For conducting a mining project’s break even analysis, you first need to know about the operational expenses (OPEX). When the OPEX is known, you can calculate the mineral’s cut off grade, which is **the break even grade, below which it is not economically viable to mine the ore**. When the cost price per tonne (OPEX) cannot be found in the mining company’s feasibility study, I kindly ask the mining company’s management to give me their best estimate.

Calculating the cut-off grade helps mining companies decide whether a deposit is worth pursuing and aids in the optimization of mine planning and resource allocation. It is important to note that *the cut-off grade can change over time as market prices fluctuate, mining costs evolve, and new technologies are developed*.

Before I can calculate the cut-off grade, I first need to show a basic equation which *converts a troy ounce into grams per ton*:

1 troy ounce = 31.1034768 grams per ton = 34.2857143 grams per tonne

As you can see, **the difference between a ton and a tonne is approximately 10%**.

Then, you need to be aware of the following conversions:

1 ton = 2,000 pounds

1 tonne = 2,204.62262 pounds = 1,000 kilograms

1 kilogram = 2.20462262 pounds

1% of a tonne = 22.0462262 pounds = 22 pounds (rounded)

This last conversion is quite convenient because, when I read a mining company’s press release in which they announce a drill result of 2% copper, I now quickly know this equals 44 pounds (lbs) or – assuming a copper price of $3 per pound – a mineral value of $132 per tonne. To learn more about how you can determine the mineral value per tonne, I recommend you to read the metal value page.

In the following __example__, you will find the hypothetical **cut-off grade for an ounce of gold** (which is actually the break even analysis for gold mining):

Mining Costs per Tonne (OPEX) – $150

Current Price per Ounce – $1,500

Cut-Off Grade (ounces per tonne) – ($150 / $1,500 =) 0.10 ounce / tonne

Cut-Off Grade (grams per tonne) – (0.10 x 28.349523125 =) 2.835 grams / tonne

I have also included an __example__ to find the hypothetical **cut-off grade for a pound of copper** (which is actually the break even analysis for copper mining):

Mining Costs per Tonne (OPEX) – $33

Current Price per Pound – $3

Cut-Off Grade (pounds per tonne) – ($33 / $3 =) 11 pounds / tonne

Cut-Off Grade (percentage per tonne) – (11 / 22 x 1% =) 0.50 percentage /tonne