Cut-off grades in mining are influenced by several key factors.
- Commodity prices: higher prices for the mined commodity can lower the cut-off grade, making it economically viable to process lower grade ore;
- Mining Costs: the cost of extracting the ore, including labour, equipment and energy costs, directly impacts the cut-off grade. Higher mining costs require a higher cut-off grade to ensure profitability.
- Processing Costs: the expenses associated with processing the ore, such as milling and refining, also affect the cut-off grade. More expensive processing methods necessitate a higher cut-off grade.
- Recovery Rates: the efficiency with which the valuable minerals can be extracted from the ore influences the cut-off grade. Higher recovery rates can justify a lower cut-off grade.
- Deposit depth: shallow deposits are cheaper to mine and can have lower cut-off grades, while deeper deposits are more expensive to access and require higher cut-off grade.
- Economic and market conditions: fluctuations in the global economy and market demand for the commodity can lead to adjustments in the cut-off grade.
These factors are dynamic and can change over time, requiring mining companies to continuously evaluate and adjust their cut-off grades to maintain economic viability.
Calculating the cut-off grade in mining involves determining the minimum grade at which a unit of ore will be economically viable to process. Here are simplified steps involved.
Steps to Calculate Cut-off Grade
- Determine Total Cost: this includes all operational expenses (OPEX) such as mining, processing, and administrative costs.
- Estimate Recovery Rate: this is the percentage of the metal that can be recovered from the ore during processing.
- Identify Metal Price: the current market price of the metal being mined.
Example Calculation
Let’s say we are calculating the cut-off grade for gold mining:
- Total Cost (OPEX): $150 per tonne
- Recovery Rate: 95% (or 0.95)
- Price per Ounce of Gold: $1,500
Using the formula: Cut-off Grade = OPEX/ (Revenue per unit x Recovery Rate)
= 150/1500×0.95
= 0.105 ounces per tonne
To convert this to grams per tonne: 0.105 x 31.1035 = 3.27
