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Mineral project valuation
Published in Odwyn Jones, Eric Lilford, Felix Chan, The Business of Mining, 2018
Odwyn Jones, Eric Lilford, Felix Chan
If variations are made to economic input parameters, including the commodity price, exchange rate or working costs, then as these input parameters change, so should the operation’s cut-off grade and hence its Reserve. The cut-off grade is the minimum ore grade below which mining is uneconomic. So if the commodity price increases and/or the local currency weakens or the unit working costs are reduced, a lower cut-off grade should be calculated resulting in an increase in the Reserve and hence, at an unchanged production rate, an increase in the life of mine (LoM; Lilford, 2017). That is, mining will be conducted at a lower grade and the operation will still be economic, for a longer duration. The converse is true (i.e. a lower commodity price or stronger local currency will require the cut-off grade to be increased, thus shortening the LoM at the same production rate), and therefore this impact should be factored into the sensitivity analysis.
Influence of drilling spacing on the mineral resources uncertainty
Published in Christoph Mueller, Winfred Assibey-Bonsu, Ernest Baafi, Christoph Dauber, Chris Doran, Marek Jerzy Jaszczuk, Oleg Nagovitsyn, Mining Goes Digital, 2019
C.J.E. Silva, M.A.A. Bassani, J.F.C.L. Costa
Cut-off grade is the minimum grade required in order for a mineral or metal to be economically mined (or processed). Material found to be above this grade is considered to be ore, while material below this grade is considered to be waste. By setting a value cut-off in the grade-Tonnage curve, it is obtained the value of the tonnage and average content for that cut-off. Thus, it is possible to identify in a quantitative way the degree of uncertainty coming from the resources simulations. Various measures are used to summarize like the standard deviation, coefficient of variation, 90th (P90) and 10th (P10) percentiles, and relative uncertainty (P90–P10)/P50) (Deutsch et al. 2007) (Figs. 1, 4).
The Anatomy of a Mine
Published in Karlheinz Spitz, John Trudinger, Mining and the Environment, 2019
Karlheinz Spitz, John Trudinger
Only a few mineral deposits are commercially viable. For a mineral deposit to become an ore deposit requires that the commercially valuable minerals can be extracted at a profit. The metal content of a mineral deposit is called grade, which is generally expressed in percentage by weight, or in case of precious metals, in ounces per ton. Higher mineral prices allow lower metal concentrations to become economically attractive to mining. Most iron ores need a grade of at least 50 percent of iron to attract interest in mining, whereas economically attractive concentrations of gold may be as low as 1/1000 of 1 percent (Case 5.1). Of course, the more concentrated the desired minerals, the more valuable the deposit. The lower limit, however, is fixed primarily by economic considerations, but other aspects are also important. The lower limit of grade is called cutoff grade (COG) and it varies according to metal prices, available mining technology, the nature, size and location of the mineral deposits, and the costs of processing. The cut-off grade is an economic term, and it marks the transition from ore to waste rock in a given ore deposit (as illustrated in Figure 5.2). Waste rock is defined as rock which does not contain an adequate percentage of ore minerals to be economically valuable as a source of these minerals. The cut-off grade represents this threshold between economic and uneconomic ore. Mine plans are drawn up with some prior assumptions about cut-off grades. As the nature of the actual ore body is revealed during mining, and in response to changes in mineral prices and available mining technology, the cut-off grade of an ore will likely change over the life of the mine. Cut-off grade is an operational criterion which is applied at the point of mining (Lane 1988). An increase in metal prices may well turn past mine waste dumps into valuable ore resources.
Evaluation of mine waste characterization to identify opportunities for optimizing project economics using fragmentation analysis
Published in Mining Technology, 2021
The cut-off grade for an ore deposit is used to classify the material as ore or waste. For a metallic ore deposit, the material over the determined cut-off grade is considered as ore and can be mined whilst the material below the cut-off grade is regarded as waste and depending upon the mining method used, it may be left in-situ or haul to the waste dumps (Cetin 2018). As presented by Asad (2005), and Cetin and Dowd (2013), to get maximum profit from a mineral deposit, optimum cut-off grades must be applied. Optimum cut-off grades can be attained only by decreasing the order of the cut-off grades strategy. Nevertheless, the establishment of an optimum cut-off grades plan that gives an extreme profit is a very compound process. For this to be achieved, one must reorder the grade tonnage distribution of the mineral deposit after each stage of mining mine operation.
Review of Solution Methodologies for Open Pit Mine Production Scheduling Problem
Published in International Journal of Mining, Reclamation and Environment, 2021
Karo Fathollahzadeh, Mohammad Waqar Ali Asad, Elham Mardaneh, Mehmet Cigla
Kumral [34] highlighted the limitations of traditional 3-OPPS that requires the mining block economic value as an input. This pre-calculation thus identifies the ore (positive economic value) and waste (negative economic value) blocks based on marginal or breakeven cut-off grade. The cut-off grade is defined as the grade that classifies material as either ore or waste, i.e. a mining block with grade greater than or equal the cut-off grade is classified as ore and a mining block with grade less than the cut-off grade is classified as waste [12]. Thus, rather than allowing the optimisation process to decide the best destination for mining blocks, the traditional models take the predefined destinations of mining blocks as an input (where ore blocks would go to processing facilities and waste blocks would end up in waste dumps). Given this deficiency, Kumral [34] shared a modified formulation for 3-OPPS that not only defines the timing of extraction but also, decides about the destination of a mining block by implementing the dynamic cut-off grade policy. While the nature of decision variables in the modified formulation adds to the computational complexity of the problem, an implementation of both formulations through exact approach revealed that the modified formulation yields approximately 5% higher NPV. This was because modified formulation sends comparatively high-grade ore to the processing plant during initial years and low-grade ore during later years.
An optimal cut-off grade policy under diverse stockpile handling strategies in open-pit mining operations
Published in International Journal of Mining, Reclamation and Environment, 2021
Asif Khan, Mohammad Waqar Ali Asad
Cut-off grade defines the destination of material from the mine to different stages within the supply chain of an open-pit mining operation. If the grade of mined material is greater than or equal to the cut-off grade, then it is classified as ore and it is destined to the processing streams for the production of the marketable product. This reflects that once mined, not only does ore cover the cost of processing and refining or marketing stages, but also it generates profit under the existing economic situation. On the contrary, if the grade of mined material is less than the cut-off grade, then the cost of processing and refining or marketing would overcome the revenue out of marketable product and such material would be destined to the waste dumps. Thus, the cut-off grade maintains an inverse relationship with the quantity of ore, i.e. higher cut-off grade would lead to the lower quantity of ore and vice versa. Consequently, given the quality (grade-tonnage distribution) of the available mineral resource as well as the economic and technical parameters, the choice of cut-off grade has a significant impact on the overall economy of the operation.