Mine Profit Enhancement Through Cut-Off Grade Management

The present value of the future profits of a mining operation, using a discount factor which represents the effective cost of venture capital, provides a measure of the projected success of the operation. The present value can be maximised by appropriate selection of cut-off grades successively through the life of the operation. A case study is presented in which detailed optimisation of cut-off grade results in a worthwhile increase in profitability compared with the use of a constant, break even, cut-off grade.Some implications of this approach to profit optimisation are discussed.