WhittleMIME 413-513 Workshop 1 2014

MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

Class Project – Part 1 Optimization in Mine Design using Whittle Software Due date: September 26th 2014 Early bird submission bonus – by September 23st 2014: +10% Late submission penalty: 10% per day

OUTLINE

1.

Introduction

2.

Task

3.

Data Files

4.

Instructions

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

1. Introduction Part 1 of the project covers the following topics: 1. Definition of the ultimate pit limit. 2. Determining nested pit shells. 3. Designing pushbacks. 4. Effects of extraction sequence of ore/waste blocks on production scheduling and long term planning. Concepts behind Whittle Nested Pits Whittle uses a Model File containing details of the contents of each block, but, for optimization purposes, we need a single value for each block. This value is the cash flow (positive or negative) that would result from mining the block. For optimization purposes it is important to assume that the block has been uncovered. It is unnecessary to allow for stripping costs, because the optimizer does this implicitly. If we calculate the block values for a particular model we will get a certain set of block values that, when used in a pit optimization, will lead to a particular pit outline, the optimal outline. Example 1 For the purpose of this example, assume the pit outline is outline "A" in the following diagram.

Figure 1. Pit outline obtained from a single optimization.

Within an optimal outline, every block is "worth mining". Each block consists of zero or more parcels and, possibly, some undefined rock that can be regarded as another parcel. Page 2

MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

The resultant cash flow from mining a block consists of the sum of the cash flows generated be mining the block’s parcels. A parcel’s cash flow depends on the way we treat the parcel (i.e. mill, leach, etc.) and the associated prices and costs with the method of treatment. An increase in all commodity prices while keeping the costs constant may cause the parcel to be treated differently (e.g. it may now be processed rather than treated as waste); in this case, the cash flow will always either stay the same or increase. Increasing the prices will not decrease the cash flow obtained from mining a given parcel. Thus, if we increase the prices, the value of every block within outline A will increase or stay the same. No block value will go down. Consequently, every block within outline A is still worth mining. Example 2 In addition, if we do another optimization using the new values, the new outline (shown as outline B below) is certain to include the whole of A. It may also include extra blocks that were not worth mining before, but which are now worth mining.

Figure 2. Pit outlines obtained from two optimizations.

The Whittle Pit Shells node (Optimization program, FXOP) If we step the prices through a series of values, doing an optimization for each, we obtain a set of nested pit outlines, and this is, in effect, what the Pit Shells node in Whittle does. It multiplies all of the prices by a series of 50 to 100 "Revenue Factors" ranging, typically, from 0.3 to 2.0, and produces a pit outline for each factor. The reason for producing outlines for the smaller values of Revenue Factor is that we want to produce inner pit shells that highlight the best positions to start mining and to assist with the sequencing. The outlines are often very close together and form an almost continuous "spectrum", where the change in tonnage from one outline to the next is quite small. However, if the grade increases sharply with depth or the ore body is discontinuous, large tonnage differences between adjacent pits can occur. Since all the outlines obey the pit Page 3

MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

slope requirements, it is simple to determine which sequences are feasible when mining out a particular pit. Example 3

Figure 3. Schematic of nested pits.

In Figure 3, if pit 5 is the ultimate pit, we can clearly mine in the sequence a, b, c, d, e, f, g, h, etc. If the pits are sufficiently far apart to give working space, another possible sequence is a, f, b, g, k, c, etc. Regardless, given a set of nested pits, these sequences are clearly defined and easy for the computer to trace, and thus can be used to show various mining schedules in order to obtain projected tonnages, grades and cash flows. Although each set of outlines is only strictly optimal for a particular set of costs, their usefulness goes far beyond this. Provided that the costs used are of the same order, another optimization run with different costs will usually produce a set of pits of similar shape, but are shifted relative to those from the first run. For example, pit number 20 from one run may be very similar to pit number 25 from the previous run. It is therefore reasonable to simulate mining with wide ranges of prices and costs using the same set of nested pits. Once a set of costs has been settled on, a final optimization using those costs and a repeated simulation can be run as verification.

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

2. Project (Part 1) Task & Deliverables Deliverable for Project Part 1: A properly documented report that amalgamates the deliverables from each of the three Steps below, for the mine’s yearly pit design and mine planning study. Find the optimal ultimate pit limits, design pushbacks and generate a Life-of-Mine (LOM) production schedule for a small gold deposit, so as to maximize its Net Present Value. Report all findings and justify your choices. For this task, the Whittle software must be used along with the parameters provided in Table 1 and the orebody models in the files described below. All deliverables for this assignment are discussed in this section; for information on the related files and steps, refer to the following sections. Table 1. Parameters for the optimization of the gold deposit.

Slope angle

54 °

Selling price

19.29 $/unit

Selling cost

N/A

Mining cost

1.8 $/tonne

Processing cost – Fresh Ore

16.862 $/tonne

Processing cost – Oxide Ore

8.195 $/tonne

Recovery – Fresh Ore

84 %

Recovery – Oxide Ore

90 %

Cut-off

0.3 g/tonne

Model Au unit

Grams

Processing capacity

0.2 Mt/y

Extraction capacity

0.5 Mt/y

Discount rate per period

8%

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

Step 1: Defining the ultimate pit limit Define the final pit by choosing amongst the available nested pit shells generated by Whittle. Deliverables from Step 1: a) A pit-by-pit graph of undiscounted cash flow per pit shell, where the pit number is plotted on the X axis and the net economic value on the Y axis. b) A pit-by-pit graph of discounted cash flow per pit, where the pit number is plotted on the X axis and the discounted economic value on the Y axis. c) Pit-by-pit graph of recovered metal, ore and waste where the pit number is plotted on the X axis and the metal on the Y axis. d) Plot the required graphs using bar style. e) All choices made need to be justified and implications briefly explained. Step 2: Design pushbacks given the ultimate pit limit in Step 1 Using the final pit as defined in Step 1, use the automatic pushback selection in Whittle to choose the pushback design. Try at least three different and meaningful numbers of pushbacks and assess the possible implications on the final NPV of the mine; explain the differences and related effects. Deliverables from Step 2: a) A table that associates a pushback design to its NPV. b) Report in pushback-by-pushback graphs ore, waste, metal and cash flows. c) Discuss the implications of the number of pushbacks used and what they physically represent. d) All choices must be justified and implications briefly explained. Step 3: Generate the LOM production schedule of the mine Using the ultimate pit and pushback design from Steps 1 and 2, generate the LOM production schedule. Use the same processing and extraction capacities as in Table 1. Deliverables from Step 3: a) Produce the LOM production schedule and report all related graphs (ore, waste, metal production, and cumulative NPV) for the mine. b) Describe the differences among the available schedule generating options: Milawa NPV, Milawa Balance and fixed lead. c) All choices must be justified and implications briefly explained, including the selection of the scheduling option. Page 7

MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

3. Data Files The folder named “MIME 413 Project Part 1” contains a single estimated (kriged, deterministic) orebody model and a parameter file. A) Model File: Orebody block model files: These types of files are identified by their extension as “mod.” They contain the specification of the block model of the deposit such as block coordinates, metal grade, ore and waste tonnage etc. Format: The formats of the parameter and model files are provided in the Whittle software’s manual and the summarised below. The first line: X, Y, Z, Number of Parcels, Positional mining CAF, Processing CAF, tonnage The second line: X, Y, Z, Rock Type, Tonnage, Metal Content If the number of the parcel for a block is zero, “the second line” doesn’t exist for that block. If the number of the parcels is 1 or more, “the second line” is written for each of the parcels for that block.

Figure 4. Example of a mod file when opened in a text editor.

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

B) Parameter File In this workshop, all the necessary parameters for the design and planning of the pit are provided. For more information, see the “Whittle Parameters” document included or the Whittle help manual. The parameter file: parfile.par Format: The format of the parameter file is summarised as below. 1

dx

dy

dz

x0 y0

z0

(block dimensions along x, y and z directions and the origin of model) 2

nx

ny

nz

(number of blocks along x, y and z directions) 3

ABI

MCAF

PCAF

PRNT RSTINT

RSTME

[active block indicator, positional mining CAF(1=use CAF, 0=do not use), processing CAF(1=use CAF, 0=do not use), printing index (1:quantity of unprocessed material printed, 0:quantity of unprocessed material not printed), restart interval and restart time] 4

1

nx

1

ny

1

nz

(sub-region block limits) 5

1

30

0.0

(number of slope regions, number of benches to generate structure arcs, default block tonnage) 6

0.0

54.0

(slope bearing angle, pit slope) 12

4

0

4

4

0

$

(decimal places to write: block ton, total ton, revenue factor, currency total, currencycharacter) 13

1.000

1.000

1

2

1.800

1

(general block tonnage, dilution factor, [recovery, the selling cost ratio; not used,] air flag A=consider air blocks in optimization(1) or do not (2), air flag B=air blocks not included in the result file (1) or air blocks within the ultimate pit are included (2)-Air flag A must be 1, or all air blocks in the model file are included (3), reference mining cost, ore selection by cutoff (1) or by cash flow (2)) 14

0.1657506

(revenue factor as single number or range start-step size-end)

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

18

GOLD

1

4

4

Fall 2014

4

(element type, position in the file, decimal places for gold in the block: total unit of element, grades and cut-offs for this element. 20

GOLD

0 19.2900

(element, selling cost/unit, price/unit) 21

OXOR

1.000

0

1.000

(rock type, mining CAF, rehabilitation cost/ton, processing throughput factor—speed of processor for a particular rock type) 25

MILL OXOR

8.195

(processing method, rock type, processing cost/ton) 26

GOLD

C

0

0.900

0

0.300

0

(element type, cutoff controlled (C) or not controlled (N), processing cost/unit, process recovery fraction, recovery threshold, minimum and maximum grade).

4. Task Instructions The computer session of this first part focuses on the basics of using the Whittle software. This is only useful to those who have not used Whittle previously. This section covers importing data into Whittle, generating pit shells and ultimate pit limits, designing pushbacks from pit shells and optimization with the Milawa-NPV option. Some of the traditional sensitivity analysis, such as varying commodity price and processing capacity are also included in the notes, but is not necessary for this assignment. You are, however, encouraged to explore these features if desired. The data set used in this assignment is generated from an estimation method (ordinary kriging). The estimated orebody model will be used as input and the resulting schedules and pushbacks obtained in the first part are referred to as the “base case” during analysis performed in subsequent assignments.

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

1 Import Deposit Data in to Whittle a. Make a new directory in your personal network drive (P:\ drive) called “Project Part 1”. b. Copy the files: ‘parfile.par’ and ‘kriging.mod’ from the folder provided into the “Project Part 1” directory you just created. c. Open Whittle and import parfile.par and kriging.mod files as follows: d. Click on create a new project and press OK.

e. Type project name: Project1, select the project directory by clicking on the directory icon on the right side - P:\Project1\. Whittle should automatically create a “working” directory - P:\Project1\working_Project1. Click on “next”, for import type, choose “Whittle block model”. Browse the folder you created to find “kriging.mod” as the model file to import, and “parfile.par” as the parameter file to import. Then, click on finish and “yes” to confirm. If there are any additional windows that appear asking for parameters, simply keep selecting “Next” or “Finish” until they go away.

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

f. Check the parameters loaded and run the program by clicking on the third man icon

. A green check mark should appear beside “New Block Model”.

g. Under “New Block Model”, select the “Description” tab and change the block model’s description from “New Block Model” to “Kriged Model”. h. Under the “Formats” tab, set the “Units” for Element GOLD to “gram”. Not setting the correct units in Whittle can lead to misleading results. i. Press the “Accept” button to accept the changes. j. Now, click on each of the tabs and check what information is provided. k. When finished, select the “Check Data” button to ensure that all data has been correctly entered.

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

2 Generate Ultimate Pit Limits a. Click on “New Slope Set” on the left and description tab on the right. Type “Kriging Slope Set” for the description and click on “Accept” keeping all the values as default. Click on “Profile” tab and check the parameters to ensure that the slope angles are correct, as per the assignment requirements (Section 2). b. Click on “New Pit Shells” on the left and description tab on the right. Type “Kriging Pit Shells” for the description. All of the parameters for this node should have been read from the parameter file but you should verify them all. Once again, it is important to be mindful of your units (% recovery, grades expressed as decimals, units for selling on market, etc.) When finished, press “Accept”.

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

c. Right-click on “New Schedule Graph” on the left side and choose “Cut Branch” from the menu. Repeat for the “Pit by Pit Graph” node.

d. Click on description tab of the “New Operational Scenario” node and type “Operational Scenario-1.” Click on “time cost” tab and change the discount rate. Then, Click on the “limits” tab on the right side and change the value of the extraction and processing limits. Additionally, ensure that the units for “Element limits” is set to grams. Then, click on “accept”.

e. Add Pit by Pit Graph: Right click on “Operational Scenario-1” and add “Pit by Pit Graph”. Click on “description” tab and type “Pit by Pit Graph-1”. On schedule tab, ensure that “fixed lead” is selected with “0” value. In the “Definition” tab, delete all the lines below “tonnage of waste rock”. Then add a new value to be displayed by clicking in ‘add’ select “Output” on the left and select “Undiscounted revenue and cash flow” on the right, and choose “Open Pit Page 15

MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

Value”. In order to generate various graphs (as outlined in the assignment deliverables), you will need to repeat this step and select the correct properties to save. You will likely need to explore the various options to be able to get the correct graphs. Do not hesitate to include a new graph not outlined in the assignment deliverables if you believe it helps you justify your points in your report’s discussion. Click on add to selection list and best case, click on OK. Then, click on OK and accept it by clicking “accept” in the general window. Then, run the program by clicking the running man icon.

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

f. Generating the pit list: Right click on the Kriging Pit Shells and select “Other”“Export Pit List”. Select the directory you created and change the name to

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

“kriga.pil”, click on run. Click on “OK” for the message. You will need these pit shells for future assignments.

g. Finding the optimal pit: Click on “Pit by Pit Graph-1.” Click on “output” tab on the right side. It shows the best, specified and worst case scenarios. The optimum pit can be found from there (checking in the discounted cash flow it may be seen which pit shell has the highest value and therefore may be chosen as the ultimate pit).

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

h. Click on the “Graph” tab and press zoom button. Click on the preferences. Type DCF on the Title of Y-Axis. Select only “Open Pit Value” and unselect the other options. Click on the 2nd Y-Axis preference tab and unselect “Use multiple Y-Axis” because you have chosen only one display (there is no need to display the 2nd axis). Click on “Style preferences” and select “Open pit value for the best case.” Change the Style to Bar, and Colour to red. Click on Graph tab to see the modified plot. Repeat these steps to generate your graphs required for the assignment deliverables. Be sure to comment on your results.

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

3 Generating Pushbacks from Pit Shells a. We will first create pushbacks using the automatic pushback selection tool. Right-click on “Pit by Pit Graph-1”, and select “Copy Node”. Right-click on “Operational Scenario-1” and select “Paste”. Change the name of the node (“Description”) and re-name it to “Pit by Pit Graph- # PB” where # is the number of pushbacks you wish to test. Under the “Schedule” tab, and under “Specified case pushback definitions”, select “Auto” and enter the number of pushbacks you would like in your design. Select the “Definition” tab, and press “Edit”. You can now enter the final ultimate pit shell to be considered (the limit of mining); enter the ultimate pit shell number defined in Step 2 (g,h) in the “End” textbox. You will not need to worry about the graphs in this step, as they will be generated in more detail in the following step. Press the running man icon to run the pushback designs. After the algorithm has finished running, under the “Schedule” tab, you will see numbers listed in order beside “Pushbacks used for last run”. These tell you the optimal pit shell combinations that Whittle has chosen, given the number of pushbacks you have selected. You will need to write down these numbers, as they will be required in the following step (Step 3 b). Repeat this step for various numbers of pushbacks by copying the node and pasting under “Operational Scenario-1”, and changing the number of pushbacks.

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

b. Adding Mining Width (combine pit shells to pushbacks): Right-click on “Kriging Pit Shells” select “Add” and “Mining Width”, then, click on the “Description” tab and type “Kriging Mining Width - # Pushbacks” (where # is the number of pushbacks you want to consider). Click on the “Definition” tab and type in the desired mining width (justify your parameters in your report). If you are unsure of any of the parameters in this menu, please refer to the help file in Whittle. Then, in “Pushback definition”, click on edit pushbacks and type in the desired pit shells numbers to be considered as pushbacks. These were made available to you in Step 3 (a) under “Pushbacks used for last run”. Run the program to combine pit shells to pushbacks. You will need to repeat this step for each pushback configuration you wish to test (# of pushbacks in design). It is recommended that you save these as new scenarios

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

c. Right click on your pushback scenario created in the previous step (Kriging Mining Width - # Pushbacks), and select “Add” then “New Operational Scenario”. Whittle should add the correct parameters, however if they are incorrect, be sure to put in the correct parameters (Discount rate and Processing limit), as per Step 2 (d) . Right click on your new operational select and select “Add” then “Pit by Pit Graph”. Under the “Schedule” tab, ensure that “Specified Case Pushback Definitions” is set to “Manual”, and you will need to add your pushbacks. Press the “Add” button, and then enter your pushbacks in increasing order (e.g. if you have 4 pushbacks, you would enter “1 2 3 4”). Press “OK”. Under the “Definition” tab, ensure that Whittle will generate the correct graphs that you require. When ready, press the running man button. Under the “Graphs” tab, you should now be able to see your graphs for the pushbacks (i.e. not pit shells, as shown in the previous step). You will need to re-do this analysis according to the various # of pushback scenarios you have chosen. Compare what happens in pushback tonnages, ore tonnages, etc. to justify your decision on number of pushbacks in your design before going on to the next step. d. Generating Pit list Krigb.pil: Right click on “Kriging Mining Width”, toolsexporting pit-list- select the working directory and change the name to krigb.pil, export it. Here, this pit list contains block coordinates and the number representing the pushbacks. You will need to do this for which ever design (# of pushbacks) you deem best. The output file is required for the next part of the project. 4 Optimization with Milawa Algorithm a. New Schedule Graph: Create a production schedule by right clicking on the new operational scenario (whichever was deemed optimal from the previous step), selecting “Add” then “Schedule Graph”. In the “Description” tab, type “Kriging Schedule – Milawa NPV”. In the “Specified Case Scheduling Algorithm” section of the “Schedule” tab, select “Milawa NPV”. Add “Manual” pushbacks by clicking “add” on the right side (Add as many pits as needed e.g. if you have 4 pushbacks, you would enter “1 2 3 4”). In the “Definition” tab, delete all the lines below “Discounted open pit value” and click on add. Then, click on “output” on the left, and on the right choose “element and grade”. Choose “Qty of output from ( /UO*) to have quantity of gold in the output file. Click on “add to selection”, choose “GOLD”, from “MILL” for “specified case”, and OK. Click “accept”. Feel free to add whatever graphs necessary to justify your decisions in your report’s discussion. Then, run the program by clicking on 2nd running man. Repeat this step for “Milawa Balanced”. Discuss the differences between the output schedules, which one you think is more effective, etc.

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

5 Exporting the Results to an Excel Worksheet a. Right-click on the menu-button on the optimal pushback design you have chosen on the left side. Choose “Options” then “Export Files” options. See that the directory file will be created (directory can be changed by clicking at the end of directory name box). Click on the square beside “Spreadsheet File” to put a check-sign and type the name as “krigpb.csv” and Ok .

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MIME 413 – Strategic Mine Planning with Uncertainty MIME 513 – Mine Planning Optimization under Uncertainty Lecturer: R. Dimitrakopoulos

Fall 2014

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