Grade

Grade is the concentration of a metal or mineral in rock. The SEC's mining disclosure rules describe it as "the concentration of metal or mineral in rock" (17 CFR 229.1300, in the definition of cut-off grade).

How grade is expressed

Grade is reported in whatever unit suits the commodity, such as ounces or grams of gold per ton or tonne, or percent of copper, zinc, or lead. The U.S. Bureau of Mines' Dictionary of Mining, Mineral, and Related Terms (1968) classifies ore by grade and gives an example from its time: gold ore containing 1 ounce per ton "would be a high-grade ore," while ore with 4 pennyweights per ton would be low grade.

Cut-off grade

Cut-off grade is the line between ore and waste. The SEC defines it as "the grade ... that determines the destination of the material during mining." Material below cut-off goes to the waste dump or is left in the ground. Material above it goes to the processing plant. The SEC notes that "net smelter return, pay limit, and break-even stripping ratio" are used in a similar way. The 1968 dictionary gives an older version of the same idea: "the lowest grade that will meet costs."

Cut-off grade changes with metal prices and costs. When the price rises, lower-grade material can become ore, and the tonnage of a deposit above cut-off grows.

How grade is measured

Grade comes from sampling. Samples from outcrops, trenches, drill core, or cuttings are assayed, and the assays are combined into grade estimates for blocks of the deposit. BLM's handbook for mineral validity reports says the purpose of sampling is "to verify, or establish a basis for estimating, the tonnage and grade of a mineral deposit," and calls sampling "the most important aspect of the field work."

Grade and tonnage together

Neither number means much alone. A small high-grade vein and a large low-grade deposit can hold the same metal. Mineral resource and mineral reserve estimates report both, together with the cut-off grade used.

Why it matters for mining claims

On federal land, a mining claim needs a discovery of a valuable mineral deposit, and a mineral examiner testing that discovery samples and assays the deposit to establish grade and tonnage. Old assay records, drill results, and grade estimates for a tract are part of understanding what the mining claims on it were located for.