

Costs have a negative effect on the value of a schedule. When trying to generate a schedule with maximum value Minemax Scheduler will delay costs as long as possible, ensuring it will still generate a schedule that meets all the constraints and has the maximum value possible. Costs can be represented using two methods, they can be represented as a generic cost or a variable cost.

Generic Costs

Generic costs are used where the cost per tonne is the same for every block, for a time period, regardless of where it lies within the operation. The generic costs can vary by time period, but if they do, they will vary for all blocks that are mined, processed, stockpiled, or reclaimed within that period.

Ore Mining

The ore mining cost is applied to the portion of a block that is not waste, is mined, and is not stockpiled. The cost entered into the software is typically a cost per tonne, but it will correspond to the unit of measure used for the block. Since the cost is only applied to blocks that are mined and not stockpiled, the ore mining cost is incurred at the time of mining, which, in this case, coincides with the time of processing.

Waste Mining

The waste mining cost is applied to the portion of a block that is waste. This is the final product defined in the model setup. The amount entered into the software is usually a cost per tonne, but, as with the ore mining cost, the cost will correspond to the unit of measure used for the block. Because the cost is applied only to the waste in the block, and waste is not stockpiled or processed, the waste mining cost is incurred at the time of mining.

Stockpiling

The stockpiling cost is applied to the portion of the block that is not waste, is mined, but not processed in the same period it is mined. The amount entered into the software is usually a cost per tonne, but the cost will correspond to the unit of measure used for the block. Because the cost is applied only to blocks that are mined and not processed, the stockpiling cost is incurred at the time of mining.

Reclaim

The reclaiming cost is applied to the portion of the block that is not waste, is reclaimed from the stockpile, and is not processed. This means it is not processed in the same period it is mined. The amount entered into the software is usually a cost per tonne, but the cost will correspond to the unit of measure used for the block. Because the cost is applied only to blocks that are processed and not mined, the reclaiming cost is incurred at the time of processing.

Processing

The processing cost is the cost applied to the portion of a block that is not waste and is processed. This includes material that is mined and not stockpiled or material that is reclaimed from a stockpile. The amount entered into the software is usually a cost per tonne, but the cost will correspond to the unit of measure used for the block. Because the cost is applied only to blocks that are processed, the processing cost is incurred at the time of processing.

Variable Costs

Material can often have different mining or processing costs depending on the material type or the block's location. It is possible for each block to have its own specific mining or processing cost. This is achieved by assigning the cost to the block using an attribute of the product. The process is similar to how grades are managed, allowing each block to have its own unique cost.

Mining Cost

The mining cost for a block may vary based on the location of the block and the material type of the block.

Blocks may have different mining costs depending on their location. This can usually be attributed to haulage variances. Generally the deeper the block lies in the pit, or the greater the distance the pit from the process, the greater the mining cost.

Blocks may also have different mining costs due to material type. Certain material may take longer to dig than others, or some may require a more closely spaced drill pattern than others for the required fragmentation. Either of these issue can have an influence on mining costs.

It can be beneficial to consider the variable mining cost when determining which schedule will deliver the greatest NPV.

Variable mining costs can be modelled by adding the variable cost attribute to the financials cost table and setting the directions to direct and stockpiled.

Processing Cost

Different material can have different processing costs. If this is required in the schedule the we need to create an attribute on the processed product that contains the processing cost for each block. This allows every block to have its own individual processing cost, rather than all blocks having the same processing cost, as is the case when using the Generic Costs. If the Process that contains the processing cost is in tonnes then the value for the attribute would be set to the $/tonne at the time of importing the model. To recognise this attribute as a cost it would need to be placed in the cost section of the financials in the scenario. Once in the Cost section it should be set to 100, this allows for the fact that scheduler treats all attributes as if they are a percentage.

Revenues

Revenues are used to determine how much value a block contributes to the NPV calculation when it is processed. There are a number of different was revenues can be represented and they can be varied over time.

Revenues Based on Grade of Contained Product

The attributes in Scheduler can be used to represent the grade of a block. If using the attribute to calculate revenue of contained metal in a block then it is important to realise that scheduler treats these attributes as a percentage. If we had 100 tonnes of a process, which had a grade of 60% Fe then when allocating the revenue for the block it would get applied to the 60 tonnes of Fe contained in the block. It is also possible to apply a recovery in the financials if required. If we set the recovery to 90% the revenue for the above mentioned block would be calculated:

Revenue = Quantity*Process Ratio*(Grade/100) * (Recovery/100) * Revenue

Revenue = 100*1*60/100*90/100*80

Revenue = 4320

Here is another example, for revenue when using Gold grades of g/t. It is possible to represent grades in units other than percentages. If doing this it is important to allow for this when setting the financials. If using g/t then we need to set the revenue to be $/g *100. The (*100) needs to be applied to allow for the fact that the software performs the revenue calculation as if the grade is a percentage, but is actually being represented as a g/t.

If we wanted to represent a value for gold of $1700/ounce when grade is represented as g/t the value to insert into the Revenue field for the financials would be:

Value per gram = $ per ounce/ grams per ounce * 100

Value per gram = (1700/31.10347)*100

Value per gram = 54.47 *100

Value per gram = 5477

Revenues based on Quantity of Product

There are times when it is required to represent the revenue as a value per quantity of the product rather than the value of material contained within the process. This is the case if we are reporting on recovered ounces, recovered pounds of copper, or final product, where the final product is represented by the process itself. To do this we still need to use the attribute to represent the revenue. The only difference is that here we set the attribute to be 100 at time of import. This is basically saying that the recovered ounces are 100% recovered ounces. We can then apply the revenue of $1700/oz directly to the attribute allocated to the recovered ounce process to be 1700. The benefit oh this is that we also have the ability to report on the recovered ounces as well as setting the value for the product to $/oz rather than having to consider the conversion previously mentioned. Another benefit of using this method for setting revenues is that if we have a recovered ounce process we can apply multiple attributes to the process. These attributes can be used to represent revenues or cost for multiple items. For example, royalty, selling cost, refining cost and shipping cost. By representing all these revenues and costs separately, it is possible to vary the individual costs over time.

Financials Varying over Time

As all the financials and revenues are entered on a period by period basis, it is possible to vary financials and revenues over time. This is simply done by inputting different financial values for the different periods defined in the Minemax Scheduler model. These financials can then be saved as part of the scenario for the project.