What is an Economic Model?

An Economic Model is a geological block model supporting additional information relating to the 'value' of a particular block of ore.

The Economic Model is defined by setting cost and price parameters for the life of the mine and then calculating an intrinsic value per processing method of each block in a geological block model as a function of its geo-metallurgical attributes. The value is usually calculated by Studio NPVS as part of the definition of the economic model but values can also be imported as an attribute of a block model if it has been calculated externally in another system.

The parameters used to calculate the block value are:

the selling price of any commodity recovered from processing where the recovery is defined as a mathematical expression of values in the block
a unit cost of mining (ore and waste) and a unit cost of processing (ore) and any adjustment factors which apply
dilution and recovery factors for the ore
a unit cost of rehabilitation for waste
an additional cost for processing each unit of a commodity.

This model is the starting point of Studio NPVS processes. From the information it contains, a set of mining 'phases' can be defined, based on the basic principle of ensuring areas of high grade are mined, wherever possible, before areas of lower grade.

Considering that realizing the best value first is a basic principle of maximizing NPV the order of the phases represents the first high level categorization of the value and the first stage of determining the Optimal Extraction Sequence.

These phases, a series of nested pits, are known collectively as Lerchs-Grossmann (or 'LG') Pits, and represent the second major step in NPV scheduling.