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<p>This paper addresses the optimisation of cut-off grade (COG) policies in mineral mining to maximise economic returns over a defined planning horizon. Traditionally, practical planning horizons have spanned months or years due to the inherent computational complexity of the problem. This study contributes a continuous, simulation-based System Dynamics (SD) solution to the COG-estimation problem. Compared to existing numerical Real Option (RO) methodologies, the proposed SD approach is more intuitive and accessible for industry practitioners. The model is tested and followed by a discussion on its practical application by mine planning engineers as a viable alternative to highly complex mathematical RO frameworks. The results demonstrate that this method adds significant value to mining valuation practices by enabling a responsive tracking of optimal COG more precisely than is possible through discrete, periodic revisions.</p>

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Model for continuous cut-off grade estimation with system dynamic simulation

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年5月21日

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  • Ramin Rakhsha,
  • Jyrki Savolainen,
  • Mark Reynolds

摘要

This paper addresses the optimisation of cut-off grade (COG) policies in mineral mining to maximise economic returns over a defined planning horizon. Traditionally, practical planning horizons have spanned months or years due to the inherent computational complexity of the problem. This study contributes a continuous, simulation-based System Dynamics (SD) solution to the COG-estimation problem. Compared to existing numerical Real Option (RO) methodologies, the proposed SD approach is more intuitive and accessible for industry practitioners. The model is tested and followed by a discussion on its practical application by mine planning engineers as a viable alternative to highly complex mathematical RO frameworks. The results demonstrate that this method adds significant value to mining valuation practices by enabling a responsive tracking of optimal COG more precisely than is possible through discrete, periodic revisions.