In order to maximize the overall economic gain from a metal mine operation, selection of cutoff grades must consider two important aspects: the time value of money and the spatial variation of the grade distribution in the deposit. That is, cutoff grade selection must be dynamic with respect to both time and space. A newly developed method that fulfills these requirements is presented. In this method, the deposit or a portion of it under study is divided into "decision units" based on the mining method and sample data. The statistical grade distribution and the grade-tonnage relationship of each decision unit are then computed based on the samples falling in the unit. Each decision unit with its grade-tonnage relationship is considered as a stage in a dynamic programming scheme and the problem is solved by applying a forward dynamic programming based algorithm with an objective function of maximizing the overall net present value (NPV). A software package is developed for the method and applied to an underground copper mine in Africa.
