Definition of economic pit limits taking into consideration time value of money

CIM Journal, Vol. 2, No. 3, 2011
T. S. Golosinski Pontificial Catholic University of Chile, Santiago, Chile
Abstract

This paper proposes new methodology to define the pit limits that yield
the maximum net present value (NPV) for a deposit, under a given economic
scenario and for a given discount rate. The method uses an algorithm that
combines dynamic programming and heuristics. It was tested for evaluating
deposits with different sizes and various grade distributions. For the discount
rate of zero, the results confirm that the economic pit limits are the same as
that defined using Lerchs Grossman method. However, when discount rates higher
than zero are used, the pit limits differ, yielding a higher NPV.
Keywords: Long range mine planning, Pit limit optimization, Ultimate pit limit, Economic pit limit, Nested pits
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