Abstract
Recent mining literature on cutoff grade theory has come to reflect some viewpoints and analyses expressed earlier in the economic literature. Agreement is best when the cutoff grade policy is established by analysis in stages, starting from the limits of the deposit, and using the maximum net present value objective. In the derivation of the optimal cutoff grade policy a dynamic programming approach is then applied to solve the overall problem as a series of linked, nonlinear, stage optimization problems. A wholly satisfactory use of a dynamic programming methodology requires that two conditions be satisfied: the separability and optimality conditions. The former is, strictly, violated by a heap-leaching or dump-leaching process, the latter by possible forms of resource rent taxation. This paper considers the problem of including such a leaching process in a cutoff grade policy analysis along aforementioned lines. It concludes that a workable method of doing so may be found which, in particular, may be quite satisfactory in arid climates where, in addition, some practical leaching experience already exists.
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