How is the break-even grade of an ore deposit determined?

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The break-even grade of an ore deposit is the specific concentration of a valuable mineral at which the total costs associated with mining and mineral processing are exactly equal to the revenue generated by the commodity.1

To determine this grade, it is necessary to estimate the expected market price of the commodity and the total extraction costs. These costs are influenced by several variables, including:1

The selected mining system and its level of mechanization.1
The projected life of the mine.1
The specific geological and structural characteristics of the deposit.1

Material with a grade higher than the break-even point is classified as ore, while material below this threshold is considered waste. This calculation is essential for defining which portions of a deposit constitute an exploitable reserve, as higher operational costs—such as those incurred when transitioning from open-pit to underground mining—require a correspondingly higher grade to remain profitable.1