Cutoff Grade Strategy - A Balancing Act

The determination of the proper cutoff grade for an open pit metal mine is based on economic criteria and the operating philosophy of the mining company. Previous papers have dealt with the balance of a fixed mine production capacity versus economic return. Mine production capacity is often controlled by the amount of mining equipment and the working area in the pit. A complete cutoff grade strategy is a balance of economic return of mining higher grade material versus the capital costs of additional production capacity and the operating cost of moving the waste and low grade material to assure proper ore release. An approach to the problem is presented which is based in part on work by previous authors and provides guidelines to proper cutoff grade strategy encompassing the time value of money and variable commodity prices.