NEWS

How can you decide what to do with a mineral deposit if you do not first know what material you have? In mining, understanding the nature, distribution, and concentration of the mineral is the starting point for designing a strategy aligned with the project’s objectives. “Grade” indicates how much of the element of interest is contained in a given amount of rock. Gold is typically expressed in grams per metric ton (g/t), while copper is expressed as a percentage (% Cu).

But a high grade does not, by itself, mean that there is a good business opportunity. The value of a mineral deposit comes from combining geology, metallurgy, engineering, and economics. To assess its potential, it is necessary to consider the metal price, recovery, mining and processing methods, geological continuity, and costs.

The work begins with representative sampling. Samples are prepared and analyzed using reliable procedures and quality controls. This information is then used to interpret the geology and build a resource model, characterizing different zones by tonnage, grade, and continuity. The better the understanding of the subsurface, the lower the uncertainty and the better the decisions.

The next step is to determine which portion of the material can be converted into economically mineable ore. This is where the cut-off grade comes in: the economic threshold that, under specific assumptions, distinguishes material worth processing from material that is not economically viable. It is not a fixed number: it depends on the price of gold or copper, mine and plant costs, recovery, infrastructure, geology, and the mining method. If the metal price or recovery improves, lower grades may become economic; if costs increase, the threshold may rise.

That is why mine planning must look at the deposit as a system. It is not enough to know how much metal is present: it is necessary to determine how to extract it, in what sequence, with what equipment, what processing capacity is required, and what it will cost to develop and operate the mine. Initial investment, operating costs, infrastructure, closure, and environmental obligations must also be taken into account.

In Argentina, this also requires an understanding of the legal framework. The Mining Code establishes the legal regime governing mines and the original ownership of mineral resources by the Nation or the provinces, depending on the territory. Law No. 24,585 incorporates environmental protection requirements and requires environmental management instruments, including the Environmental Impact Report. The Mining Investment Law establishes a specific investment regime, and large-scale projects may qualify for the RIGI provided they meet its requirements. Planning, therefore, combines technical knowledge of the deposit with an understanding of the business, the relevant jurisdiction, and the rules governing investment.

In a gold or copper project, the same grade can have different economic values depending on mineralogy, recovery, deposit geometry, the waste-to-ore ratio, infrastructure, and costs. The goal is not to seek the highest possible grade, but to find the combination that maximizes project value in a sustainable way.

Ultimately, grade provides the bridge from rock to business: estimating metal content, defining economic thresholds, organizing extraction, and assessing which portion of the resource can be converted into reserves while taking technical, economic, legal, and environmental factors into account. Good planning means understanding the resource, defining the mining method, calculating costs, projecting revenues, and assessing risks before committing capital.

A better understanding of the deposit leads to better decisions. And making better decisions from the start can mean the difference between a potential resource and a viable project.

LR Strategic Mining helps mining companies turn geological, technical, and economic information into strategic decisions. Learn how we can help you transform the potential of your deposit into value