Mine Planning for Lower Grades: Reviewing Your Key Assumptions

Many mines that were designed for high-grade, simple orebodies are now pushing deeper or expanding laterally into zones where grades are lower and geology is more variable. A mine plan that worked well five years ago may no longer reflect the real economics of the deposit. Cut-off grade decisions, block model assumptions, and LOM schedules all need review when the orebody changes character. This article explains how to approach that review in a structured way.

Why Lower Grades Change Every Assumption in the Mine Plan

A high-grade deposit gives planners some room for error. When the orebody grade sits well above the cut-off grade, misclassified blocks, short-term schedule changes, and small estimation errors have a limited effect on the Ore Reserve and on cash flow. That changes when you move into lower-grade material. The margin between the value of the ore and the cost to mine it becomes narrow, and small errors in the block model or the cost structure can move blocks from ore to waste, or from waste to ore.

The first thing to examine is the SMU. The selective mining unit defines the smallest parcel of material that the operation can reliably separate at the face. If the SMU used in the block model is smaller than what the excavator and ore control system can actually select, the model will predict a grade distribution that is more selective than what the mine can achieve in practice. In a high-grade deposit this difference may not change the economics significantly. In a low-grade deposit, the predicted recovery at the cut-off grade can be materially higher than the actual mill feed grade, and the Ore Reserve will appear better on paper than it performs in production.

The Inferred category deserves particular attention. Inferred material cannot be included in an Ore Reserve under JORC Code, NI 43-101, or S-K 1300. In a complex, lower-grade orebody, a large proportion of the deposit may remain in Inferred because drill spacing is wide or geological continuity is difficult to establish. That material may appear in a conceptual LOM schedule, but it cannot support a bankable reserve statement until it is upgraded to Indicated or Measured through infill drilling and re-estimation. Planners who include Inferred tonnes in production targets without clearly flagging the distinction are making a commitment that the Ore Reserve cannot support.

Cut-off grade calculation also becomes more sensitive as grade falls. The cut-off grade is the point at which the revenue from processing a block equals the cost of mining and processing it. When grade is low, a modest change in operating cost per tonne, in metallurgical recovery, or in the assumed metal price can push the cut-off grade higher than expected. When the cut-off grade rises, the Ore Reserve becomes smaller, the strip ratio may increase because more of the pit is now classified as waste, and the LOM schedule shortens. Our Cut Off Grade (COG) Analysis service works through each input systematically so the cut-off grade reflects the real cost structure of the operation, not an assumption carried forward from an earlier study.

Block Model Quality and Geological Complexity

Complex orebodies present specific estimation challenges. A deposit with strong geological controls, such as a structurally bounded skarn or a lithologically controlled porphyry, can be estimated with reasonable confidence if those controls are correctly interpreted and coded into the model. The problem arises when the domain boundaries are uncertain, when mineralisation is discontinuous, or when grade variability within a domain is high. In those conditions, block grades estimated by ordinary kriging or inverse distance can smooth the true distribution, and the contact between ore and waste in the model may not match what the blasthole assays show at bench level.

The block model should be reconciled against production data regularly, not only at year end. When the model consistently over-predicts grade at low cut-off grades and under-predicts grade at high cut-off grades, this is a sign of conditional bias. The model may be acceptable at the deposit scale but unreliable at the scale of a single blast or a weekly mill feed blend. Correcting this requires going back to the estimation parameters, and sometimes to the geological interpretation itself. Our Exploration and Block Modeling hub describes how estimation and domain modelling decisions connect to reserve outcomes.

Geometallurgical variability adds another layer of complexity. Recovery is not a single number in a low-grade, complex orebody. Different lithologies, alteration types, or mineralogical assemblages within the same block model domain can have very different processing behaviour. When recovery varies with rock type, the economic value of a block depends not only on its grade but on what the rock actually is. A planner who applies a single recovery factor across a geologically variable deposit may classify material as ore that will not recover economically, or reject material that would have performed well. The mine plan needs to reflect this variability, which requires geometallurgical characterisation of the deposit. Agmines does not provide metallurgical testing, but the mine plan framework we work with must account for what the metallurgical data show.

QA/QC on the underlying assay database is not optional in a low-grade setting. At high grades, a few abnormal assays have a visible but limited effect on the block model. At low grades, systematic bias in sample preparation or the analytical method can shift the estimated mean grade enough to change the economic classification of a large portion of the deposit. The signing professional, whether a Competent Person or Qualified Person depending on the reporting framework, is required to confirm that data quality is adequate to support the classification reported. If QA/QC has not been reviewed since the original resource estimate, that review should happen before the block model is used for planning.

LOM Scheduling and Ore Reserve Reporting When the Orebody is Complex

A LOM schedule for a complex orebody requires more careful sequencing than one for a simple, high-grade deposit. In a variable orebody, grade changes significantly from bench to bench and across the pit. The scheduler needs to understand which areas of the deposit will deliver ore above the cut-off grade in each year of the plan, and what the realistic strip ratio will be to access that ore. If the schedule is built without this spatial understanding, the plan may appear acceptable in spreadsheet form but be physically unreachable given pit slope constraints, ramp geometry, and equipment access.

Short-term planning is where LOM assumptions are tested in practice. The annual plan divides into quarterly and monthly periods, and each period requires that specific benches and blocks are available and that the ore control system can direct material correctly. In a complex, low-grade orebody, ore control is not a background task. It is central to whether the operation achieves its mill feed targets. Misrouting low-grade ore to the waste dump, or diluting the mill feed with marginal material, directly affects metal production and the reconciliation between the block model and actual output. Our Ore Control and Reconciliation hub explains how ore control decisions connect to plan performance.

The Ore Reserve statement must reflect what the mine can actually produce, not simply what the block model contains. Under JORC Code, the Competent Person must apply Modifying Factors, including mining, metallurgical, economic, marketing, legal, environmental, social, and governmental factors, before Mineral Resources are converted to Ore Reserves. Under NI 43-101 and S-K 1300, the Qualified Person carries the same responsibility. In a low-grade or complex orebody, the Modifying Factors related to dilution and ore loss are particularly important. Planned dilution should be estimated using the EFH or another practical method that reflects the actual selectivity of the mining equipment at bench scale. If planned dilution is underestimated, the Ore Reserve will overstate recoverable grade and the actual mill feed will be lower than the schedule predicts.

Reserve reporting for complex orebodies also requires that the LOM schedule is clearly linked to the Ore Reserve statement. The tonnes and grade in the schedule should be consistent with the reported Ore Reserve, after dilution and ore loss. If the business plan includes material from Inferred categories or from outside the pit optimisation shell, this must be clearly stated and separated from the Ore Reserve-based LOM. Our Strategy and Reserves hub covers how reserve reporting connects to business planning and how to keep the two consistent without misrepresenting the confidence level of the underlying resource.

Sensitivity analysis matters more, not less, when grades are lower. A mine planning team should know how the NPV and the Ore Reserve size change when the metal price falls, when operating costs rise, or when the recovery assumption is adjusted downward. These are not abstract scenarios. They reflect conditions that can change within a single year of operation. If the plan has no sensitivity framework, decision-makers cannot evaluate the range of outcomes or identify which input variables carry the most risk. Building this into the technical reporting process is part of responsible reserve management, not a separate exercise.

Planning with the Right Framework in Place

Lower grades and geological complexity do not make a deposit unworkable. They require more rigorous planning, better-connected data systems, and closer alignment between the block model, the cut-off grade, the LOM schedule, and the Ore Reserve statement. Operations that invest in that alignment consistently perform closer to plan. Those that carry forward assumptions built for a different orebody will find the gap between the model and the mill feed growing over time.

If your operation is moving into lower-grade or more variable material and you need an independent review of the mine plan, the block model assumptions, or the reserve reporting framework, contact the Agmines team at agmines.com/contact. We work in English and Spanish and are available to discuss your project directly with your technical team.