With the mining industry struggling more than ever to unlock value and manage risk in new and existing projects, Minemax are expanding the reach of their strategic mine planning solutions by providing tools to analyse and manage risk in mine plans.

According to Jim Butler, CEO of Minemax, “A number of years back when the industry just couldn’t expand fast enough, our flagship Minemax Scheduler solution helped companies develop mine plans that optimized NPV while accounting for the full detail of capex expansion options associated with equipment, plant and other infrastructure purchase. Capex in mine planning is still a very big component of our business as more and more people have been discovering that you do not need to divorce mine planning and equipment/infrastructure decision-making. However, with the recent downturn due to rising costs and falling commodity prices, the notion of risk is playing an even higher role in project decisions.”

The oil and gas industry has been formally dealing with risk for decades, but unfortunately there have not been easy-to-use risk analysis tools available to mining engineers and analysts. This doesn’t mean that the methodologies and practices are not established in mining. For example, Roussos Dimitrakopoulos of McGill University is very well respected within the industry and has been delivering courses on grade risk for many years. AusIMM offers courses in risk as well. The methodologies are here and accepted, but what we hear industry saying is that they don’t have tools that embody the methodologies; tools that take in the grade uncertainty and the financial uncertainty so that they can develop robust plans and report probabilistically on KPIs and not just deterministically.

Instead of saying “This is a 1.8 billion dollar project”, miners want the means to reliably say something like “There is approximately a 90% chance that this is a 1.8 billion dollar project, but there is about a 10% chance it will be 700 million.” Gone are the days of single number estimates of project value, payback period and ounces. Investors and senior management want to understand the possible outcomes and their respective probabilities. They want to understand risk.

In response to this, Minemax have introduced risk analysis into their Minemax Planner product for rapid, high-level strategic optimization. Minemax Planner was released in February 2014 at SME and has functionality for pit optimization (multiple pit shells), practical pushback generation and NPV schedule optimization. According to Butler, the new risk analysis edition lets a mining engineer or analyst examine the risk associated with uncertain costs, metal prices, recoveries and grade. The resulting P10, P50 and P90 charts give even further insight into the potential upside or pitfalls of a project. This functionality was previewed at AusIMM’s Strategic Mine Planning Symposium (SMP 2014) in November. At that time Minemax was determining the robustness of a mine plan to grade risk through multiple equally-probable realizations of the ore body obtained through conditional simulation. Based on these conditional simulations, the tool presents a statistical representation of typical KPIs such as NPV, metal, grade and ore tonnes.

What Minemax is now doing is adding in the ability to model risk associated with financials and recoveries to give a holistic risk analysis tool. Instead of specifying a fixed value for mining costs or recoveries, ranges are now entered. By sampling values from the ranges of all uncertain parameters together with sampling from the conditionally simulated models, a very large number of Monte Carlo simulations can be run on the mine plan to produce a statistical representation of KPIs. Financial or grade-based risk analyses can be run separately or simultaneously. If an analyst just wants to isolate the risk of mining cost uncertainty, they can do that. If conditionally simulated models are available, then grade risk can be addressed by itself. If an engineer wants to bring grade, financial and recovery uncertainty into the picture, then they can run a simultaneous risk analysis.

Butler said they wouldn’t be at this point if they hadn’t been talking with their customers to find out what was missing from the mine planning puzzle. “The industry knows what’s broken in their mine planning processes. We just partner with them to understand how they see the problem and work with them to get a solution. We have already had tremendous positive feedback on our approach to risk analysis from SMP 2014, and at SME in February this year in Denver, will do our final preview before the commercial release.”

To schedule a demonstration of Minemax Planner for risk analysis, please contact us.