Resources Policy 49 (2016) 142152

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Resources Policy
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A review of cut-off grade policy models for open pit mining operations
Mohammad Waqar Ali Asad n, Muhammad Asim Qureshi, Hyongdoo Jang
Department of Mining Engineering and Metallurgical Engineering, WASM, Curtin University, Australia

art ic l e i nf o a b s t r a c t

Article history: In an open pit mining operation, the heterogeneity of the grade-tonnage distribution of the deposit
Received 10 March 2016 dictates that all available material within the boundaries of an open pit may not be processed. Given this
Received in revised form heterogeneity, it is imperative that the valuable (ore) and waste materials are clearly identied. In this
29 April 2016
context, the cut-off grade denes the quantity of ore and waste, ensuring smooth supply of ore to the
Accepted 12 May 2016
processing streams. While, the earliest signicant effort towards the development of models for cut-off
grade policy dates back to 1960s, a number of contributions on this vital aspect of a mining operation
Keywords: have been made since then. This paper presents a comprehensive overview of the available literature on
Optimization cut-off grade policy models and suggests possible areas of future research.
Modelling
& 2016 Elsevier Ltd. All rights reserved.
Cut-off grade
Processing
Open pit mining

1. Background operation, along with the corresponding quantity of material (ore

Fig. 1 presents the layout of an ideal open pit mining system
that constitutes three essential components: a mine (open-pit), a
processing plant, and a renery. Mine produces ore and waste
materials, ore is then transported to the suitable processing
streams, and waste is hauled to the waste dumps. Processing plant
then upgrades the metal content in raw ore and produces con-
centrate, which is then fed to the renery for the production of
metal as the nal marketable product (McKee et al., 1995). As
material ows from one component of the mining system to the
next, overall economy of the operation is the driving force that
guides the decision making process on this material movement.
Cut-off grade is the most important economic criterion that
denes the supply of ore and waste material from the mine to
subsequent processing streams and waste dumps, respectively
(King 1999, 2001; Wooler, 2001). The material with metal content
greater than the cut-off grade is designated as ore because under
existing economic situation, not only this material will pay for the
cost of mining, processing, and rening but also it will generate
some prot. On the contrary, the material with grade less than the
cut-off grade is identied as waste, and if this material is required
to be mined, it will incur the cost of mining that includes ex-
cavation and haulage from the mine to the waste dumps.
Given this denition, a cut-off grade policy thus describes a
schedule or sequence of cut-off grades over the life of an
n
Corresponding author.
E-mail addresses: waqar.asad@curtin.edu.au (M.W.A. Asad),
m.m.qureshi@student.curtin.edu.au (M.A. Qureshi),
Hyongdoo.jang@curtin.edu.au (H. Jang).
and waste) to be mined, quantity and average (head) grade of ore
to be processed, and the quantity of metal to be rened (Hirai
et al., 1987; Marques and Costa, 2013). Consequently, linking itself
to the overall objective of a mining business, this policy forms the
basis of cash ows and the resultant net present value (NPV) over
the life of operation. Moreover, the link between the cut-off grade
policy and the strategic (size or extent of extraction, scale of op-
eration, and sequence of extraction) as well as operational plans of
a mining operation is well recognized in the mining industry
(Lane, 1988; Hustrulid et al., 2013; Rendu, 2014; Hall, 2014). Not
only this explains the overarching impact of cut-off grade policy
on an ideal mining system (mine, processing plant, and renery)
but also this establishes the relevance as well as the signicance of
the procedures or models that dene or develop this policy.
1.1. Inputs to cut-off grade models
A grasp on the nature of inputs to cut-off grade models is
fundamental to the understanding of these models. Accordingly,
the cut-off calculation models consider economic, geological, and
operational parameters as inputs (Taylor, 1972; King, 2001).
The economic parameters include metal selling price ($ per
tonne of metal, $ per pound of metal, or $ per gram of metal),
rening, market and/or sales cost ($ per tonne of metal, $ per
pound of metal, or $ per gram of metal), mining cost ($ per tonne
of material), processing cost ($ per tonne of ore), xed or period
cost ($ per period or year), and discount rate (%).
An orebody model delineating the resource mineralization on a
block-by-block basis becomes the primary geological input. De-
pending upon the size of the orebody, a typical orebody model

http://dx.doi.org/10.1016/j.resourpol.2016.05.005
0301-4207/& 2016 Elsevier Ltd. All rights reserved.
 M.W.A. Asad et al. / Resources Policy 49 (2016) 142152 143

Metals or Final constitutes several thousand mining blocks, with location (spatial
Stockpiles Run of Mine Products coordinates), metal content (grade), and quantity of material
Leach
(tonnes) associated to each mining block. Fig. 2 presents a hy-
Potential Ore

pothetical copper orebody model, both in complex three-dimen-

Processing Streams
Crushed Leach sional and relatively simple two-dimensional structures.
Ore Concentrates However, this primary geological input is then translated into
Mine Refinery
grade-tonnage curve or distribution that constitutes grade cate-
Flotation gories/increments along with corresponding quantity of material
Waste

(tonnage) within each grade category/increment (Dagdelen, 1992).

- In generalized form, a grade increment in the grade-tonnage curve
Others consists of the lower ( gl ) and upper ( gu ) grades and the available
Waste Dumps - Tailings
quantity of material ( q) between gl and gu , and if the grade-ton-
nage distribution of the mineralization consists of k individual
Fig. 1. Layout of an ideal open pit mining system.
categories, then it may be represented as
( g1, g2 ) , q1 , ( g2, g3 ) , q2 , , gk,gk + 1 , qk , with Q as the total
( )
quantity of available resource between g1 and gk + 1 (Lane, 1988;
Taylor, 1984). Fig. 3 shows the grade-tonnage distribution of a
hypothetical mineralization (Hustrulid et al., 2013).
Finally, the operational parameters include mining, processing,
and rening capacities, and metallurgical recovery. Tables 1 and 2
present a hypothetical data that may be used in description and
comparison of various cut-off grade models.
Given the overall objective of a mining operation, it is the
general understanding within the mine planning community that
an optimal cut-off grade policy, derived from these inputs, would
identify the best possible schedule of cut-off grades and the cor-
0.00 0.20 0.00 0.00 0.15 responding quantities of material to be mined (Qm), ore to be
processed (Qc ), metal to be rened (Qr ), and the cash ows to be
generated (CF ), such that the NPV of the operation is maximized
0.13 0.00 0.26 0.14 0.00 subject to the operational (i.e., mining (M ), processing (C ), and
rening (R )) capacities.
Realizing the importance of the procedures that dene such
0.29 0.35 0.27 0.00 0.25 policy, this paper presents a comprehensive review of cut-off
grade models. As such, in the following sections, we discuss the
details of breakeven model, Lane's model, extensions in Lane's
0.21 0.41 0.25 0.28 0.18 model, stochastic models, and mathematical programming mod-
els. Possible areas of future research are discussed in the con-
cluding remarks.
0.00 0.29 0.46 0.43 0.00

2. Breakeven model

The traditional or breakeven model takes the metal selling

price ( s ), rening, market and/or sales cost ( r ), mining cost ( m),
Fig. 2. A hypothetical orebody model (grade in %Cu) in 3D (left) and 2D (right)
processing cost ( p), metal content or grade ( g ), and metallurgical
views. recovery ( y ) as inputs, and derives the prot ( P ) per tonne of
material as follows (Henning, 1963; Taylor, 1972, 1984):

25
20
Tonnage (Tonnes in Million)

20
16
Tonnage (Tonnes in Million)

12 15

8 10

4 5

0 0
0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 0.0-0.5 0.5-1.0 1.0-1.5 1.5-2.0 2.0-2.5 2.5-3.0 3.0-4.0
Grade (% Cu) Grade Category Interval (% Cu)

Fig. 3. The grade-tonnage distribution of a hypothetical copper deposit.

144 M.W.A. Asad et al. / Resources Policy 49 (2016) 142152

Table 1 decision is whether a mining block is mined or otherwise (or

Economic and operational parameters of a copper mining operation (Lane, 1964). whether it is inside the ultimate pit limit or otherwise), i.e. any ore
block with value ( V ) that covers the cost of removing overlying
Description Value
waste would be included inside the ultimate pit limit.
Copper price (s ) $550.00 per tonne Once an ultimate pit limit is established (irrespective of the
Rening, marketing or sales cost (r ) $50.00 per tonne nature, whether ore or waste, all mining blocks within the ulti-
Mining cost (m) $0.50 per tonne mate pit limit will be mined), the next decision is whether a
Processing cost (p) $0.60 per tonne
mining block should be sent to the processing streams or waste
Fixed or period cost (f ) $4,000,000.00 per year
Metallurgical recovery (y ) 90%
dumps. At this stage, a mining block that is capable of covering the
Discount rate (d ) 15% processing and rening, marketing, and/or sales costs shall be sent
Mining capacity (M ) 20,000,000 t per year to the processing streams; otherwise, it shall be hauled to the
Processing capacity (C ) 10,000,000 t per year waste dumps. This leads to the modied Eq. (2) that denes the
Rening capacity (R ) 90,000 t per year processing cut-off grade as follows:
p
=
Table 2 ( s r ) y (3)
Grade-tonnage distribution of copper mineralization (Lane, 1964).
As opposed to the mining cut-off grade that takes the orebody
Grade increments (%) Quantity q (tonnes) model (Fig. 2(a)) as the geological input, this processing cut-off
grade considers the grade-tonnage distribution/curve of the de-
gl gu
posit (Fig. 3) within the ultimate pit limit and denes the cut-off
0.0 0.15 14,400,000 grade policy over the life of operation (until exhaustion of re-
0.15 0.20 4,600,000 serves). Given the inputs in previous section, Table 3 presents a
0.20 0.25 4,400,000 cut-off grade policy derived from the breakeven model.
0.25 0.30 4,300,000
0.30 0.35 4,200,000
Aligning with the breakeven model, Vickers (1961) presents a
0.35 0.40 4,100,000 graphical approach based marginal analysis for dening the cut-off
0.40 0.45 3,900,000 grade, as it assumes that the mining rm would be maximizing
0.45 0.50 3,800,000 total prot as in case of breakeven cut-off grades. However, al-
0.50 0.55 3,700,000
ternative to constant cut-off grades in breakeven model are
0.55 0.60 3,600,000
0.60 0.65 3,400,000 available. In this context, Henning (1963) provides a framework of
0.65 0.70 3,300,000 relationships for cut-off grade calculation with varying enterprise
0.70 1.56 42,300,000 objectives, and it conrms that the cut-off grade may not remain
constant if the objective is to maximise the difference between
present value of annual operating prot and associated costs, ra-
P =( s r ) gy mp (1)
ther it would be higher during earlier years and lower during later
Consequently, at breakeven point, the Eq. (1) yields breakeven years, nally reducing to the breakeven value that corresponds to
cut-off grade as follows: the objective of maximizing the difference between revenue and
cost. Dagdelen (1992) also explains similar strategies for increas-
m +p ing the value of breakeven cut-off grade during the initial periods
=
( s r ) y (2) of an open pit mining project.
However, irrespective of these variations, it is evident that in
In this model, depending on the mineral commodity, Eq. (2)
the cut-off policy derived from the breakeven model, Eq. (3) plays
calculates the value of in %, grams per tonne, pounds per tonne,
an exclusive role in the cut-off grade calculation, and as a funda-
or ounces per tonne.
mental aw, not only this calculation ignores the grade-tonnage
Moreover, as part of the strategic mine planning activity, Eq. (2)
distribution of the available mineralization, but also it disregards
nds its application in dening the size or extent of extraction, i.e.,
the operational capacities, and consequently, leads to a schedule of
the ultimate pit limit (Dagdelen, 1992). In this context, is used as cut-off grades that remain constant over the life of operation
a mining cut-off grade, and it identies the ore and waste blocks (Taylor, 1972).
within the orebody model (a mining block with metal content or
grade greater than becomes an ore block, or otherwise), the
value ( V ) of ore and waste blocks is then calculated using Eq. (1), 3. Lane's model
and nally an application of the graph theory based algorithms
generates the ultimate pit limit. Conceptually, at this stage, the Unlike breakeven model, the cut-off grade calculation in Lane's

Table 3
Cut-off grade policy derived from the breakeven model.

Year Cut-off Grade, (%) Average Grade, g (%) Qm (tonnes) Qc (tonnes) Qr (tonnes) CF ($) NPV ($)

1 0.1333 0.7538 11,467,890 10,000,000 67,844 18,187,987 85,337,863

2 0.1333 0.7538 11,467,890 10,000,000 67,844 18,187,987 79,950,555
3 0.1333 0.7538 11,467,890 10,000,000 67,844 18,187,987 73,755,151
4 0.1333 0.7538 11,467,890 10,000,000 67,844 18,187,987 66,630,436
5 0.1333 0.7538 11,467,890 10,000,000 67,844 18,187,987 58,437,014
6 0.1333 0.7538 11,467,890 10,000,000 67,844 18,187,987 49,014,579
7 0.1333 0.7538 11,467,890 10,000,000 67,844 18,187,987 38,178,778
8 0.1333 0.7538 11,467,890 10,000,000 67,844 18,187,987 25,717,607
9 0.1333 0.7538 08,256,880 07,200,000 48,848 13,095,351 11,387,262
 M.W.A. Asad et al. / Resources Policy 49 (2016) 142152 145

Qm
model not only considers the grade-tonnage distribution of the t = M , with the opportunity cost ( f + vd
) to be distributed per unit
mineralization, but also it honours the production capacities of of material mined, also, if processing plant is limiting the opera-
various components of the mining operation. The model aligns Qc
tion, then t = C , with the opportunity cost ( f + vd ) to be covered
with the overall objective of a mining operation, as it maximises by each unit of ore processed, and nally, if renery or market is
the NPV subject to the mining, processing, and rening capacity Qr
responsible for delaying the operation, then t = R , with the op-
constraints. (Eqs. (4)7) present the general mathematical for-
mulation of the Lane's model (Lane, 1964, 1988): portunity cost ( f + vd
) to be distributed per unit of metal rened
or marketed. Eqs. (1416) reect these scenarios:
T
Pt
NPV = t
QmpQc
f +vd
t = 1 ( 1+d ) (4) vm=( s r ) Qr m+
M (14)
Subjected to
Qc
f +vd
Qmt M ,t (5) vc =( s r ) QrmQm p+
C (15)
QctC ,t (6)
f +vd QrmQmpQc
vr = s r +
QrtR,t (7) R (16)

Here, Pt =( s r ) Qrt mQmt pQct ft is the cash ow or prot
realized by mining Qm quantity of material, processing Qc quantity
of ore, and rening or marketing Qr quanity of metal during time
period t . Thus, over the life of operation (T ), the model aims to
dene a schedule of cut-off grades ( t T ), such that the NPV is
maximized by satisfying the constraints Eqs. (5)(7).
In this context, given the grade-tonnage distribution and pro-
duction capacities, if gl is considered as the cut-off grade, then the
quantity of waste ( qw ), the quantity of ore ( qo ), and the average
grade of ore ( g ) as a function of this cut-off may be dened, which
leads to the following relationships:
C; ifq > C
o
Qc =
qo; otherwise
q
Qm=Qc 1 + w
qo
Qr =Qc ( g y)
Now, if next Qm quantity of material in Eq. (9) is mined over
time period t , then a cash ow Pt will be realized at the end of
period t . However, after mining Qm, Q Qm quantity of the re-
serves still remains available, and if it is scheduled to be mined
from time period t + 1 to T , with possible cash ows Pt + 1 to PT , W
as the corresponding present value of these cash ows in time t ,
and v as the overall present value of future cash ows generated
from time t to T . Fig. 4 presents this situation in a time-diagram.
P PT
While, W = t + 1 1 + + T t
, v becomes:
( 1 + d) ( 1 + d)
Pt +W
v=
( 1+d)t
Thus, an increase in the present value ( v ) by mining next Qm
quantity of material may be derived from Eq. (11) as follows:
v=v W =Pt vdt
Substituting Pt in Eq. (12) yields:
v=( s r ) QrmQmpQc( f +vd
)t
Now, time t is purely dependent upon the limiting production
capacity during this period, i.e., if mine is the bottleneck, then
Fig. 4. Presentation of the cash ows and the present value in Lane's model.
Finally, the optimum value of cut-off grade ( ) thus requires a
calculation of the increase in present values vm , vc , and vr as a
function of gl . Fig. 5 shows a graphical presentation of these
functions.
According to the Lane's model, Fig. 5 depicts that the curve vm
relates to the mine being a bottleneck in the system (i.e., Eq. (5) is
an equality), and the grade at the maximum value of vm corres-
ponds to the mine limiting cut-off grade ( m ); the curve vc relates
to the processing plant being a bottleneck in the system (i.e., Eq.
(6) is an equality), and the grade at the maximum value of vc
corresponds to the process limiting cut-off grade ( c ); and the
curve vr relates to the renery or market being a bottleneck in the
system (i.e., Eq. (7) is an equality), with the grade at the maximum
(8) value of vr corresponding to the renery or market limiting cut-off
grade ( r ).
Moreover, the point of intersection of curves vm and vc shows
that both mine and processing plant are bottleneck (i.e., (Eqs.
(9) (5) and 6) are equalities), and the grade at this point corresponds
to the mine and processing plant balancing cut-off grade ( mc ),
(10) ensuring that both components produce at their maximum
throughput. Also, the point of intersection of curves vm and vr
shows that both mine and renery are bottleneck (i.e., (Eqs.
(5) and 7) are equalities), and the grade at this point corresponds
to the mine and renery balancing cut-off grade ( mr ). Likewise,
the point of intersection of curves vc and vr shows that both
processing plant and renery are bottleneck (i.e., (Eqs. (6) and 7)
are equalities), and the grade at this point corresponds to the
process and renery balancing cut-off grade ( cr ).
While, the optimum cut-off grade ( ) is one of the six limiting
and balancing cut-off grades, Fig. 5 shows that any value of less
than r or cr will result in violation of the processing plant capacity
constraint (Eq. (6)), and any value of greater than r or cr would
(11)
not only violate the renery or market capacity constraint (Eq. (7)),
but a further increase in would require excessive mining of waste
material, so that the access to high-grade ore becomes possible,
resulting in violation of the mine production capacity constraint
(12)
(Eq. (5)). This reveals that as given in Fig. 6, the optimum cut-off
grade ( ) corresponds to the maximum value vmax among the
minimums from functions vm , vc , vr , and this general rule is pre-
(13) sented as (Lane, 1988):
vmax ( )=max min ( vm, vc , vr ) (17)
Given the complexity and a number of repetitive iterations in
these calculations, it is best to implement the Lane's model
through an algorithm. Table 4 presents the cut-off grade policy
derived from the Lane's model that has been generated using such
an algorithm.
Table 4 shows that as opposed to the cut-off grade policy based
146 M.W.A. Asad et al. / Resources Policy 49 (2016) 142152

16

14

12

10
($ millions)

0
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80
Grade (% Cu)

Fig. 5. A graphical presentation of, vm , and vc as a function of gl .

on the breakeven model, Lane's model not only demonstrates a
substantial increase in NPV, but also it establishes a dynamic cut-
off grade policy, ensuring higher cut-off grades during early years
of operation, with a subsequent decrease during later years, linked
with the exhaustion of reserves. This exclusive attribute in Lane's
model allows the management of stockpiles between the lowest
(0.2396%) and the highest (0.5036%) cut-off grade values. For ex-
ample, during year 1, any material with grade greater than or
equal to 0.2396% and less than 0.5036% would be sent to the
stockpiles, as it may be retrieved for processing as soon as it be-
comes economical, either during the mine life or after the ex-
haustion of reserves within the ultimate pit limit. Table 5 presents
the cut-off grade policy with the option to stockpile, which in-
dicates a further increase in the life as well as NPV of the
operation.
3.1. Extensions in Lane's model
Lane's model is the pioneer work that describes the general
theory of cut-off grades as well as its relevance to the mine
planning aspects of an open pit mining operation. As explained in
previous sections, a careful comparison of both Lane and break-
even models demonstrates the signicance of Lane's model, and
this became a reason for its large-scale acceptance in the mining
industry. Today, not only the Lane's model has been implemented
in the standard strategic mine planning software (Whittle and
Vassiliev, 1998), but also several extensions of the original Lane's
model are available.
In this context, Mol and Gillies (1984) suggest an improvement
into traditional cut-off models (breakeven and Lane), such that it is
relevant to the iron mining operations, where market driven
contracts dene the required grade specications, thus max-
imization of the marketable reserves is the priority, and material
blending to achieve required grade specications becomes
imminent.
Dagdelen (1992, 1993) present the steps of algorithm for im-
plementation of the Lane's model and a case study that conrms
the benets of this model. Through examples, it demonstrates that
mining companies recognize the value of using higher cut-off
grades during early years of a mining operation, as it generates
higher cash ows, ensuring an early return of the capital invest-
ments. Also, Dagdelen (1993) provides more insights into

16

14

12

10
($ millions)

0
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80

Grade (% Cu)

Fig. 6. Choosing the optimum value in Lane's model.

 M.W.A. Asad et al. / Resources Policy 49 (2016) 142152 147

Table 4
Cut-off grade policy derived from the Lane model.

Year Cut-off Grade, (%) Average Grade, g (%) Qm (tonnes) Qc (tonnes) Qr (tonnes) CF ($) NPV ($)

1 0.5036 0.9999 17,847,221 10,000,000 89,997 26,074,739 95,765,702

2 0.5034 0.9998 17,847,221 10,000,000 89,985 26,071,221 84,055,818
3 0.4590 0.9705 16,831,262 10,000,000 87,339 25,254,067 70,592,970
4 0.4106 0.9389 15,829,898 10,000,000 84,471 24,320,538 55,927,848
5 0.3581 0.9035 14,828,295 10,000,000 81,314 23,242,717 39,996,487
6 0.3011 0.8655 13,848,932 10,000,000 77,902 22,026,447 22,753,244
7 0.2396 0.8248 02,971,851 02,303,661 17,101 04,760,751 04,139,784

Table 5
Lane's model based cut-off grade policy with stockpiles.

Year Material Source Cut-off Grade, (%) Average Grade, g (%) Qm (tonnes) Qc (tonnes) Qr (tonnes) CF ($) NPV ($)

1 Mine 0.5036 0.8100 17,847,221 10,000,000 89,997 26,074,739 97,399,414

2 Mine 0.5036 0.8100 17,847,221 10,000,000 89,997 26,074,739 85,934,586
3 Mine 0.4670 0.7903 17,004,459 10,000,000 87,809 25,402,434 72,750,035
4 Mine 0.4198 0.7651 16,010,921 10,000,000 85,010 24,499,351 58,260,107
5 Mine 0.3686 0.7375 15,020,620 10,000,000 81,944 23,461,819 42,499,772
6 Mine 0.3132 0.7076 14,046,817 10,000,000 78,620 22,286,569 25,412,919
7 Mine 0.2535 0.6756 02,222,742 01,695,897 12,730 03,557,755 06,938,289
8 Stockpile 0.2396 0.2813 10,000,000 10,000,000 31,252 03,375,911 04,421,277
9 Stockpile 0.2396 0.2813 05,820,183 05,820,183 18,189 01,964,842 01,708,558

balancing cut-off grades, and shares linear interpolation as an al-
ternative procedure to graphical approach in Lane (1964, 1988),
which is more suitable for algorithmic implementations.
Whittle and Vassiliev (1998) conrm that changes in proces-
sing costs, recoveries, and capacities impact the cut-off grade
calculation in Lane's model, and consequently, based on a sto-
chastic liberation modelling technique, it provides a recovery
prediction system, which feeds variable predicted values for re-
coveries (as opposed to the constant and average values for re-
covery) as an input to the Lane's model. Whittle and Wooller
(1999) establish the relevance between the cut-off grade and the
subsequent milling time, apply the stochastic liberation modelling
technique in Whittle and Vassiliev (1998), and simultaneously
optimise the performance of the comminution circuit and pro-
cessing cut-off grade in the Lane's model. Wooler (2001) also ap-
plies Whittle programming's Opti-Cut (a commercial im-
plementation of the Lane's model) for dening the optimal strat-
egy for a milling operation, and a simultaneous optimization of the
mine cut-off grade and mill throughput.
Nieto and Bascetin (2006) as well as Bascetin and Nieto (2007)
modify the opportunity cost concept in (Eqs. (14)16) with an
optimization factor, and realizing the non-linear nature of the
model implement the Generalized Reduced Gradient (GRG) algo-
rithm to generate solution through their modied model. The
optimization factor is introduced to address the convergence of
NPV over a number of steps in the iterative process, which con-
sequently leads to an improvement in overall NPV of the
operation.
Asad (2007) incorporates commodity price and operating cost
escalation into the basic Lane's model. Thus, the commodity price
and operating costs do not remain constant during the life of
operation, rather depending upon the dened escalation rates,
these economic parameters vary from one year to next. Therefore,
this study offers a relatively realistic cut-off grade policy. An ap-
plication of the algorithm at a hypothetical copper deposit de-
monstrates the impact of these changes on overall NPV of the
operation. While a sensitivity analysis in this study delineates the
relative importance of escalation in economic parameters, Asad
and Topal (2011) complement stockpiling option in Asad (2007).
Asad and Topal (2011) present the mathematical formulation for
creation of stockpiles, describe the strategy to reclaim the stock-
pile material after exhaustion of in-pit reserves, compare the cut-
off grade policies with and without stockpiling, and demonstrate
the benets in terms of increase in NPV and life of operation.
Osanloo et al. (2008) modify and improve the basic Lane's
model by incorporating the environmental issues specic to the
porphyry copper deposits. Apart from the traditional framework in
basic Lane's model, this modied model accounts for separate
waste dumps and tailing dams for acid and non-acid generating
wastes. Consequently, the mathematical formulation in (Eqs. (13)
17) includes the operating costs associated to the disposal of these
wastes to the waste dumps and nally to the tailing dams. An
application of this model not only reects an improvement in NPV
as compared to the basic Lane's model, but also it ensures the
environmental sustainability of the open pit mining operations.
Similarly, Narri and Osanloo (2015) suggest a sustainable mining
model through a reduction in the undesirable impacts of en-
vironmental issues associated to the open pit mining, and their
improved Lane's model that denes different types of wastes, not
only incorporates the environmental costs, but also considers the
possible revenues from waste rock reclamation.
He et al. (2009) apply a combination of the genetic algorithm
and neural networks nesting method for dynamic optimization of
cut-off grades. This study realizes the complexity and non-linear-
ity of the basic model and offers a solution through evolutionary
approaches. More specically, a neural network establishes the
local link between the revenue factor ((Eqs. (14)16)) and chro-
mosomes ( gl ), and genetic algorithm performs a search for the
optimal cut-off grade globally by satisfying (Eq. (17)). An applica-
tion of the method at an actual iron mine suggests changes in the
present scheme of cut-off grades, which leads to substantial im-
provement in NPV.
Gholamnejad (2008, 2009) introduces waste dump rehabilita-
tion cost into the prot function of the basic Lane's model, which
leads to the change in relationships for vm , vc , vr ((Eqs. (14)16)),
with a consequent shifting of the optimum point . A case study of
this modied model demonstrates that inclusion of the waste
dump rehabilitation cost leads to a reduction in the value of ,
coupled with a consequent decrease in the quantity of waste sent
to the waste dumps, which indirectly translates into the benet of
processing low-grade ores.
148 M.W.A. Asad et al. / Resources Policy 49 (2016) 142152
King (2009) relies on the initial works in King (1999, 2001,
2004) and then builds on the terminology in the basic Lane's
model to explain the intricacies in practical applications of Lane's
approach. It outlines the details of various possible strategies and
their implications specic to the operating and administrative cost
modelling. For example, it suggests change in the prot and cut-off
grade formulations by separating the cost of mining ore and waste
as two components, because some operations pay relatively less
cost on blasting waste and haulage cost for both ore and waste is
always different.
Rendu (2009) summarizes the Lane's theory of cut-off grades,
modies the basic cut-off grade relationships such that they are
applicable in a variety of situations, and demonstrates the differ-
ence between cut-off grade policies that maximize NPV or internal
rate of return (IRR). It also classies the inputs into naturally xed
(mineralization) and human controlled (economic and technical)
variables, and establishes that the complex relationship between
both classes of variables must be considered for dening the op-
timal cut-off grade strategies. The paper outlines that under NPV
maximization regime, the cut-off grade policy would be in-
dependent of the past investments, i.e. it relates to the past in-
vestments indirectly through the imposed capacity constraints.
However, in IRR maximization regime, the discount rate remains a
function of the initial investment, and at the beginning of rst
period, the NPV at this discount rate would neutralize the initial
investment.
Abdollahisharif et al. (2012) incorporate the concept of variable
production capacities in the basic Lane's model. This modied
model sets the renery capacity to the market demand and derives
the processing and mining capacities as a function of cut-off grade
and renery capacity. Even though, as opposed to an accepted
mathematical procedure in Lane's model, this study shares a re-
latively crude framework for dening the optimum cut-off grade;
nevertheless, a comparison with basic Lane's model and Gho-
lamnejad (2009) reects a higher NPV using this variable capacity
based model. This improvement in NPV is attributed to the sche-
dule of cut-off grade that ensures processing of low-grade ore and
sends less waste material to the waste dumps.
Khodayari and Jafarnejad (2012) reform the Lane's model such
that it maximizes the quantity of metal ( Qr ) to be produced per
year. The mathematical formulation in this method relies on the
conceptual framework for balancing cut-off grades in Lane's
model, and the step-by-step derivation of the method reects that
the maximum quantity of metal would be possible only if the
optimum cut-off grade remains equal to the mine and process
balancing cut-off grade ( mc ).
Gama (2013) utilizes a modied form of the prot function for
nding the optimum value of cut-off grade in Lane's model. More
specically, it relies on the derivation of minimum allowable cut-
off grade and maximum allowable stripping ratio (the ratio of
quantity of waste to the quantity of ore), and then the optimum
cut-off grade is dened such that it is never less than the mini-
mum allowable cut-off and the corresponding stripping ratio
never exceeds maximum possible waste stripping. The paper de-
monstrates the value of the procedure through a sensitivity ana-
lysis based on variation in commodity selling price.
Hustrulid et al. (2013), Rendu (2014) provide a comprehensive
overview of both breakeven and Lane's models, describe the in-
tricacies in application of the Lane's model in open pit and un-
derground mining situations, and share valuable case studies with
different stockpiling strategies.
Rahimi and Ghasemzadeh (2015) and Rahimi et al. (2015a,
2015b) utilize Lane's model as a basis for sharing a novel approach
towards the calculation of cut-off grade policy that simultaneously
considers bio-heap leaching and concentration as processing
methods, associated environmental concerns, variable recoveries,
capital costs, and present an evaluation of their proposed models
in real-life case studies. More specically, Rahimi et al. (2015b)
focuses on the development of optimal cut-off grade policy under
the impact of environmental costs associated to low-grade copper
mining operations, where copper is recovered through the appli-
cation of environmentally sensitive hydrometallurgical methods.
An implementation of the mathematical models and proposed
algorithm in a case study reects an improvement in NPV as
compared to the original Lane's model.
Whereas, the contributions discussed above focused on the
extension in Lane's model applicable to the mineral deposits with
single economic mineral, Lane (1984) as well as Lane (1988) pro-
posed a vital extension into the original model (Lane, 1964), al-
lowing cut-off grade calculation for mineral deposits with multiple
economic minerals.
Lane (1984) overruled the perception that the cut-off grade
calculation procedure for ore bodies with single economic mineral
remains valid for dening cut-off grades for mining operations
dealing with multiple economic minerals. More specically, it
questioned the application and accuracy of the methods that re-
sort to alterations of the realistic grade-tonnage distributions, by
mere conversion of the primary and secondary mineral grades into
a single equivalent grade (Osanloo and Ataei, 2003). Such con-
versions would be unrealistic if one of the economic minerals is
subject to market or demand limitation. Alternatively, a mining
operation that is producing two economic minerals requires re-
ning or marketing component for two (primary and secondary)
metals, and with the addition of a renery/market, the structure of
(Eqs. (14)16) updates as follows:
QmpQc
f +vd
vm=( s1r1) Qr1+( s2r2 ) Qr2 m+
M (18)
Qc
f +vd
vc =( s1r1) Qr1+( s2r2 ) Qr2mQm p+
C (19)
vr1= s1 r1+ Qr +( s r ) Qr mQmpQc
f +vd
1 2 2 2
R1 (20)
Qr mQmpQc
f +vd
vr2=( s1r1) Qr1+ s2 r2+ 1
R2 (21)
Here, s1= selling price of metal 1, s2= selling price of metal 2, r1=
rening or marketing cost of metal 1, r2= rening or marketing
cost of metal 2, Qr1= quantity of metal 1 to be rened/marketed,
Qr2= quantity of metal 2 to be rened/marketed, R1= rening or
marketing capacity for metal 1, and R2= rening or marketing
capacity for metal 2.
This indicates that as opposed to a single optimum cut-off
grade ( ) dening ore and waste on the grade-tonnage curve, an
intercept between 1, 2 identies the ore and waste on the grade-
tonnage distribution in two minerals case. Fig. 7 shows this in-
tercept on a surface representing the grade-tonnage distribution in
this scenario (Lane, 1988). This leads to an update in Eq. (17) as
follows:
vmax ( 1, 2 )=max min ( vm, vc , vr1, vr2 ) (22)
The convergence at the optimum values for 1 and 2, and
consequently the solution to Eq. (22) is a challenge. Lane (1984),
(1988) utilize grid search technique as a solution approach to this
problem, as well as share the implementation of this technique in
a case study. Again, a number of studies (Dagdelen and Asad, 1997;
Cetin and Dowd, 2002; Osanloo and Ataei, 2003; Ataei and
Osanloo, 2003a, 2003b, 2004; Asad, 2005; Cetin and Dowd, 2013;
Nieto and Zhang, 2013) then followed as an extension to the Lane's
 M.W.A. Asad et al. / Resources Policy 49 (2016) 142152
Fig. 7. Grade-tonnage distribution of the deposit in two-minerals case (Lane, 1988).
model in two minerals case.
Dagdelen and Asad (1997) implement grid search technique,
provide a sensitivity analysis based on a variation in production
capacities, and relate the resultant cut-off grade policy with after-
tax cash ow analysis.
Cetin and Dowd (2002) argue that in multi-minerals case
equivalent grade-tonnage distribution is valid only in situations
where a strong correlation exists among the constituent minerals.
This study then implements genetic algorithm as a search method
for dening the cut-off grades and provides a comparison with the
grid search method outlined in Lane's approach (Lane, 1988).
Osanloo and Ataei (2003) introduce an equivalent grade factor
in Lane's model and employ golden section search method for
dening the cut-off grade policy. Ataei and Osanloo (2003a) use
Lane's model and provide a comprehensive overview of the golden
section search method (without dening the equivalent grade
factor), along with its application for nding the optimum values
of the cut-off grades in a copper-molybdenum ore body. Ataei and
Osanloo (2003b) present an overview of the application of genetic
algorithm, golden section search method, grid search technique,
and equivalent grades method for Lane's model, and share im-
plementation of these methods in their computer program, along
with a case study on a lead-zinc orebody. Ataei and Osanloo
(2004) use Lane's model and share the implementation of an al-
gorithmic structure that employs a sequential application of both
grid search technique and genetic algorithm, such that a rened
search for the optimal values of cut-off grades in a lead-zinc ore-
body is ensured.
Asad (2005) addresses the management of stockpiles in two
minerals case, employs grid search technique, and presents a step-
by-step procedure in an algorithm implementing this extension in
the Lane's model. Cetin and Dowd (2013) improve the Lane's
model for mining operations dealing with more than two eco-
nomic minerals, and share an application of the grid search
technique in such situations. Nieto and Zhang (2013) present an
algorithm that implements Lane's model with equivalent grade
distribution, and share a valuable sensitivity analysis that accounts
for variation in price of by-product (secondary mineral) in a rare
earth case study.
4. Stochastic models
The metal selling price and grade-tonnage distribution are
among the most important inputs for the development of the cut-
149
off grade policy. While, the conventional studies discussed in the
breakeven and Lane's model consider the constant (deterministic)
values for metal selling price and the grade-tonnage distribution,
in reality, being merely estimated values during the life of a
mining operation, both parameters are subject to change or
variation.
The variation in metal selling price is market driven, and the
impact of this change on mining operations is enormous, specially,
during the periods of economic downturn or declining metal pri-
ces (Abdel Sabour and Dimitrakopoulos, 2011). Similarly, the var-
iation in grade or metal content spans over the extent of the
orebody, and given that the grade-tonnage curve is derived from
an orebody model, the uncertainty in supply of ore to the pro-
cessing streams is natural, which nally translates into an en-
ormous impact in terms of meeting the production targets. It has
been reported that premature closure of mining operations is in-
stigated mainly due to poor description (under- or over-estima-
tion) of the ore body or forecasted metal prices (Baker and Gia-
como, 1998; Vallee, 2000).
Not only this validates that cut-off grade policies derived from
constant inputs for metal selling price and grade-tonnage curve
may be biased or unrealistic, but also it demonstrates the im-
portance of stochastic models for dening the cut-off grade policy
under market and/or grade uncertainties (Dimitrakopoulos, 2011).
Therefore, as opposed to using the constant or known values for
metal selling price and grade-tonnage distribution in conventional
models, the stochastic models consider multiple equally probable
realizations of the metal selling price and/or grade-tonnage dis-
tribution (Goodfellow and Dimitrakopoulos, 2016). Therefore, if
is an indicator for a price or grade-tonnage distribution realization,
then metal selling price would be represented as s , and accord-
ingly, if the grade-tonnage curve of the mineralization consists
of k individual categories or increments, then it may be re-
presented as g1, g2 , q1 , g2, g3 , q2 , , gk,gk + 1 , qk ,
( ) ( ) ( )
with Q as the total quantity of available resource between g1 and
gk + 1 (Asad and Dimitrakopoulos, 2013).
Given this new framework of inputs, some contributions
(Dowd, 1976; Krautkraemer, 1988; Mardones, 1993; Cairns and
Shinkuma, 2003; Johnson et al., 2011; Azimi et al., 2012; Asad and
Dimitrakopoulos, 2013; Azimi et al., 2013; Thompson and Barr,
2014) provide an insight into the development of cut-off grade
policy under market and/or grade uncertainty.
Dowd (1976) is the earliest contribution sharing the dynamic
and stochastic programming based cut-off grade models, such
that, the dynamic programming model assumes perfectly pre-
dicted (known or constant) values for selling price, and the sto-
chastic programming model accepts random changes with possi-
ble prediction as probable values. In this study, the stochastic
model uses transition probability matrix for dening the com-
modity price uncertainty, where within a dened range for prices
during the life of operation, probability that the price will move
from one value to another is dened within the matrix. An ap-
plication at a copper deposit shows that the cut-off grade strategy
with stochastic model under uncertain prices generated relatively
higher discounted value as compared to the cut-off grade strategy
with dynamic programming model.
Krautkraemer (1988) initially examines the cut-off grade re-
sponse to change (anticipated increase or decrease) in commodity
price coupled with xed or relaxed mining capacity and declining
ore quality. The model is then extended to describe the cut-off
grade response to unanticipated price change along with the
ability of the mining operation for expansion in mining capacity,
which leads to a conclusion contrary to the industry view of de-
creasing cut-off grade in increasing price regimes. However, the
hypothetical basis on the structure or shape of an orebody does
150 M.W.A. Asad et al. / Resources Policy 49 (2016) 142152
not make this contribution worth applying in real life scenarios.
Mardones (1993) offers an option valuation approach to modify
the available cut-off grade strategy under market or price un-
certainty. The method employs current selling price and develops
a cut-off grade strategy using Lane's model with stockpiling op-
tion, then applies contingent claims analysis or option valuation
framework, which allows the exibility to modify the governing
cut-off grade as a response to the expected selling price. While, an
application of the method at a copper mine demonstrates rela-
tively higher value under varying expected price regimes, a si-
multaneous rather than sequential (two steps) approach would
have generated more value as compared to the traditional models.
Cairns and Shinkuma (2003) present a model that looks into
the possibility of a positive or negative impact of changing price on
cut-off grades, and conclude that not only the description of this
impact is complicated but also the response of the cut-off grades is
mine-dependent, because, the geology (grade-tonnage distribu-
tion) and available technology may play their role, leading to an
increasing or decreasing cut-off grade as price increases.
Johnson et al. (2011) contribute a partial differential equations
based mathematical algorithm that calculates a dynamic cut-off
grade policy under the market uncertainty regime. It presents an
implementation of the proposed algorithm in a real mine case
study and concludes that the decision on a mining block being
sent to the processing streams or waste dump, not only depends
on the commodity price or ore grade, but also the grade of sub-
sequent mining blocks, processing costs, as well as mining and
processing capacities have their signicant role in this decision.
Azimi et al. (2012) share real option and discounted cash ow
analysis based ranking system that implements a combination of
single and multiple criteria for selection of the best strategy
among a number of feasible cut-off grade strategies developed
under selling price uncertainty. More specically, as a rst step,
given a set of equally probable selling price realizations, the al-
gorithm applies Lane's model for the development of all feasible
cut-off grade strategies, where each strategy relates to a unique
selling price realization, and then in second step, ranking system
selects the best among feasible strategies. Also, as part of the real
options evaluation, under a low price regime, the method explores
the exibility to close the mine prematurely during early years of
operation.
Li and Yang (2012) consider the grade uncertainty and model
the cut-off grade calculation as a multi-stage stochastic program-
ming problem. The proposed model and its implementation
through an algorithm are also suitable for application at multi-
mineral mining operations. The solution is generated through the
general reduced gradient approach, where NPV is optimized
iteratively over each production period.
Asad and Dimitrakopoulos (2013) present an extension into the
basic Lane's model, such that, the stochastic framework generates
a risk-quantied cut-off grade policy considering grade un-
certainty as well as a mining operation or complex with multiple
processing streams. The stochastic model takes a set of equally
probable realizations of the grade-tonnage distribution and gen-
erates a unique (single) cut-off grade policy. The study also shares
an application of the method on an actual copper mining complex
that constitutes ve (two otation mills, one bio-leach pad, and an
acid leach plant) ore processing destinations, and the risk analysis
reects a considerable difference between the minimum and
maximum possible NPV, conrming the signicance of stochastic
approaches in low-grade orebodies.
Azimi et al. (2013) incorporate both selling price and grade
uncertainties, and continuing with contribution in Azimi et al.
(2012), it shares real option and discounted cash ow analysis
based ranking system that implements multi-criteria for the se-
lection of the best strategy among a number of feasible cut-off
grade strategies developed under selling price and grade un-
certainties. More specically, as a rst step, given a set of equally
probable selling price and orebody realizations, the algorithm
applies Lane's model for the development of all feasible cut-off
grade strategies, where each strategy relates to a unique selling
price and grade-tonnage curve realizations, and then in second
step, ranking system selects the best among feasible strategies.
Also, the exibility to close the mine prematurely during early
years of operation is built into the system.
Thompson and Barr (2014) consider selling price uncertainty,
formulate the cut-off grades optimization problem as a system of
nonlinear partial differential equations, and solve this formulation
using a numerical approach. The model simultaneously generates
the maximum value based cut-off grade strategy and hedging
statistics for a set of equally probable selling price realizations. An
implementation of the model in a real life scenario establishes that
as compared to the cut-off grade values realized through con-
ventional or deterministic (Lane's model and extensions) models,
the projected cut-off grades are far lower under market un-
certainty regimes as well as long-term valuation horizons, con-
rming the results reected in Asad and Dimitrakopoulos (2013)
that marginal/low-grade orebodies would suffer the most in such
conditions.
5. Mathematical programming models
It has been established that not only Lane's model integrates
grade-tonnage distribution and mining system capacities into the
calculation of cut-off grade policy, but also it may be modied or
extended to incorporate various important dimensions of a rea-
listic mining operations, such as stockpiles, multiple processing
streams, environmental issues, stochasticity of inputs into the al-
gorithmic implementation of the model. However, the inherent
assumptions and nature of the procedure in Lane's model as well
as these additional considerations contribute to the complexity of
the problem, which makes it prone to miss the optimum values for
cut-off grades (Asad, 2005).
Therefore, the basic Lane's model remains heuristic, and it in-
dicates the need to develop and implement mathematical pro-
gramming models, ensuring the optimal solution to the problem
(Dagdelen and Kawahata, 2007, 2008). While, the application of
mathematical programming approaches to open pit mine design
and production scheduling dates back to 1960s, realizing the
limitations of Lane's model, a very few applications (Dagdelen and
Kawahata, 2008; Ganguli et al. 2011; Azimi and Osanloo, 2011;
Yasrebi et al. 2015) of mathematical programming approach for
cut-off grade optimization are available.
Dagdelen and Kawahata (2007, 2008) share mathematical
modelling framework, considerations, and applications of mixed
integer linear programming (MILP) formulation for dening the
optimal cut-off grade policy for an open pit mining operation that
constitutes multiple mines as material sources and multiple
dumps, stockpiles, and processing streams as material destina-
tions. More specically, Dagdelen and Kawahata (2007) look into
the variety of possible situations for the successful application of
MILP model. Also, Dagdelen and Kawahata (2008) present the
application on a gold mining operation considers four processing
options, including, run-of-mine leach, crushed ore leach, otation
circuit with concentrates fed to autoclave mill, and direct feed to
autoclave mill, and as part of the year-by-year production sche-
dule, the formulation seeks to dene a set of four different cut-off
grades per year, each corresponding to the relevant processing
stream. A comparative analysis of the cut-off grade policies with
and without stockpiles provides further insights into operational
intricacies. While, these articles describe the conceptual
 M.W.A. Asad et al. / Resources Policy 49 (2016) 142152
framework for MILP model, being part of the OptiMine software,
they do not share the actual mathematical formulation.
Ganguli et al. (2011) utilizes the conceptual framework similar
to the one contributed in Dagdelen and Kawahata (2007, 2008);
however, rather than focusing on a particular case study, it shares
a generalized form of the model, and describes the details of the
MILP formulation as well. It is evident that this generalized MILP
takes economic parameters and grade-tonnage distribution of the
deposit as an input, maximizes NPV of the operation, satises re-
serve, production capacity, blending, as well as mine sequencing
constraints, and solves for a multi-period production schedule
based on the optimal cut-off grade policy.
Moosavi et al. (2014) propose a mixed integer programming
model that offers simultaneous solution to both mining sequence
and cut-off grade optimization problems. The method considers
multiple ore destinations or processing streams along with equally
probable realizations of the orebody model, and with these vari-
able inputs, it calculates the expected economic loss associated to
a mining block. The mathematical formulation minimizes this
economic loss and satises the production capacity, reserve, and
precedence constraints. While an application at gold deposit de-
monstrates the method, the details on the size of mathematical
model and the possible solution strategies to counter the com-
putational complexities of MILP models are not discussed.
Yasrebi et al. (2015) considers the conceptual framework as
well as the structure of the inputs described in Lane's model,
formulates the cut-off grades problem as a non-linear program-
ming model, and presents an application of this model on a hy-
pothetical data given in Hustrulid et al. (2013). However, a com-
parison of the cut-off grade policy derived from this non-linear
model with an implementation of the Lane's model in Hustrulid
et al. (2013) suggests no improvement in NPV, indicating that
Lane's model generated an optimal solution for this hypothetical
data.
6. Concluding remarks
While breakeven model provides a basic understanding into
the calculation of cut-off grades, the drawbacks of its application
to realistic, large-scale, and complex open pit mining operations
are obvious, as it is proven that keeping a constant cut-off grade
throughout the life of operation allows exposure to serious eco-
nomic risks.
Lane's model not only overcomes the deciencies in breakeven
model but also apart from the importance of economic inputs, it
recognises the production based limitations of a mining operation
as well as the relevance of the grade-tonnage distribution. Thus, it
follows a systematic approach to dene an optimal cut-off grade
policy, which becomes a valid reason for its acceptability in both
mining industry and academia. Specially, the extensions in both
basic (single mineral) and multiple-minerals based Lane's models
are a proven evidence of its exibility or adaptation to im-
plementation under varying inputs and solution approaches.
These extensions cover economic, technical, environmental, and
algorithmic (solution methods) variations, offering an expansion
in the value and applicability of the Lane's approach.
Moreover, apart from a few exceptions, a majority of the sto-
chastic models also offers an extension into the basic Lane's model.
These stochastic models consider commodity price and/or grade
uncertainty and generate risk quantied cut-off grade policies, but
they work within the connes of the conceptual framework de-
ned in basic Lane's approach. The stochastic models are realistic
and more relevant, but a very limited number of studies consider
stochastic nature of the inputs to cut-off grade models. Thus, in
future, there exists enormous scope of contribution through the
151
development and implementation of stochastic models for den-
ing the schedule of cut-off grades in open pit mining operations.
Given the nature of Lane's models and their extensions, not
only their algorithmic implementations rely on a pre-dened
mining sequence but also being iterative generate solutions by
trial and error method (Dagdelen and Kawahata, 2008), and sub-
sequently, become prone to offer a heuristic solution to the cut-off
grade problem. Alternatively, mathematical programming based
cut-off grade models derive an exact or true optimum solution;
however, to date, only few studies are available in literature. Thus,
the development and implementation of mathematical program-
ming based cut-off grade models becomes another area of future
research.
Nevertheless, given the scale of open pit mining operations, the
size or number of decision variables within the mathematical
models is excessive, which leads to the computational complexity
of these models. Consequently, generating the solution to the
mathematical programming based cut-off grade models within
reasonable time becomes a challenge. Thus, the development of
new methods or algorithms to solve these models is another
emerging eld of future research.
So far, in the context of inputs to cut-off grade models, while
the nature of economic or operational inputs varies from one
model to the next, the structure of the geological input remains
same, i.e. the grade-tonnage curve of the deposit as the geological
input is the common factor among these models. Nevertheless, as
explained in previous sections, apart from known mining se-
quence, uniform distribution of grades in a given mineralization is
the basic assumption in conversion of the orebody model (Fig. 2)
into a grade-tonnage curve, and given the heterogeneity of grades,
this assumption is unrealistic and invalid. Therefore, a schedule of
cut-off grades that is derived using the grade-tonnage curve pro-
vides a strategic guidance only, because in practice, it lacks the
synchronization with the short-term operational plans. Conse-
quently, during the exploitation of the reserves, in a given period,
it is possible that the available or accessible material for mining
may not satisfy the dened cut-off grade for that period.
This limitation of the available heuristic as well as mathematical
programming based models presents an opportunity on the de-
velopment and implementation of mathematical models that take
orebody models (Fig. 2) as an input and endeavor to generate the
optimal mining sequence and cut-off grade policy simultaneously.
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