# Assessing of Losses and Dilution Impact on the Cost Chain: Case Study of Gold Ore Deposits
## 1 Introduction  
Modern gold mining companies in Russia and worldwide come across problems of production costs optimization caused by severe price competition on the one hand and deteriorating mining and geological conditions on the other, including declining gold grade in the ore, increasing depth of excavation, decreasing unallocated stock of deposits, etc. Just a few mining companies can change the situation by means of extensive production development, namely due to acquisition of new deposits, application of high-performance equipment and modern technologies. Therefore, mining companies tend to pay more attention to internal reserves of efficient subsoil use and optimal resource consumption, based on continuous planning, analysis and control of the production process, starting from extraction of mineral resources and finishing with their processing (Mine-to-Mill process) [1, 2, 3, 4, 5]. That is why, presently, there is a need to develop efficient solutions of the mine-to-mill process, which has to be adapted to each specific mining plant. The idea of the mine-to-mill concept is that metal production is a chain of interconnected processes (extraction--transportation--communication--processing), and completion of each stage affects the following ones. Therefore, input engineering parameters of the previous process determine technological and economic indicators of the succeeding one, i.e., expenditure chain of the production cycle. Engineering parameters include a wide range of factors that depend on geology, mining method and technique, grain composition of the rock mass, transportation schemes, technology of ore blending, etc. This research focuses on a case study that demonstrateshow indicators of mining losses and dilution (extraction stage parameters) influence variation of costs in the production cycle [6; 7]. Case study: Kuranakh ore field contains 11 deposits: Severnoye, Porfirovoye, Tsentralenoye, Yakutskoye, Bokovoye, Pervukhinskoe, Kanavnoe, Delbe, Dorozhnoye, Yuzhnoye, Novoye its total area is around 1500 km [8]. The gold reserves at the deposits of the Kuranakh group included: explored (ABC1 categories)--78.6 tons, preliminary estimated (C2)--6.8 tons, with an average gold grade in the ore of 1.58-2.83 g/t (average for all deposits--2.01 g/t) [9; 10]. The study considers two mining conditions: base-case scenario and project scenario. The base-case scenario implies the actual conditions of the Kuranakh ore field development. Such factors as relatively small reserves, complex morphology and non-compact arrangement of ore bodies, which are significantly remote from each other and from concentration plants (up to 20 km), cause scattered (decentralized) mining operations and require increased transport standards, additional costs for the construction and maintenance of open pit roads, dump facilities, industrial sites. Extremely uneven mineralization and distribution of metal content, frequent intermittency of ore and waste rocks in ore bodies and deposits require additional costs for in-mine exploration, testing of blast boreholes, ore blending prior to its processing (organization and maintenance of an in-between stockpile) and selective mining of industrial, cut-off grade (poor) ores and waste rocks. If we assume that we change technological parameters, for example, we use selective mining, then first of all we increase the content in industrial reserves and reduce losses and dilution. This allows us to accept the project scenario. The indicators of the base-case and project scenarios differ in the characteristics of losses and dilution: base-case scenario: losses are 3.1% with the ore grade of 0.9 g/t; dilution is 17% with the grade of 0.2 g/t; project scenario: losses are 2.1% with the ore grade of 0.9 g/t; dilution is 13% with the grade of 0.2 g/t. Basing on factor analysis and method of value engineering, a methodology is developed that allows detecting cost economy in the process of production, which arises due to the influence of losses and dilution factors.