Determination of Optimal Cut Off Grades in Reporting Nickel Laterite Resource

Ramon N. Santos 1, Rogel A. Santos 2, Ma. Brenda Mae C. Jumangit 3

1 VP for Mining, MacroAsia Corporation
2 Exploration Manager, MacroAsia Corporation
3 Senior Mining Engineer, MacroAsia Corporation


The economic nickel deposits in the Philippines are all laterite in form. The mineralization is derived from the weathering of ultramafic rocks believed to form part of ophiolite belts that became exposed to the tropical climatic conditions due to orogenetic processes. Morphologically, the deposits occur as thin veneer of weathered crust consisting of upper iron rich limonite, a transition zone, and lower nickel enriched saprolite overlying the unweathered bedrock.

Although several methods such as test pitting, trenching, and application of ground penetrating radar system (GPRS) and induced polarization (IP) are employed in the exploration for nickel laterite deposits, resources classification of nickel laterite deposits is based primarily on grid drilling of boreholes that enable the sampling of the various horizons of the laterite.

Patterned after the Joint Ore Reserve Committee (JORC) code of Australia, the Philippine Mineral Reporting Code (PMRC) for reporting the results of exploration and mineral resources was introduced and adopted in 2004. The PMRC underwent revisions and refinement in 2007 and 2008 and is now fully accepted by the Philippine Securities and Exchange Commission (SEC) and Philippine Stock Exchange (PSE) as the standard in disclosing results of mineral exploration and mineral resources.

The PMRC prescribed scheme in reporting nickel laterite resources is by describing the tonnage and average grade of each of the three categories of the mineral deposit: Inferred Resource, Indicated Resource, and Measured Resource based on an assumed cut off grade of Nickel. The PMRC does not allow reporting of mineral resource at zero cut off, hence a specific grade must be used.

It has been observed that mining companies use different cut off grades in estimating and reporting their Nickel laterite resource. It is not certain whether the assumed cut off grades have mathematical bases or just arbitrarily selected.

Cut off grade is dependent on several factors some of which are peculiar to the particular deposit, hence it cannot be expected to be universal to all deposits.

The PMRC is silent on the prescription and selection of the cut off grade and there is no available published guidelines or procedure for deriving such value. This paper attempts to illustrate through a case study a plausible approach in the determination of optimal cut off grade.

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