Determination Of A Mining Cutoff Grade Strategy Based On An Iterative Factor

One of the most difficult problems in mining operation is how to determine optimum cutoff grades of ores at different periods over the lifespan of the mine that will maximize the net present value (NPV) of the mine. Cutoff grade optimization maximizes the NPV of a project subject to capacity constraints in the mine, mill and the market.. This paper describes the determination of a cutoff grade strategy based on K. Lane’s algorithm adding an iterative optimization factor calculated for every year during the live of the mine to maximize the project’s NPV. The introduced algorithm is a windows based program developed at Virginia Tech which coded in visual-basic within a spreadsheet environment (Excel). The resulting cut-off windows based program is a user-friendly tool which calculates interactively different mining cutoff grade scenarios. The benefits of the methodology are demonstrated using a hypothetical case study. The authors have observed an improvement of the total NPV using this iterative approach using a year by year optimization factor.