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A cut-off grade is the grade of mineralisation that a deposit can be economically mined.
The cut-off grade is determined by the cost to mine a deposit, and the price that a company can sell the underlying commodity. The higher the cost to mine, the higher the cut-off grade, whereas the higher the price of the commodity the lower the cut-off grade(Cut Off Grades Explained, n.d.).
It will determine all of the critical parameters, such as the grade of the deposit, the size of the deposit and the amount of metal produced from the deposit. Get it right and you can take it to the bank. Get wrong and the mine becomes a large pit in the ground where money and dreams are shoveled in by a Komatsu P&H 9020C(Watson, 2018).
The fundamental principle is that only ore with a grade high enough to cover all costs and yield a profit is worth mining.
What factors do you find most challenging to accurately predict when determining a cut-off grade? Share your insights and experiences below!
Reference:
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Cut Off Grades Explained. (n.d.). Retrieved April 17, 2025, from https://nextinvestors.com/learn-to-invest/mining/cut-off-grades-explained/
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Watson, A. (2018, May 16). What is cut-off grade? An introduction to overlooked yet critical concept in mining and resource investing. | Geology for Investors. https://www.geologyforinvestors.com/what-is-cut-off-grade-an-introduction-to-overlooked-yet-critical-concept-in-mining-and-resource-investing/
