A Cut-Off Grade Optimization Model in Open Pit Mining Considering Reclamation Cost and Revenue

In open pit mining industry, cut-off grade has an important roles in affecting the total profit that will be earned by the company. In this research, cut-off grade optimization model is developed for open pit mining industry to maximize the total profit. We consider the environmental aspect in this model which consists of reclamation cost and reclamation revenue. We also consider the revenue of sales and valuable wasted materials revenue, and also the cost of selling stage, processing cost, mining cost, waste removal/rehabilitation cost and fixed cost. The results show that the model is able to determine the optimal cut-off grade and total profit that will be earned by the company can be estimated. Besides that, we can also estimate the completion time of mining project and the value of Net Present Value (NPV) and Return on Investment (ROI). The application of the model can be illustrated using numerical example that given in this study.