Determination of value at risk for long-term production planning in open pit mines in the presence of price uncertainty

Mine planning is a multidisciplinary procedure that aims to guarantee the profitability of a mining operation in changing and uncertain conditions. Mine plans are normally classified as long-term, intermediate -term, and short-term plans, and many factors affect the preciseness of these plans and cause deviations in reaching the objectives. Commodity price is the heart of mine planning, but it has a changing and uncertain nature. Therefore, the determination of mine plans in the presence of uncertain mineral price is a challenge. A robust mine plan reduces the risk of early mine closure. A procedure is presented to determine the value at risk (VaR) in any possible mine planning alternative. VaR is considered together with downside risk and upside potential in order to select the most profitable and least risky plan. The model is tested on a small iron ore deposit.