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Apr 11, 2025

Using Formulas to Increase Mining Profitability

Discover how mining formulas in Excel can optimize processing costs, improve recovery factors, and boost your project’s NPV with real-world examples.

Video transcription

Why Formulas Matter in Mining Optimization

In this video, we explore how mathematical formulas—built in tools like Excel—can significantly improve decision-making and profitability in active mining operations. While formulas aren’t useful for unexplored deposits, they become essential once your mine is producing.

Connecting Ore Quality to Costs and Recovery

We begin by demonstrating how formulas can model the relationship between ore quality and processing costs or recovery factors. Using real-world data from Ferrum Magnetite deposits, we build trendlines with high correlation coefficients (close to 1), confirming strong links between variables.

Scenarios Without vs. With Formulas

  • No Formula Scenario: Assumes uniform processing costs for all ore types, regardless of quality—simple, but unrealistic.

  • Single-Formula Scenarios: Introduce formulas that connect ore quality to either processing cost or recovery factor.

  • Dual-Formula Scenario: Links both cost and recovery to ore quality for the most accurate simulation.

Impact on Costs, Output, and NPV

Each block in the geological model uses these formulas to calculate outputs. While this increases processing time, the results become significantly more accurate. Small changes in ore grade lead to noticeable shifts in cost, output, and income.

Scenarios with dual formulas deliver:

  • Lower enrichment costs

  • Higher output

  • Increased income

  • Higher Net Present Value (NPV)

Better Cutoff Grade Strategy

Formulas shift how we interpret cutoff grades. Quality becomes a key factor, guiding smarter decisions about what to mine—and what to avoid.

Optimized Pit Design

Mining areas adjust dynamically based on formula-driven evaluations, expanding into zones with higher ore quality and overall profitability.

Conclusion

Using formulas helps identify high-value material, reduce unnecessary processing, and strategically expand profitable zones. By integrating formula-based models, mining operations can boost efficiency and profitability across the board.