Stripping ratios aren’t often discussed, but they can be an early and important indicator for mining projects. Here’s what investors should know about them.
A strip ratio, or stripping ratio, is an important measurement related to the open-pit mining process.
Put simply, it represents the amount of waste material, also known as overburden, that must be moved in order to extract a given amount of ore. That said, 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. After all, moving lightweight material like sand or dirt is simpler than moving hard rock.
Ore quality is another consideration in stripping ratios. That’s because if a deposit contains low-quality ore, more of it must be mined in order to achieve a return on investment.
Calculating stripping ratios
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 would 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. The lower the strip ratio the better, since a low strip ratio translates into lower mining costs and good prospects for profitability.
Conversely, a project with a very high strip ratio likely will not be profitable. In this case, the unwanted material is much greater than the amount of ore that can potentially be extracted, making it too expensive to mine.
It should be noted that every deposit is different, and a project that benefits from another factor — for example, having high grades — can potentially support a higher strip ratio. Generally speaking, there is an inverse relationship between reserve grade and strip ratio.
With all of this in mind, mining companies calculate strip ratios for open-pit projects well before they enter development and production, and tend to seek out projects with relatively low strip ratios. Even so, given all the factors involved in calculating a strip ratio, it’s difficult to determine an overall ideal figure. In the case of a "typical" large, low-grade copper porphyry deposit, a strip ratio below 3:1 is generally considered good.
Examples of stripping ratios
Mines with good strip ratios include Lundin Mining’s (TSX:LUN,OTC Pink:LUNMF) Candelaria copper-gold-silver mine in Chile at 2.4:1, and Copper Mountain Mining’s (TSX:CMMC,OTC Pink:CPPMF) copper mine in Canada at 2.2:1.
It is also not unusual to see a high-grade volcanic massive sulfide deposit support a strip ratio greater than 5:1.
For example, the high-grade Bisha copper mine in Eritrea posted a strip ratio of 5.4:1 in 2014. Similarly, the high-grade New Liberty gold mine in Liberia had a strip ratio of 15.5:1.
This is an updated version of an article originally published by the Investing News Network in 2014.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Western Copper and Gold is a client of the Investing News Network. This article is not paid-for content.
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