A theory of compound decisions on mill-dump cutoff grades

Abstract

For a large-scale mine and concentrator, working a low-grade orebody by open-pit methods, the mill-dump cutoff grade decision is of crucial economic importance. Lane has provided a sound theoretical basis for this decision-making. His approach to the problem is extended to allow for the effect of taxation, and to include deliberate decisions concerning the concentrator operations that must be taken in conjunction with the cutoff grade selection for optimal overall results. The cutoff grade decision is thus seen as a compound decision upon which the government is able to exert influence through its tax formula It is assumed that a grade distribution is available for selective mining units, as well as mathematical expressions that describe the processes of comminution, liberation of valuable mineral from gangue, and mineral recovery by separation from gangue. Typically, the operation may be thought of as the mining and processing of the massive chalcopyrite-bornite zone of a poryhyry orebody. Apart from its operational use, the theory enables the identilication of taxation schemes that enhance overall mineral recovery and government revenue, without affecting the economic feasibility point of the operator. Two simple tax formulae that achieve this are discussed.