Enterprise optimization case study: PanAust’s Inca Oro Project, Chile
Matthew Dorman and Mark Jones Whittle Consulting, Australia
Whittle Consulting’s (WCL) Enterprise Optimization (EO) solution is an integrated approach to maximizing the Net Present Value (NPV) of a mining business by simultaneously optimizing up to 10 different mechanisms across the mining value chain. The EO methodology which WCL has developed over the last 12 years draws from the manufacturing industry (theory of constraints) and cost accounting (activity-based costing) as well as advanced mining techniques such as cut-off grade optimization and “skin analysis”. The principles behind Enterprise Optimization accelerate cash flow through the business by applying a holistic planning approach over the whole business chain rather than conventional ‘silo’ based decision making. The EO methodology and techniques are underpinned by sophisticated in-house proprietary software and has proven to be an excellent strategic planning tool for mining businesses having consistently identified significant value uplifts to projects and operations alike.
This paper presents the findings from the EO Study for the Inca de Oro (IDO) Copper/Gold project located in the Atacama region of Chile. The Inca de Oro Project is a joint venture between PanAust Ltd of Australia and Codelco of Chile. The techniques and optimization mechanisms applied produced a 116.8 % overall increase in pre-tax NPV above the PanAust’s best business case (referred to as the “base case”).
The IDO deposit is a porphyry-copper type ore body containing minor amounts of gold, silver and molybdenum. This is an open pit mine with a conventional process plant producing copper concentrate with gold and silver credits. The processing plant incorporates a SAG and ball mill preceded by secondary crushing. There also exists the potential to include external mineral resources from the Carmen deposit located 12 km southwest of IDO. The Carmen deposit is 100 % owned by PanAust and has similar geological and metallurgical characteristics to IDO. Dependent on the rate of production, Carmen ore will be either directly trucked to IDO or crushed on site and conveyed for processing at IDO.
The rim of the IDO open pit is within 500 metres of the nearest occupied building in the IDO township. Due to the proximity to the township, urban air quality criteria are applied to the operation which potentially limits production rates from the mine due to dust generation. Of the mine activities that generate dust, the largest contributor is in-pit haulage. A 46 Mtpa mining limit was applied as a proxy constraint in the initial study for limiting dust emissions. The Carmen deposit is regarded as a mineral source that could potentially keep the plant running at capacity whilst keeping dust emissions within regulatory limits since it is located at distance from the township. Blast intensity is also limited on the side of the pit closest to the township in order to maintain vibration below the environmental constraints.
Ore from both IDO and Carmen deposits have similar hardness and are energy intensive to process. Akin to other mines in the region, infrastructure challenges have contributed to relatively high capital and operating costs. Initial base case valuation indicated that IDO (not including Carmen) as a stand-alone project did not present an attractive investment case.
WCL was engaged to assist PanAust in realising the potential in this project and used EO as the tool to optimize the NPV. Specifically, WCL evaluated options around plant sizing, plant expansion timing, capital staging, scheduling, grind size selection, blasting intensity selection and the effect of including the Carmen deposit. The application of EO produced meaningful NPV improvements as presented in this paper.
- PanAust Ltd.