The optimum plant capacity for a new mine is usually based on empirical studies or rules of thumb', subject to confirmation by detailed scheduling of the proposed mining operation. The mining industry has a record of poor returns on investment and a high rate of project failure using these methods, with under-performance in grade being a common experience._x000D_
The assumption that economies of scale' will result from increasing throughput rates needs to be balanced by an awareness of the adverse effects of increasing the rate beyond a level that is supportable by the resource. For each scale of operation considered, it is a reality that for any intended head grade, at the associated intended cut-off grade, the actual head grade achieved will fall as the mining rate increases. This effect is known to people at operations but is not recognised in current ore reserve estimation methodology._x000D_
Once recognised, this dependency of head grade on mining rate can be quantified and used to establish the economically optimum mining and processing rate for a new project. A simple analysis is proposed, which may be extended to detailed spreadsheet modelling for financial optimisation.