Mine Production (Grade / Cut-off)
Also: Primary mining, Mining output, Mine supply
Mine production is the total quantity of precious metal recovered from ore through mining, where the ore grade and the economic minimum grade (cut-off) decide which material is worth extracting at all.
Mine production is the single most important source of supply in the precious-metals market. Each year, mining companies around the world lift thousands of tonnes of gold, silver, platinum and palladium out of the earth — a process governed chiefly by two technical-economic parameters: ore grade and cut-off grade.
Ore grade
The ore grade states how many grams of a precious metal are contained in one tonne of raw ore (g/t). The higher the grade, the more productive the ore. A common breakdown:
| Category | Gold grade (g/t) | Note |
|---|---|---|
| Low-grade | 0.3 – 1.5 g/t | Requires large-scale open-pit mining |
| Medium-grade | 1.5 – 5.0 g/t | The majority of the world's mines |
| High-grade | above 5.0 g/t | Underground mines, highly profitable |
Cut-off grade
The cut-off is the minimum ore grade at which extraction still makes economic sense. It is not a fixed figure: it depends directly on the current gold price or silver price together with mining costs (in particular the AISC — all-in sustaining costs):
Cut-off (g/t) = mining cost ($/t ore) ÷ metal price ($/g)
When the metal price rises, the cut-off falls — more of the ore body becomes economic and the mineable reserve grows. When the price falls, the cut-off rises and previously profitable deposits are mothballed. Over the long run this mechanism dampens extreme price swings.
Primary mining vs. by-product
Gold and silver are recovered both as a primary metal (dedicated gold mines) and as a by-product of copper, zinc or lead extraction. Roughly 30% of world silver supply comes from base-metal mines — and there the silver volume responds only weakly to the silver price, because the mining decision is driven by the lead metal.
Effect on the precious-metal price
Over the long term, mine production sets the base level of supply in the market. New mine developments typically take 7–15 years from discovery to production. A supply squeeze — triggered by falling grades at existing mines or by underinvestment — therefore feeds through to prices with a considerable lag. Long-run price histories show such cycles clearly, which you can track on the live gold price page.
In brief
Grade and cut-off are the levers that decide whether an ore body is mined at all — a rising precious-metal price automatically unlocks new reserves, a falling price shuts them down. Investors should understand this supply logic to read price cycles more accurately.