Cut-off grade: an overview
What is the cut-off grade?
Rocks referred to as ore contain precious minerals that are mined. “Grade” refers to the amount of precious mineral present in the ore; it is typically expressed as a percentage or in grammes per tonne.
With a grade of 75%, for instance, precious minerals make up 75% of the ore’s weight. Likewise, a grade of 2.5 grammes per tonne (g/t) indicates that for every tonne of ore, there are 2.5 grammes of the desirable material. A mining deposit’s grade varies from place to place; some may have higher grades than others, while others may have lower grades.
Lower grades result in less revenue, whereas higher grades yield more valuable minerals and more earnings. Losses may result from too low quality because mining and processing expenses may outweigh revenue. The lowest grade at which mining is profitable is known as the “cut-off grade”. Anything rated lower than this is regarded as garbage.
How is the cut-off grade calculated?
We must determine a cut-off grade in order to determine how much of a resource may be mined profitably. The reserve calculation cannot contain ore whose grade falls below this cut-off. The point at which the cost of extracting the commodity from the ore and processing it to sell it matched is known as the cut-off grade.
To put it simply, we have to figure out how to balance revenue and costs. The break-even cut-off grade, which serves as the standard for reserve estimation, is the point at which the value of the valuable mineral (commodity) equals the costs associated with mining and processing.
Note: Since the mine operating expenses were assumed when the decision to mine was made, only fixed mining costs are mentioned here.
The valuable minerals that are collected during mining are sold to generate revenue. However, the tools and techniques utilised can make it difficult to separate trash from ore. Consequently, there’s a chance that some trash will mix with the ore and some ore will remain. Dilution is the term for this mixture of trash and ore; ore loss is the term for leaving ore behind.
Dilution, also known as the mining call factor, is the proportion that remains after dilution and ore loss in the cut off grade calculation. The mine call factor, which gauges the level of quality control during mining, is a measure of how reflective the mining process is; the greater the call factor, the more valuable metal is mined. Ore loss and dilution will be covered in more detail later on in our discussion of mining techniques.
With today’s technology, it is frequently challenging to recover all of the important minerals throughout the processing stage. Recovery is the percentage of valuable minerals that are found again.
How sensitive is the cut-off grade?
Let’s do a sensitivity analysis. If the selling price changes, it will affect the cut-off grade. Here’s how it works:
If the Selling Price Drops
- Lower selling prices mean less revenue per gram of gold.
- This will increase the cut-off grade because the mining and processing costs need to be covered by selling fewer valuable ore.
- More material will be considered waste because the minimum grade required for profitability increases.
If the Selling Price Rises
- Higher selling prices mean more revenue per gram of gold.
- This will decrease the cut-off grade because even lower-grade ore can now be mined profitably.
- More material will be considered ore because the minimum grade required for profitability decreases.
Why do cut-off grades differ between mining methods?
The expenses of various mining techniques have a big influence on the cut-off grade. Put simply, different mining techniques have different costs, recovery rates, and dilution. Although it has less dilution, underground mining is typically more expensive than open-pit mining. Underground mining is more selective than open-pit mining, which demands a high stripping ratio. Underground mines are more expensive since they require a lot of infrastructure, such as workshops, electrical lines, ventilation, and refuges. Large fleets are utilised in open-pit mines to transport massive volumes more affordably than smaller, more costly fleets in underground mining.
By Martine Mshana.
