The Role of Cost Estimating in Mine Planning and Equipment Selection

The objective of a mine planning exercise is to plan a safe mine that maximises net present value (NPV) for the project. Two primary elements are key to design of a mine plan optimised to maximise profit: selection of an optimised production rate and selection of an optimised equipment fleet. Both depend upon accurate estimations of capital and operating costs for the equipment and for the life cycle of the mining operation. Once a trial production rate is determined, a primary equipment fleet, ie excavators, haulers, and blasthole drills, can be determined based on material characteristics and haulage distances and gradients. An auxiliary fleet, dozers, road maintainers, service trucks, etc can be determined using less rigid productivity criteria. With an equipment fleet determined, operating and support personnel can be assigned based on shift requirements and equipment operating needs; and material and supply requirements can be estimated. Knowing the areal dimensions of the major equipment items, road widths and repair shop dimensions can be determined. Personnel numbers and supply requirements determine the square metre sizes of offices, change rooms, and storage facilities. Reliable sources of capital and operating unit prices and costs for all these items are referenced in the paper. Once preliminary capital and operating cost estimates are calculated by applying unit costs to equipment, personnel, material and supply needs, potential profit can be tested using DCF techniques. An optimised mine plan can then be determined by testing the potential profitability of multiple mine production rates. Because of the economies of scale, full capital and operating cost estimates must be completed for each production rate in order to produce meaningful comparisons.