Cut-off Grade-A Concept

One of the first essential decisions for exploration and mining venture at evaluation and mine-planning desk is to determine the cutoff grade. As an investor reading a resource estimate, it is important to pay attention to the ‘cut-off grade’, as it dictates which drilling intercepts can and can’t be used in the resource estimate and ultimately the size of the economically mineable resource. Cutoff grade thus, may be considered as ‘Mean Grade’ which defines the resource estimate over Mean width/Tonnage available for economic mining at ‘Break Even’ stage . Considering the fundamental role of plant cutoff grade on the economical operation of a mine, the optimal selection of this grade is of great importance. One of the main problems in mining operations is how to determine the optimal cutoff grades of ore deposits at different periods during the life of a mine which can be considered based on one of the goals of maximizing annual profit or net present value extraction during the mining period. Thus, Cut-off grade at Resource/Reserve evaluation stage may be static based on geological behaviour while the same may be dynamic at Mine feasibility stage based on cost-benefit analysis. Despite the existence of a range of different techniques for determining the optimal cutoff grade, cutoff grade optimization with the goal of maximizing the net present value over the years of the mine's life, as well as the correlation with the distribution of the grade and tonnage of the remaining ore, requires a long calculation process, especially for large mines. Cut-off grade being a technoeconomic parameter should be expressed as Grade of mineral over minimum mining width. Considering the market being volatile for the price of minerals/commodities, the Cutoff grade may be static depending on the exploration data population for Resource estimation and dynamic based on cost benefit analysis at Feasibility stage for optimum NPV but needs a judicious decision based on the active life of the Resource at an estimated given lifetime with risk assessment.