Cutoff grade is the minimum ore grade at which it is economically viable to mine, process, and sell a mineral commodity, serving as the threshold that distinguishes economic ore from uneconomic waste or sub-economic material. In gold, iron ore, bauxite, and diamond mining, the cutoff grade is a fundamental parameter in resource classification, mine planning, and production scheduling that directly determines the size of the mineable ore reserve, the strip ratio, and the economic life of a mine. Cutoff grade calculations incorporate the full cost of mining, processing, general and administrative (G&A) expenses, sustaining capital charges, royalties, and selling costs, balanced against the prevailing commodity price and metallurgical recovery factors. For gold deposits, cutoff grade is typically expressed in grams per tonne (g/t Au); for iron ore, in percentage iron (% Fe); for bauxite, in percentage alumina (% Al₂O₃); and for diamonds, in carats per hundred tonnes (cpht). Dynamic cutoff grade strategies, which adjust the cutoff in response to changes in commodity prices or mine costs, are used in sophisticated mine planning to maximize net present value (NPV) rather than merely maximizing ore tonnage. Cutoff grade decisions therefore have profound financial and strategic implications for mining companies.
