A mathematical programming model for optimal cut-off grade policy in open pit mining operations with multiple processing streams

Cut-off grade classifies the available supply of ore (valuable) and waste material within a mineralised deposit. Given the mining, processing and refining limitations of a mining operation, an optimal cut-off grade policy ensures that the flow of ore from the mine to the processing and refining facilities is maintained at the maximum possible throughput. This policy defines a schedule of cut-off grades along with corresponding quantities of mineralised material to be mined, processed and metal refined in each period of the scheduling horizon. The criteria that controls the development of cut-off grade policy aligns with the strategic objectives of an operation in order to maximise the discounted value (net present value or NPV) over the life of operation. This paper proposes a new mixed integer linear programming (MILP) based model that maximises NPV subject to the mining, processing, refining capacity constraints and develops an optimal cut-off grade policy for an open pit mining operation with multiple processing streams. An implementation of the proposed method on hypothetical and realistic data promises a relatively higher NPV as compared to the traditional Lane's approach practiced in the mining industry.