Stripping Ratios: What are They and Why are They Important?

Stripping ratios aren't often discussed, but they can be an early and important indicator for mining projects.

stripping ratio

A strip ratio, or stripping ratio, is an important measurement related to the open-pit mining process. It represents the amount of waste material, also known as overburden, that must be moved in order to extract a given amount of ore.

However, stripping ratios are not only about the volume of unwanted material present at a site; they also take into account the types of material that must be removed to reach the ore. That’s because moving lightweight material—like sand or dirt—is simpler than moving hard rock to get to ore.

Ore quality is another consideration in stripping ratios since, if the ore at a deposit is low quality, more of it must be mined to achieve a return on investment.

Calculating stripping ratios and determining profitability

At their most basic, strip ratios can be calculated by dividing overburden thickness by ore thickness. For example, an overburden thickness of 100 meters and an ore thickness of 50 meters would yield a strip ratio of 2:1. That means mining 1 cubic meter of ore will require mining 3 cubic meters of overburden.

The stripping ratio of a deposit may be used, in part, to gauge how profitable it may be.

For instance, a project with a very high strip ratio likely will not be profitable. That’s because a high strip ratio means that the unwanted material is much greater than the amount of ore that can potentially be extracted, making it too expensive to mine. Conversely, a project with a low strip ratio will probably have good prospects for profitability.

As a result, mining companies calculate strip ratios for open-pit projects well before they enter development and production, and seek out projects with relatively low strip ratios. That said, given all the factors involved in calculating a strip ratio, it’s difficult to determine an overall ideal figure. Some sources say a strip ratio of 3:1 is on the outer edge of what is economical to pursue but, again, it depends on the nature of the overburden involved.

Stripping ratios to watch

Here are a few examples of what stripping ratios mean for specific mining companies:

Western Copper and Gold (TSX:WRN)

Western Copper’s Casino project, located in Canada’s Yukon, has a predicted strip ratio of 0.49:1 for the first four years of operation and of 0.59:1 for the long term. That means mining will produce more ore — specifically, gold, copper, silver and molybdenum — than it will unwanted material.

“We are enormously pleased with the Casino feasibility study,” Dale Corman, CEO of Western Copper and Gold, said upon the release of the study in 2013. “This study establishes Casino as one of the very few world-class long life, copper-gold projects with robust economics at a feasibility study level. The Yukon is a top mining district, and we look forward to securing permits as our next step of development.”

Haywood Securities analyst Stefan Ioannou agrees. Commenting on Casino in a 2014 interview, he said that for a copper project, “[g]enerally speaking a strip ratio of less than 1:1 would be considered low, so 0.59:1 is a relatively low strip ratio, which is good.”

Nemaska Lithium (TSXV:NMX

Nemaska Lithium completed a feasibility study for its Whabouchi mine and concentrator in June 2014. The project is located in the lower James Bay region of Quebec, and the study found that the stripping ratio at the site is comparatively low, at 2.2:1.

For that reason, Whabouchi is anticipated to be a relatively lower-cost hard rock lithium mine. It should produce very little waste and require a smaller mining pit, and these features mean it will be an environmentally friendly site as well.

Euromax Resources (TSXV:EOX)

Euromax is currently advancing the Ilovica copper-gold project in Macedonia. In January 2016, Euromax released results of a feasibility study for the project, with highlights featuring a low strip ratio of 1:1. The study contemplates a conventional open-pit mine with a throughput of 10 million tonnes per year and a mine life of 20 years.

Certainly, low stripping ratios that support low operating costs are advantageous for mining companies in difficult market environments. “We believe that not only are we well positioned to benefit from any improvement in commodity prices, but with cash operating costs now reduced to the USD 200/oz level we are equally well equipped to withstand any sustained weakness in commodity markets, whilst remaining cash flow positive,” said company President and CEO Steve Sharpe upon the release of the study.

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Editorial Disclosure: Western Copper and Gold and Nemaska Lithium are clients of the Investing News Network. This article is not paid-for content.

This is an update of an article originally published by the Investing News Network in June 2014.

 

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