Chapter 14: Cutoff grade theory

An important concept with regard to most mineral deposits is the cutoff grade and its impact on the economics of a project. Consider, for the moment, a block of ore that is estimated to weigh 1 tonne and contain 3 grams of gold. At a gold price of, say, US$1500 per ounce the value of the gold in the block of ore is approximately US$145. Clearly, if it cost more than US$145 to mine, treat and extract the gold from that tonne of ore, it would be uneconomic to mine. Conversely, if the cost were less than US$145, it could be economic to mine the ore.

When companies quote mining reserves, under the JORC definition, the ore has to be economically recoverable. If all the tonnes of ore in a deposit contained the same ...

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