ISSN 1062-7391, Journal of Mining Science, 2016, Vol. 52, No. 4, pp. 732–739. © Pleiades Publishing, Ltd., 2016.

______________________________ MINERAL MINING ________________________________

_______________________________________________________________________________________________________________________ ________________________________________________________________________________________________________________________________

TECHNOLOGY
Optimal Mill Cut-Off Grade Modeling in the Mineral Deposits
via MIP: Haftcheshmeh Copper Deposit1
M. Gholinejad* and E. Moosavi
Department of Mining Engineering, South Tehran Branch, Islamic Azad University,
Tehran, Iran
*e-mail: Mgholinejad@azad.ac.ir
Received May 12, 2016

Abstract—Cut-off grade play a critical role in defining tonnages mined and processed, average grade of
mill feed, cash flows, mine life time, and all major characteristics of a mineral deposit. Simply, the cut-off
grade is the lowest grade at which material is considered ore and is processed to create a concentrated
commodity product. Essentially, it asserts that the mill cut-off grade is a function of the ore availability and
the needs of the mill. The focus of this paper is upon one of these long time-scale decisions: whether to
process the extracted material, or to waste it. Consequently, an effort is made for the development of a
model for optimization of mill cut-off grade which considers grade blending of mineral deposit. A new
mixed integer programming (MIP) model is proposed to deal with this objective and with this model
determined the mill cut-off grade of Haftcheshmeh Copper deposit. The results show the obtained mill cut-
off grade from proposed model generates the optimum average grade. Therefore, generated net value (NV)
from this model is nearer to reality.
Keywords: Mill cut-off grade, grade blending, mixed integer programming, net value, haftcheshmeh copper
deposit.
DOI: 10.1134/S1062739116041142

INTRODUCTION
One of the most complicated problems relating to the extraction of ore block in the mineral deposit
is choosing the cut-off grades during the mine life. Cut-off grade directly affect the economic
feasibility of mining operation the project life. The cut-off grade strategy that results in higher overall
Net Present Value (NPV) for a given project starts via high cut-off grades. Higher cut-off grade leads
to higher average grades per ton of ore in the initial periods of the mining operation; consequently,
higher average grades are realized depending upon the grade distribution of the deposit [1]. The cut-
off grade states the quantity mined processed, and finally, the product produced in the refinery for
marketing [2, 3]. The success of a project is significantly dependent on the selection of cut-off grade.
Therefore, cut-off grade optimization is essential in term of life mine.
Some studies have dealt with the concept of cut-off grade developing methods and algorithms with
different focuses and merits. At first, the economic cut-off grade parameter was defined by Mortimer
[4]. In fact, this parameter is equivalent to breakeven grade criteria, which does not lead to NPV
maximization. One of the best observations for optimization of cut-off grade have been made by
Henning [5] and Lane’s theory [2, 6]. This theory made a function of the maximization the NPV of
cash flow but is also able to provide various constraints of capacities (mine, mill, and refinery) in the
mining operation. His method considers what may be called an opportunity cost which is affected by
the discount rate. Later, Taylor [7] and Schaap [8] developed upon this concept. Taylor [7] made a
difference between the planning and operation cut-off grades, that they may not always be the same.
In fact he states that, “maximum present value and constant cut-off grades are incompatible.” Taylor

1
The article is published in the original.
732
 OPTIMAL MILL CUT-OFF GRADE MODELING IN THE MINERAL DEPOSITS VIA MIP 733

[9] also highlighted the need for establishment of stockpile through a real example. Halls and John
[10] defines dual cut-off grades as a minimum grade that covers all estimated cost (mining,
processing, refining and marketing) and has reasonable profit.
An essential preliminary to an analysis of cut-off grade strategy is an examination of NPV
maximization. There are many approaches for the determination of cut-off grades. But most of the
research that has been done in the last three decades shows that determination of cut-off grades with
the objective of maximizing NPV is the most acceptable method, which is based on a finite resource.
Most of these works have been done to devote to the cut-off grade determination in 1970’s and
1990’s. Rudenno [11], Dowd [12], Elbrond et al. [13], Jordi and Currin [14] and Napier [15] all
considered the problem of maximizing the NPV. They have used, respectively, dynamic
programming, linear programming and non-linear programming to solve the problem of the optimum
cut-off grade. Following this policy, other researchers have worked in this regard, such as Takayoshi
[16], Cairns and Shinkuma [17], Minnitt [18], Ataee and Osanloo [19], Bascetin and Nieto [20],
Rashidinejad et al. [21], Gholamnejad [22, 23], He et al. [24], Wang et al. [25], Navarro Torres et al.
[26], Asad and Topal [27], Yu et al. [28], Azimi et al. [29], Cetin and Dowd [30], Asad and
Dimitrakopoulos [31], Meagher et al. [32], Narrei and Osanloo [33], Akbari et al. [34], Moosavi and
Gholamnejad [35] as well.
The objective of the mill cut-off grade problem is to find the minimum cut-off grade in mineral
deposit. This cut-off grade is only a function of mill costs and recoveries and is independent of
mining costs. The mill cut-off grade problem is a complex non-linear problem which involves a large
number of continuous or discrete decision variables and constraints. Unfortunately, none of these
attempts appears to enjoy wide acceptance. One of the main reasons of not welcoming for these
methods is the large size and inherent difficulty of the model. This paper presents a new mixed
integer programming method to solve the optimal mill cut-off grade problem. The proposed method is
designed to considering grade blending constraints of mineral deposit.
The content of this paper is organized as follows. In section 1, the necessity of optimization of cut-
off grade in mineral deposits is discussed in sufficient detail and then mill cut-off grade formulation
have been proposed. The proposed formulation of mill cut-off grade by mixed integer programming is
presented in section 2. In section 3, implementation of the proposed model on Haftcheshmeh deposit
is described. In section 4, results and discussions about mentioned modelling described on the case
study. Finally, the conclusions are given in next section.
1. OPTIMIZATION OF MILL CUT-OFF GRADE IN MINERAL DEPOSITS
Taylor [7] defined cut-off grade as “any grade that, for any specific reason, is used to separate two
sources of action, for example, to mine or to leave, mill to dump.” Cut-off grade strategy dictates the
target of mined material when processing types are available, such as leaching and milling. Cut-off
grades are also used to decide whether material should be stockpiled for future processing or
processed immediately. In fact, the cut-off grades for the purposes of sending material that are
extracted from the mine are calculated. Figure 1 shows the cut-off grade of decision criteria.

Fig. 1. Cut-off grade of decision criteria [35].

JOURNAL OF MINING SCIENCE Vol. 52 No. 4 2016

734 GHOLINEJAD, MOOSAVI

Cut-off grade optimization is an interactive process, including metal price, mining, milling cost,
the capacity of processing plant, mining capacity in the mining operation, mining sequence, grade
distribution of the deposit, and resulting cash flow. The effect of these changes will be enormous on
the cut-off grades mining operation which changing due to the declining effect of net present value
during the mine life. Even though, the fact is that optimization of mill cut-off grades should be
simultaneously calculated in mineral deposit. Therefore, mill cut-off grade optimization is one of the
most important topics in mining operation, because:
 Mill cut-off grade show maximum economic potential of reserve,
 Mill cut-off grade can improve mining sequence during mine life.
1.1. Mill Cut-off Grade Formulation
The minimum cut-off grade is only directly related to the operating costs and corresponding
revenues from selling into account, if there are any [36]. The minimum cut-off grade satisfied the
value gc of g as follows:
UtilityOre (g c ) = Utilitywaste (g c ) . (1)
In light of the definitions and notations described above, the utility of mining and processing one
metric ton of ore grade material can be written as follows:
U ore (g ) = g ⋅ R ⋅ (P − S ) − (bo + co + oo ) , (2)
where g is the average grade; R is total material recovery; P is unit selling price of the final material; S
is unit refining costs of the final material; bo is mining cost per metric ton of ore; co is processing cost
per metric ton of ore; oo is overhead cost per metric ton of ore.
Also, the utility of mining and wasting one metric ton of waste material can be written as follows:
U waste (g ) = −(bw + cw + ow ) , (3)
where bw is mining cost per metric ton of waste; cw is processing cost per metric ton of waste; ow is
overhead cost per metric ton of waste.
To decide whether one ton of material should be wasted or sent to the processing plant, one must
compare the utility of both actions. Taken from the Eq. (1), the minimum cut-off grade is the value gc
of g as follows:
g c = [(bo − bw ) + (co + cw ) + (oo + ow )] / R ( p − s ) . (4)
Cut-off grade obtained from Eq. (4) applies to material that must be mined and is sometimes called
“internal cut-off grade.” If the costs of mining and shipping material to the waste dump or to the
processing plant are the same (bo = bw) and there are no significant additional costs in processing
waste (cw = 0 and ow = 0), this cut-off grade is only a function of mill costs and recoveries and is
independent of mining costs. It is known as the mill cut-off grades:
g c = [(co + oo )] / R ( p − s ) . (5)
The mill cut-off grade is a measure that indicates the maximum size and economic potential of
mineral deposits.
2. PROPOSED MODEL AS MIXED INTEGER PROGRAMMING
In this section, we formulate the mill cut-off grade problem in a mixed integer programming
model. The objective of the mentioned problem is the maximization of the total profit considering
mill cut-off grade of mineral deposit, simultaneously. Therefore, the objective function is expressed
as the sum of net value of the extracting blocks. As mentioned earlier, the objective function of the
model can be represented mathematically as the following:
M N
Z =  NVn ⋅ bnm ,
m
Maximize (6)
m n

where n is the block identification number, n = 1, 2,…, N; N is the total number of blocks to be scheduled; m
is the processing type of the block (i.e. m = 1, 2,…, M); M is the number of processing type; NVnm is the net

JOURNAL OF MINING SCIENCE Vol. 52 No. 4 2016

 OPTIMAL MILL CUT-OFF GRADE MODELING IN THE MINERAL DEPOSITS VIA MIP 735

m
value to be generated by mining block n if processed as type m; bn is the binary variable equal to
1 if block n is extracted at period t as processing type d .

0 Otherwise
The objective function in Eq. (6) does explicitly maximize net value, furthermore optimizes
feasible extraction sequencing of mineral deposit and ensures a desired mill cut-off grade.
Subsequently, destination of the block extracted is quite straightforward. The reason is that feasible
extraction sequences and the amount of ore having the desired quality to be sent to the mill need to
prioritize. So, the mentioned objective function directly leads to a practical maximum NV that is
really. Otherwise, the generated NV would only be optimal in the theory but not in mining practice.
Due to the operational requirements, the maximization of the objective function is subjected the
following constraints:
N

 (g
n =1
n − L g ) ⋅ Qn ⋅ bnm ≥ 0 m = 1,2 ,...M , (7)
N

 (g
n =1
n − U g )⋅ Qn ⋅ bnm ≤ 0 m = 1,2,..., M , (8)

where gn is the average grade of block n; Lg is the lower bound average grade of material sent to the
mill; Ug is the upper bound average grade of material sent to the mill; Qn is the total tonnage
(ore/waste) in block n.
The constraints (7), (8) limit the average grade of the material sent to the mill to a certain value.
Figure 2 shows the decision variables of the proposed model.
3. IMPLEMENTATION OF PROPOSED MIP MODEL ON THE HAFTCHESHMEH COPPER DEPOSIT
Haftcheshmeh Copper deposit is located near the Sungun Copper mine. The Haftcheshmeh Copper
deposit is situated in the East Azarbaijan Province (Azarbaijan-e Sharqi) in the north-west part of Iran
(Fig. 3). The grid reference for the project area is 46º 43’ east, 38º 42’ north. The border with Turkey
lies some 200 km to the west. The Aras River that also forms the border of Iran with Armenia and
Azerbaijan lies approximately 40 km to the north of the mine. The mine lies, by road, approximately
130 km north east of the city of Tabriz and about 75 km north-west of the provincial capital Ahar.
The nearest sizeable town to the mine is Varzaghan which lies some 28 km to the south.
Porphyry Copper deposits, due to the nature of their relatively low grade world-wide, are
developed at as high a plant throughput as possible consistent with a minimum mine life of
approximately 20 years. The mineralization is largely hosted by a hydrothermally altered quartz-
monzonite porphyry intrusion, which forms part of the Haftcheshmeh stock. Four lithological zones
have been recognized as being significant in regard to grade: Leached, Supergene, Hypogene and
Skarn. Two additional zones are also recognized both of which are considered waste: Dyke and Soil.
The geological cross section of Haftcheshmeh deposit is illustrated in Fig. 4.

Fig. 2. Decision variables of the proposed model.

JOURNAL OF MINING SCIENCE Vol. 52 No. 4 2016

736 GHOLINEJAD, MOOSAVI

Fig. 3. Location of the Haftcheshmeh ore deposit.

Fig. 4. Geological cross section of Haftcheshmeh deposit.

The resource statement as used for pit design and mine planning purposes is the measured and
indicated resources of 409 Mt with 0.24% average grade at the cut-off grade of 0.15%. The
dimensions of block model considered for the deposit are 10×10×15 m. For solving presented model
in the Haftcheshmeh Copper deposit, considered two steps as below:
• Step 1: provide an input file of block model by using Excel software, Includes: characteristics
of counters each block, tonnage, grade and ore content of each block, the net value of each block.
Decision variables and available constraints related to the type of block in the model are considered.
• Step 2: solving model by using Premium Solver software v.11 [37]. Decision variables,
objective function and available constraints are defined in the software environment. Branch and cut
algorithm was used to solve the mathematical model proposed.
For showing the effect of the optimal mill cut-off grades model on the Haftcheshmeh Copper
deposit, two scenarios are considered. In the first scenario, proposed model considered without grade
blending constraint. In the second scenario the grade blending constraint incorporated in proposed
model. The input data for these scenarios are given in Table 1.

JOURNAL OF MINING SCIENCE Vol. 52 No. 4 2016

 OPTIMAL MILL CUT-OFF GRADE MODELING IN THE MINERAL DEPOSITS VIA MIP 737

Table 1. Input data for two scenarios

Parameter Unit Scenario 1 Scenario 2
P $/t 4500.00 4500.00
bo $/t 1.60 1.60
co $/t 2.50 2.50
S $/t 315.00 315.00
R % 90.00 90.00
Lg % — 0.52
Ug % — -

Table 2. Optimal cut-off grades strategy for scenario 1, 2

Scenario Mill cut-off grade Average grade
1 0.2 0.49
2 0.23 0.54

Since the iterative steps of optimization are boring and time consuming, an Excel spreadsheet was
developed to facilitate doing the calculations. Table 2 shows the results of the aforesaid scenarios in separate,
respectively.
4. RESULTS AND DISCUSSION
Obtained mill cut-off grade strategy dictates the target of mined material. If two processes are
available to treat the same material, cut-off grade must be calculated to separate waste from ore being
processed and to decide to which one of the two processes the ore should be sent. How to decide
whether material should be processed or wasted was discussed previously. Obviously, if the optimum
mill cut-off grade is not used, material is sent to a destination where the profit made is less than could
be made otherwise or the loss incurred is greater than necessary. As it can be seen, the optimal cut-off
grades in the first and the second scenarios are different and of course in compliance with the Eq. (6).
In the first scenario, the average grade according to the obtained mill cut-off grade is 0.49%.
Hence, the average grade does not meet the required feed of mill. Nevertheless it is unclear, because
this model is no guarantee that grade blending constraint. For the second scenario a graphical
representation of the relationship between mill cut-off grade and net value or loss is shown in Fig. 5.
The cut-off grade applicable to one metric ton of material that must be mined and can be either or
wasted is 0.23%.
In other words, the utility of sending material to the processing and that of leaving the material at the waste
dump are plotted on Figure 5 as a function of the mill cut-off grade. The advantage of this model is
consideration grade blending of mineral deposit, while satisfying required feed of mill.

Fig. 5. Graphical estimation of optimal cut-off grade between wasted and milled material for scenario 2.

JOURNAL OF MINING SCIENCE Vol. 52 No. 4 2016

738 GHOLINEJAD, MOOSAVI

CONCLUSIONS AND FUTURE WORK

In mineral deposit industries, considerable economic gains can be achieved by optimal cut-off
grade calculation, which maximizes the net value of a mining project. This paper presents a
mathematical model based on the binary integer programming for mineral resource, which can
calculate mill cut-off grade problem. In fact, the proposed procedure is to develop a model that
generates a practical schedule with considering processing types, while satisfying system constraints.
This model overcomes the limitation of conventional method, and the innovation mainly includes as
follow:
 To reduce required number of variables and, subsequently, to handle the available variables
and constraints in a short time.
 To consider grade blending of mineral deposit, while satisfying required feed of mill.
One area for future research is the development of the proposed model to meta-heuristic
approaches for solving large-scale optimization problem, and the multi-objective optimization
approach could be other subjects for future research.
REFERENCES
1. Dagdelen, K., An Optimization Algorithm for Open Pit Mine Design, Proc. 24th
Application of Computers and Operations Research in the Mineral Industry, Canada: Montreal, Quebec,
1993, pp. 157–165.
2. Lane, K.F., The Economic Definition of Ore, Cutoff Grade in Theory and Practice, Mining Journal Books
Limited, London, 1988.
3. Mohammad, W.A., Development of Generalized Cutoff Grade Optimization Algorithm for Open Pit
Mining Operations, Journal of Engineering and Applied Science, 2002, 21(2), pp. 119–127.
4. Mortimer, G.J., Grade Control, Trans. Inst. Min. Metall., 1950, 59, pp. 357–99.
5. Henning, U., Calculation of Cutoff Grade, Can. Min. J., 1963, 84, pp. 54–57.
6. Lane, K.F., Choosing the Optimum Cutoff Grade, Colorado School of Mines Quarterly, 1964,
59(4), pp. 811–829.
7. Taylor, H.K., General Background Theory of Cutoff Grade, Transactions of the Institute of Mining and
Metallurgy, 1972, A(96), pp. A204–A216.
8. Schaap, W., Objective Function and Methodology in Cutoff Grade Theory, Proc. 18th APCOM,
1985, pp. 493–502.
9. Taylor, H.K., Cutoff Grades—Some Further Reflections, Transactions of the Institute of Mining and
Metallurgy, 1985, A(81), A160–A179
10. Halls, J.L. and John, L., Determination of Optimum Ore Reserves and Plant Size by Incremental Financial
Analysis, Transactions of the Institute of Mining and Metallurgy, 1969, 78, A20–A26.
11. Rudenno, V., Determination of Optimum Cutoff Grades, Proc. 16th APCOM, Tuscon, Arizona, Am. Inst.
of Min. Engrs, 1973, pp. 261– 268.
12. Dowd, P.A., Application of Dynamic and Stochastic Programming to Optimize Cutoff Grades and
Production Rates, Trans. Inst. Min. Met: Section A, 1976, 85, pp. A 22–31.
13. Elbrond, J., Dubois, J.F., and Daoust, E.T., Rate of Production and Cutoff Grade: a Program System for
Teaching and Experimentation, Proc. 15th APCOM Symposium, Aus. I.M.M., Brisbane, 1977, pp. 13–19.
14. Jordi, K.C. and Currin, D.E., Goal Programming for Strategic Planning, Proc. 16th APCOM, Tucson,
Arizona. Am. Inst. of Min. Engrs., 1979, pp. 296–303.
15, Napier, J., The Effect of Cost and Price Fluctuations on the Optimum Choice of Mine Cutoff Grades, J. S.
Afr. Inst. Min. Met., 1983, pp. 117–125.
16. Takayoshi, S., A Generalization of the Cairns–Krautkraemer ,odel and the Optimality of the Mining Rule,
Resource and Energy Economics, 2000, 22, pp. 147–160.
17. Cairns, R.D. and Shinkuma, T., The Choice of Cutoff Grade in Mining, Resource Policy, 2003,
29, pp. 75–81.
18. Minnitt, R., Cut-Off Grade Determination for the Maximum Value of a Small Wits-Type Gold Mining
Operation, Journal of South African Institute of Mining and Metallurgy, 2004, 104, pp. 277–284.

JOURNAL OF MINING SCIENCE Vol. 52 No. 4 2016

 OPTIMAL MILL CUT-OFF GRADE MODELING IN THE MINERAL DEPOSITS VIA MIP 739

19. Ataei, M. and Osanloo, M., Using a Combination of Genetic Algorithm and the Grid Search Method to
Determine Optimum Cutoff Grades of Multiple Metal Deposits, International Journal of Surface Mining,
Reclamation and Environment, 2004, 18(1), pp. 60–78.
20. Bascetin, A. and Nieto, A., Determination of Optimal Cut-Off Grade Policy to Optimize NPV Using a
New Approach with Optimization Factor, Journal of South African Institute of Mining and Metallurgy,
2007, 107, pp. 87–94.
21. Rashidinejad, F., Osanloo, M., and Rezai, B., An Environmental Oriented Model for Optimum Cut-Off
Grades in Open Pit Mining Projects to Minimize Acid Mine Drainage, Int. J. Environ. Sci. Tech, 2008,
5(2), pp. 183–194.
22. Gholamnejad J., Determination of the Optimum Cutoff Grade Considering Environmental Cost, J. Int.
Environmental Application & Science, 2008, 3(3), pp. 186–194.
23. Gholamnejad, J., Incorporation of Rehabilitation Cost into the Optimum Cut-Off Grade Determination,
Journal of the Southern African Institute of Mining and Metallurgy, 2009, 108, pp. 89–94.
24. He, Y., Zhu, K., Gao, S., Liu, T., and Li, Y., Theory and Method of Genetic-Neural Optimizing Cutoff
Grade and Grade of Crude Ore, Expert Systems with Applications, 2009, 36(4), pp. 7617–7623.
25. Wang, Q., Deng, J., Zhao, J., Liu, H., Wan, L., and Yang, L., Tonnage-Cutoff Model and Average Grade-
Cutoff Model for a Single Ore Deposit, Ore Geology Reviews, 2010, 38, pp. 113–120.
26. Navarro Torres, V.F., Dinis da Gama, C., Falcão Neves, P., Costa e Silva, M., and Xie, Q., Innovative
Criteria for Economical Exploitation of Ornamental Deposits Applied to the Cut-Off Grade Concept,
Journal of Mining Science, 2010, 46, pp. 187–196.
27. Asad, M.W.A. and Topal, E., Net Present Value Maximization Model for Optimum Cut-Off Grade Policy
of Open Pit Mining Operations, The Journal of The Southern African Institute of Mining and Metallurgy,
2011, 111, pp. 741–750.
28. Yu, S., Zhu, K., and He, Y., A Hybrid Intelligent Optimization Method for Multiple Metal Grades
Optimization, Neural Comput. & Applic., 2012, 21, pp. 1391–1402.
29. Azimi, Y., Osanloo, M., and Esfahanipour, A., An Uncertainty Based Multi-Criteria Ranking System for
Open Pit Mining Cut-Off Grade Strategy Selection, Resources Policy, 2013, 38, pp. 212–223.
30. Cetin, E. and Dowd, P.A., Multi-Mineral Cut-Off Grade Optimization by Grid Search, The Journal of the
Southern African Institute of Mining and Metallurgy, 2013, 113, pp. 659–665.
31. Asad, M.W.A, and Dimitrakopoulos, R., A Heuristic Approach to Stochastic Cutoff Grade
Optimization for Open Pit Mining Complexes with Multiple Processing Streams, Resources Policy, 2013,
38, pp. 591–597.
32. Meagher, C., Dimitrakopoulos, R., and Vidal, V., A New Approach to Constrained Open Pit Pushback
Design Using Dynamic Cut-Off Grades, Journal of Mining Science, 2014, 50 (4), pp. 733-744.
33. Narrei, S. and Osanloo, M., Optimum Cut-Off Grade’s Calculation in Open Pit Mines with Regard to
Reducing the Undesirable Environmental Impacts, International Journal of Mining, Reclamation and
Environment, 2015, 29(3).
34. Akbari, A. and Rahimi, E., Effect of Copper Slag Recovery on Hydrometallurgical Cut-Off Grades
Considering Environmental Aspects, Journal of Central South University, 2016, 23(4), pp. 798–807.
35. Moosavi, E. and Gholamnejad, J., Optimal Extraction Sequence Modeling for Open Pit Mining Operation
Considering the Dynamic Cutoff Grade, Journal of Mining Science, 2016, in publishing.
36. Rendu, M., An Introduction to Cutoff Grade Estimation, Society of Mining, Metallurgy, and Exploration,
Inc. (SME), United States, 2008.
37. Premium Solver Platform Version 11.5, User Guide by Frontline Systems, www.solver.com, 2013.

JOURNAL OF MINING SCIENCE Vol. 52 No. 4 2016