Production rate optimisation – avoiding the temptation of tonnage

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Strategic versus Tactical Approaches in Mining 2011 — Y. Potvin (ed) 
© 2011 Australian Centre for Geomechanics, Perth, ISBN 978-0-9806154-6-3 
Strategic versus Tactical Approaches in Mining 2011, Perth, Australia 
3 
Production rate optimisation – avoiding the 
temptation of tonnage 
P. McCarthy AMC Consultants Pty Ltd, Australia 
 
Abstract 
A feasibility study is a prediction of future events. Modern computing techniques have allowed estimates to 
be made with increasing precision but may not have improved their accuracy. A mine (including mill and 
infrastructure) is a complex dynamic system, so that any description of a future mine built up from 
estimates of its component parts must be tempered by an appreciation of how the system performs as a 
whole. While software models are proceeding toward the goal of whole-system simulation, the models must 
be calibrated against real-world performance. This can only be achieved by benchmarking modelled 
performances and costs against comparable real-world examples. With the current level of sophistication of 
modelling, benchmark data must take precedence over model outputs and in that respect we may be no 
more advanced in predicting whole-of-mine performance than we were in the pre-computer era. 
One key optimisation parameter is the mine’s production rate. If a scheduling package suggests that a 
particular production rate can be achieved then this must be verified and moderated by benchmarking, with 
particular regard to the relationship between production rate and head grade. The assumption that 
“economies of scale” will result from increasing throughput rates needs to be balanced by an awareness of 
the adverse effects of increasing the rate beyond a level that is supportable by the resource.
At low to moderate production rates the forecast ore reserve grade and mining recovery may be achieved 
comfortably. However, as the challenge of meeting production targets increases, mining becomes less 
selective, more waste finds its way into the ore steam and ore that requires careful extraction may be 
abandoned. Without changing the intended cutoff grade, the actual head grade will fall as the mining rate 
increases. This effect is known to people at operations but is not generally recognised in current ore reserve 
estimation methodology or in mine optimisation studies.
The dependency of head grade on mining rate can be quantified and used to establish the economically 
optimum mining and processing rate for a new project. A practical analysis is set out based on real-world 
examples. 
1 
Introduction 
The production rate for a new mine is selected by balancing the potential return on investment against the 
required capital and the risk of failure. The ability of markets to absorb the output is rarely an issue. Hoover 
(1909) said “The lower the production rate, the lower the required investment, the longer the income 
stream and the lower the risk to the investor”. While this was well before the advent of Discounted Cash 
Flow (DCF) analysis, the point made remains a good one. 
The risk arising from increasing the designed throughput takes two forms; first that the mine will be unable 
to deliver the material to the mill, and second that although the tonnage target is met, the material will be 
of inadequate quality due to dilution or contamination. A study reported by Tatman (2001) compared 
designed production rate with the average sustained production rate from 60 steeply dipping tabular 
deposits. Tatman (2001) found that 35% of the mines did not achieve their planned production rate, and 
was able to derive an empirical formula relating the risk of failure to the geometry of the deposit and the 
rate of mining. Tatman (2001)’s conclusions are consistent with the author’s observations for underground 
mines (McCarthy, 1993) that in general there is a limiting rate of mining advance (typically about 60 vertical 
metres per year) beyond which either the ore tonnage or head grade, or both, cannot be sustained.
doi:10.36487/ACG_rep/1108_01_McCarthy

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Production rate optimisation – avoiding the temptation of tonnage 
P. McCarthy 
4 
Strategic versus Tactical Approaches in Mining 2011, Perth, Australia 
A similar rule can be developed for other forms of underground mining and, expressed as metres or 
benches advanced per year, for surface mining. 
The physical limit to the rate at which any orebody can be mined is dictated by the possible rate of 
development, available face length (in a pit) or available stopes (underground), grade control turnaround, 
and so on. There is also an economically optimum rate, which is lower than the physical limit of mine 
production, beyond which the negative influences of a high rate of mining begin to outweigh the 
incremental cost advantages. It is also clear that mining slowly is more predictable, while attempting to 
mine quickly leads to greater production volatility and a less certain outcome. As more capital is invested in 
the larger operation, it has a higher commercial risk. 
In most feasibility studies, there is an implicit attempt to maximise production within “safe” limits. This may 
not be the optimum strategy. In particular, the negative impact on head grade of a high mining rate is well 
known in operations but is ignored in the literature on mine optimisation. This paper further develops ideas 
presented by the author (McCarthy, 2010) about developing a rational basis for optimising the production 
rate that recognises, in particular, the relationship between mining rate and head grade. 
2 
Orebody size and mining rate 
With the exception of flat tabular orebodies, as the orebody gets bigger: 
 The available tonnes per vertical metre increases. 
 For a pit, the stripping ratio to a particular depth decreases.
 For an underground mine, the development efficiency (tonnes per metre) increases. 
 Possible stope sizes get bigger (to a geotechnical limit). 
 Lower-cost and more productive mining methods become possible. 
 The average capital investment per tonne of eventual production decreases. 
 The physical limit to the mine production rate increases. 
 The economically optimum mining rate increases. 
However, increasing the production rate may have disadvantages: 
 The required total capital investment increases. 
 The required working capital, including pre-stripping or advance development, increases. 
 Step capacity limits are reached, requiring further capital investment. 
 Head grade to the mill decreases, for reasons discussed following. 
 Control of the mining process begins to deteriorate after some point. 
 The physical limit of production from the orebody is approached. 
 Potentially negative social and environmental impacts increase. 
 The rate of waste production and disposal increases. 
3 
The process of optimisation 
Ideally, a feasibility study would result in an optimised design for the mine and processing plant. In reality, 
many studies are constrained by time, budget and data to achieve a minimum economic hurdle, without 
really determining how much better the project could be with further study. The gross variables under the 
designer’s control are the cutoff grade, production rate, mining method and process design. Of these, the 

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