Pit Optimization Settings: Time

To access this screen:

Optimization task bar >> Ultimate Pit >> Settings >> Time tab.

Define general parameters needed for Net Present Value (NPV) evaluations. In essence, you use this screen to set an annual discounting rate and an average output rate for ore.

Annual Discounting Rate

In strategic mine planning, the annual discounting rate is the rate used to convert future cash flows (revenues, costs, rehabilitation liabilities, etc.) into their present value so that economic decisions can be compared on a common basis. Essentially, it reflects the time value of money, the riskiness of the project, capital costs and even other factors such as country risk, commodity price volatility and other factors.

Typically:

Higher discount rate → favours short-term cash flow and smaller, higher-grade pits.

Lower discount rate → favours longer-life projects and larger pits.

Average Ore Output Rate

In essence, the average ore output rate is the average amount of ore mined (and usually delivered to the processing plant) per unit of time. Your application expects this in the format X tons per N days. It is a long-term, smoothed production rate use to optimize the generation of the ultimate pit. It can influence pushback shapes, cut-off grades and can also impact the duration of the mine.

Typically:

A higher ore output rate → shorter mine life but higher upfront cash flows.
A lower ore output rate → longer mine life and often higher ultimate pit due to lower discounting of late-year ore.

Note: For a detailed explanation of ultimate pit optimization process, see Pit Optimization.

Time Options

Annual discounting enter a percentage discount rate between 0 and 100. See Annual Discounting Rate, above.

Average ore output rate

Enter the ore (raw material) tonnage the mine will produce per selected time period, usually a year (365 days).

The Ultimate Pit Optimal Extraction Sequence (UP OES) is used to calculate the first n tonnes of ore (where n is specified using the tonnes field) and the net profit generated from this activity is discounted by the figure shown in the Annual Discounting field above. The next n tonnes are further discounted as if they are mined in year 2, and so on. This can be expressed by the following formula for a 10% Annual discounting value:

Kth year NPV = Net value / (1+0.10)k

The rate is defined in terms of recovered and/or diluted ore option becomes available only when Mining dilution or Mining recovery are changed from their default values on the Economic Settings screen.

Also see Average Ore Output Rate, above.