Leveraging cut-off grade optimization is one of the ways mining companies can boost profitability amidst a turbulent market. With prolonged inflation and geopolitical uncertainty, mining companies are under pressure to streamline production schedules for increased efficiency and profitability.
By separating waste material and ore more efficiently using optimal cut-off grades, ROI can be increased for mining operations. In shifting their focus to higher grades of ore, companies are positioned to sustain or even increase yield and profits for their existing mines.
What is Cut-Off Grade Optimization?
Cut-off grades indicate how economically viable mineral resources are for extraction and separation from waste material. When extracted material falls above these cut-off grades, it is considered valuable ore to be processed and refined. Anything below these cut-off grades is considered waste.
Factoring in cost per unit, ore grade and production capacity, allows maximum profit or Net Present Value (NPV) to be determined to influence viable cut-off grades. The lowest grade of ore economically worth extracting and processing for maximum profitability is then determined, accounting for labor, machinery and other extraction costs.
The Benefits of Cut-off Grade Optimization for Mine Profitability
Extended Mine Life
Factoring in the capacity constraints of mines allows companies to sustain production levels for a longer period. For example, considering its annual limits to possible tonnage mined or milled and focusing on higher-grade ore through cut-off grades. By optimizing cut-off grades, mining companies can extend their life of mine to maximize returns and avoid the need for further costly explorations and the development of new mines.
Operational Cost Reduction
Additionally, extracting lower grade ore is more labor-intensive, increasing a company’s operational expenses for a smaller amount of yield. Setting optimal cut-off grades early during the mine planning stage can ensure that companies prevent diminishing returns due to these higher expenses for lower grade ore.
Risk Mitigation and Compliance with Environmental Regulations
A growing number of sustainable investors are prompting companies to explore ways to increase yields while complying with environmental regulations. By focusing on higher grade ore, mining companies can reduce the amount of waste material generated during the extraction process. This lessens environmental impact, preventing heavy fines and maintaining social license to operate.
Incorporate Cut-off Grade Optimization During Early-Stage Mine Planning
Cut-off grade optimization is an opportunity in the early mine planning stages to increase yield and returns during the full mine lifespan. However, challenges such as constant market fluctuations in metal and mineral value mean that systems and KPIs need to evolve with shifting targets.
Unison Mining works with mining companies to develop systems, processes and KPIs, supporting cut-off grade optimization. Our teams help facilitate full adoption of technology such as predictive modeling to simplify the process. We prioritize fostering employee buy-in through developing systems, incentives, skills programs and actively supervising employees. This allows cutoff grade optimization processes to be cost optimized, helping companies navigate economic uncertainty.
