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

A strip ratio is a measurement related to the open-pit mining process that shows the amount of waste material, also known as overburden, that has to be moved to get a certain amount of ore.

However, strip ratios are not only about the volume of unwanted material present at a site. They also take into account what kind of material must be removed to reach ore. That’s because moving lightweight material like sand or dirt is relatively simple, while moving material like hard rock to get to ore is difficult.

Ore quality is another consideration in strip ratios due to the fact that if ore is low quality, more of it must be mined to achieve a return on investment.

Calculating a strip ratio

The most basic way to calculate a strip ratio is by dividing overburden thickness by ore thickness. For example, an overburden thickness of 100 meters and an ore thickness of 50 meters yields a strip ratio of 2:1. That means mining one cubic meter of ore will require mining three cubic meters of overburden.

Typically, one reduces any strip ratio to show what is necessary to mine one unit of ore. For instance, a ratio of 6:2 would be expressed as 3:1 to make the figure more intelligible at a glance.

Determining profitability

A project’s strip ratio can be used to gauge how profitable it may be. For instance, a project with a very high strip ratio — that is, a project where unwanted material is much greater than the amount of ore that can potentially be extracted — likely will not be profitable. 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, so investors may want to keep that in mind when reading up on companies.

Strip ratios to watch

For a look at what strip ratios mean for real companies, here are two that have used strip ratio to shape their strategy.

Western Copper and Gold (TSX:WRN) has a project with a remarkable strip ratio. Its 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. “This study establishes Casino as one of the very few world-class long live, 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 recently about Casino, 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:NMXrecently completed a feasibility study at its Whabouchi Mine and Concentrator, located in the lower James Bay Region of Quebec. The study found the strip ratio at the site is comparatively low, at 2.2:1.

Whabouchi is anticipated to be a low-cost lithium mine due to this favorable ratio, and should produce very little waste and require a smaller mining pit. These features mean it will be an environmentally friendly site as well.

 

Related reading: 

Western Copper & Gold: Developing One of the Largest Advanced-stage Copper-Gold Resources