Computer-assisted Monte Carlo simulation of optimum cut-off grade in surface mining metal ore deposits

This study attempts to obtain the optimum cut-off grade using Monte Carlo simulation assisted by real option theory. After studying the existing theories of real options, we introduce a jump diffusion real options price model to the traditional research on mineral resources price, and deduce a back - calculation formula about cut-off grade; then, produce some future prices by stochastic simulation; and then, simulate the future price changing process by using computer-assisted Monte Carlo method and indirectly obtain the optimal current cut-off grade; finally, take a mining enterprise as the detailed example to validate the results.