Cut-off grade is a key economic tool in mining used to determine whether material is treated as ore or waste. It guides decisions such as whether to mine, mill, dump, or stockpile material. These decisions depend on factors like mining method, metal prices, and processing costs, making cut-off grade highly dynamic.
Adjusting the cut-off grade can boost short-term profitability and improve a project’s NPV, benefiting shareholders and stakeholders. However, raising the cut-off grade may reduce mine life, leading to fewer long-term employment opportunities and diminished socioeconomic benefits for surrounding communities.
During high commodity prices, companies may lower cut-off grades to extend mine life or stockpile high-grade ore for future use. Financial, technical, and market conditions all influence cut-off strategies. Ultimately, optimizing cut-off grades is about maximizing NPV across the mine’s life while managing economic risks.
Cut-off grade is the single most important economic decision in mining, directly dictating life and death for a project. How do you strategically balance maximizing short-term NPV with the imperative to secure long-term mine life and community value? Share your insights!
Text rights: Pascal Amedzrovia and George Agyeib, 2022
Text source: Optimisation of Cut-Off Grade Considering Dilution and Waste Rehabilitation Costs, NIPES Journal of Science and Technology Research 4(2) 2022 pp.246 – 258 pISSN-2682-5821, eISSN-2682-5821, p246-247
