The Most Important Number in Mining
Cutoff grade determines what is ore and what is waste — a boundary that defines the size, value, and life of every mine on Earth. Get it wrong and you either leave profitable rock in the ground or process material at a loss. The concept is deceptively simple: when the revenue from processing a tonne of rock exceeds the cost of mining and processing it, that rock is ore. But the implications cascade through every aspect of mine planning.
Breakeven Economics
The breakeven cutoff grade equals total cost divided by recoverable metal value per unit grade. At a copper price of $5000/t with 85% recovery, $5/t mining cost and $15/t processing cost, the breakeven is 0.47% Cu. Every tonne above this grade contributes profit; every tonne below destroys value. This simple equation governs billions of dollars in investment decisions worldwide.
Dynamic Optimization
Kenneth Lane revolutionized mine planning in 1988 by showing that the optimal cutoff grade is not simply the breakeven grade. His theory incorporates the time value of money, processing capacity constraints, and the opportunity cost of depleting high-grade reserves early. The result: optimal cutoff grades are higher than breakeven early in mine life, extracting maximum value from the best material first.
Sensitivity and Risk
Cutoff grade is exquisitely sensitive to metal price — a 20% price drop can reduce reserves by 30-40% in a low-grade deposit. This simulation lets you explore how price, cost, and recovery interact to define the economic boundary, revealing why mining companies obsess over cost control and metallurgical optimization.