Ore Grade
Also: Grade, Mineral content, g/t
The ore grade indicates how many grams of a precious metal (e.g. gold or silver) are contained per tonne of raw ore, and is the most important metric for assessing the economic viability of a mine.
The ore grade is one of the central metrics in mining. It describes the concentration of a usable metal in the raw ore and, for precious metals, is usually expressed in grams per tonne (g/t). An ore grade of 5 g/t means: each tonne of mined rock contains on average 5 grams of gold (or the metal under consideration). The current gold price largely determines the minimum grade from which mining becomes profitable.
How the ore grade is calculated
Measurement is carried out through systematic sampling (drill cores, trenches) and subsequent chemical analysis in the laboratory. From many individual samples a statistically averaged block grade is determined, which feeds into resource and reserve estimates.
Metal content [g/t] = (contained metal [g]) / (ore weight [t])
For the total production of a mine, in simplified form:
Metal yield [g] = ore grade [g/t] × tonnage [t] × recovery rate [%]
Cut-off grade: the economic lower limit
The so-called cut-off grade is the minimum ore grade below which material is no longer mined, because the costs exceed the revenue. It depends directly on the gold price and the all-in sustaining costs (AISC):
| Mining method | Typical cut-off grade |
|---|---|
| Open pit | 0.3 – 0.5 g/t |
| Underground | 2 – 4 g/t |
| High-grade underground mine | > 8 g/t |
If the gold price rises, the cut-off grade falls – deposits that were previously uneconomic suddenly become worth mining. This mechanism influences global gold supply with a delay of several years.
Significance for investors and the market
The ore grade is a key indicator of the profitability of mine production and mining stocks. High-grade mines produce at lower unit costs and are more resilient to falling metal prices. Low-grade large operations (bulk mining) compensate for the lower grade with enormous volumes.
For the primary mining of gold: the global average grade has been declining for decades, because the easily accessible, rich deposits are largely exhausted. The structurally declining supply from existing mines is a long-term driver of the gold price.
With by-product mining – for example silver as a by-product of a copper mine – the effective ore grade for the secondary metal is reported separately and contributes to cost reduction.
In brief
The higher the ore grade, the more economical the mining – and the less sensitive a mine is to falling precious metal prices. The globally declining average grade limits primary supply in the long term and structurally supports the gold price.