The use and abuse of metal equivalents

S Rose1 and G Fahey2

1.Principal Mining Geologist, CSA Global, Perth, WA 6005. Email: steve.rose@csaglobal.com

2.Principal Mining Geologist, CSA Global, Perth, WA 6005. Email: gerry.fahey@csaglobal.com

ABSTRACT
Metal equivalents provide a useful and concise indication of the value of mineralisation that contains
more than one valuable metal or mineral. They provide a single number that reflects the contributions
of two or more assay results, providing a simpler presentation of information. This works particularly
well in operating mines with well-established recoveries and sales histories. Another application of
metal equivalent is to present unfamiliar or minor exotic metals or minerals in terms that are more
widely understood in the market – though usage can be problematic. Calculation of metal equivalent
is dependent on assay data, metal/mineral pricing and metallurgical recoveries. Shortcomings in the
calculation can occur when values are derived before actual metallurgical recoveries are known or
using unrealistic metal prices.
When reporting Exploration Results, Mineral Resources, or Ore Reserves, for polymetallic deposits,
the JORC Code 2012 Edition, Clause 50, sets out clearly the minimum reporting requirements under
five bullet points and requires the following to be reported:
individual grades for all the metals in the metal equivalent calculation
assumed commodity prices for all the metals
assumed metallurgical recoveries for all metals
a clear statement that all elements have a reasonable potential to be sold
show the calculation formula used
This paper provides a discussion on how to calculate metal equivalent values, and then shows why
and where they are useful. The paper then identifies where errors can be made, and where common
abuses occur, and lastly sets out the expectations for reporting metal equivalents using the JORC
Code.

INTRODUCTION
Many deposits do, or have the potential to, produce more than one economic product, for example
Cu-Pb-Zn-Ag mineralisation, Cu-Au mineralisation or other polymetallic and industrial minerals. In
their intended context, metal equivalent values provide a useful way to summarise the value of
several economic components within a mineralised body. The term used in this paper is “Metal
Equivalents”, but the principles and approach can equally be applied in in deposits where the
economic components are minerals. Metal Equivalents can also be called “Grade Equivalents”.
A literature review for Metal Equivalents shows information with several themes:
Simple explanations for investors (e.g. (Geology for Investors 2019), (Hansen 2012))
Fleeting mention within journal papers about producing mines, accepting the operator’s
approach
Papers about mining optimisation where a cut-off grade is needed to be reported (e.g. (Baird
& Stachwell, 1999))
Reports and stock exchange announcements for mining companies where Metal Equivalents
have been used
Only one textbook was found that set out the principle clearly ( (Annels, 1991)

Mining Geology 2019 / Perth, WA, 25-26 November 2019 81

The literature review tends to show that the use of Metal Equivalents is somewhat poorly defined in
journal articles, other than isolated textbooks, and has grown from practices mainly in use at
operating mines.
At operating mines, the use of Metal Equivalents evolved in order to allow more straightforward
evaluation of mining areas. Its use in exploration reporting is rather different – it is to enable the
investor to more easily understand the complexity of multiple metals and grades, and to better
demonstrates the merit of the mineralisation in question (Hansen 2012).
What the literature review failed to show was any paper giving specific attention to the topic. A couple
of the papers, for instance (Baird and Stachwell 1999), mention that the “traditional approach taken
in the industry… would involve the calculation” of a metal equivalent grade in a multi-metal orebody.
Methods for Metal Equivalent calculation are provided in a textbook, (Annels 1991), in which the
grade of one metal is expressed in terms of another, after allowance has been made for the
difference in metal prices and recovery factors. The textbook gives examples for copper equivalent
calculations for a copper-molybdenum deposit, Nickel Units in use at Sudbury in Canada and also
an approach to Net Smelter Returns (NSR).
The literature review showed the following approaches to Metal Equivalents:
Combined lead-zinc
NSR
Cu-equivalent; Au-equivalent

Combined Lead-Zinc Approach

This has the benefit of simplicity – the values of lead and zinc in percent are added together. It is
appropriate when the product produced by the mine is a zinc-lead concentrate, and where the
received metal prices for the zinc and lead are similar. Graphs of the five year spot prices for zinc
and lead show (Figure 1) that whilst the price movements of the two metals tend to follow the same
pattern, there is a consistent price premium applied to zinc compared to lead. (Kitco Metals, 2019)

Figure 1 – Five-year prices for lead and zinc (USD/lb) (Kitco Metals 2019)

Net Smelter Return (NSR) Approach

This approach calculates a value per tonne mined rather than a head grade. This has the benefit of
clarity and certainty, and the calculation includes representation of the ore quality. It can provide a
clearer measure of the value of an ore block where there are different mining or processing methods
generating different final products (e.g. two or more concentrates, precious metals doré etc.)
(Kuchling 2015). The drawbacks are the complications associated with the calculation and the
requirement for extensive input data. To calculate the NSR value it requires parameters such as
metallurgical recoveries, concentrate characteristics, smelter payable costs, royalties and taxes, and
processing costs, if there are more than one circuit. A change in any one of these parameters
requires a re-calculation of the NSR values. In some operations it may be deemed undesirable to be
showing so directly the value of an ore block. It is clear that the NSR approach can work for operating

Mining Geology 2019 / Perth, WA, 25-26 November 2019 82

mines or development projects at the Feasibility Study stage. Exploration projects will not have
sufficient data to be able to calculate meaningful NSR values.

Cu-Equivalent and Gold-Equivalent Approach

The Cu-Equivalent (CuEq) approach may be most common in copper porphyry deposits, to allow
reporting of subsidiary valuable metals in terms of the predominant copper value.
The Au-Equivalent (AuEq) approach is commonly seen in gold-copper porphyry deposits, and also
in gold-silver deposits, to allow reporting of subsidiary metals in terms of the predominant gold value.

EXAMPLES OF HOW TO CALCULATE METAL EQUIVALENTS

Example 1:
(Annels 1991) gives the following example for calculating a CuEq grade in a copper-molybdenum
porphyry mine
CuEq=(Cutot%-Cuas%)+((NSRMo* molybdenum recovery)/NSRCu * concentrator copper
recovery* smelter recovery for copper)* Mo%)
Equation 1 – Copper equivalent calculation (Annels 1991)
Where Cutot is the total copper grade
Cuas is the acid soluble copper grade
NSRMo is the net smelter return price for molybdenum
NSRCu is the net smelter return price for copper
This example includes a differentiation between valuable and non-valuable copper mineralisation,
allowance for differences in the metal prices, and differences in the metal recoveries.

Example 2:
This example of a metal equivalent equation comes from a current zinc-gold-lead-silver mine. To
express grades in terms of a zinc equivalent (ZnEq) value the following approach is used (Table
2Table and Equation 1).
Table 2 – Example of inputs for a zinc equivalent calculation

Inputs
Realised Unit Recover In Situ Unit price Unit Zinc equivalent
Price * y * factor
Zn 2,179 $/t 92% 20.05 $/t 1.00
Au 52 $/g 70% 36.22 $/g 1.81
Pb 2,537 $/t 75% 19.03 $/t 0.95
Ag 0.5 $/g 65% 0.35 $/g 0.02
* US$

Zn Eq= Zn+(1.81Au)+(0.95Pb)+(0.02Ag)
Equation 1 – Zinc equivalent equation
This considers that a zinc concentrate, and a lead-silver-gold concentrate are produced and sold to
different customers. The realised price is the actual price received by the mine for the sale of the
concentrate and includes Treatment Charge (TC)/Refining Charge (RC) and tax costs. This equation
uses true metal prices and processing plant recovery at the time of reporting.

Example 3:
Whilst Metal Equivalents can prove to be very useful, it is important to also report the grades of the
supporting metals for evaluations, scheduling and production reporting. This is to ensure compliance
with processing plant feed requirements and production budgets. For example, a planned stope in a

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gold-copper-zinc-silver mine is based on using a metal equivalent grade that is well above the
marginal cut-off, but the calculation is carried by high values of the subsidiary metal silver. Mining of
the stope without careful blending may make it difficult to meet concentrate specifications or
production.
Going further, it is possible to have a metal equivalent value which is acceptably above an economic
cut-off but is made up of accumulating components at marginal grades. For example, Equation 2,
with grades of 0.2% Cu, 0.2 g/t Au, 0.1% Pb and 50 g/t Ag will give a CuEq grade of 1.14%.
CuEq= Cu+(1.27Au)+(0.67Pb)+(0.01Ag)
Equation 2 – Example copper equivalent equation
There can be a tendency to confuse the metal equivalent calculation with the cut-off grade
calculation. The metal equivalent calculation uses relative metal prices to allow the statement of
component economic metals in terms of the dominant metal grade. Changes in metal prices tend to
affect all metals together, so may not significantly change the relative prices (e.g. Figure 1 shows
that lead and zinc prices tend to follow the same pattern over time).
The authors suggest that it is better to use long term metal prices and metallurgical recoveries in the
metal equivalent calculations, such as those used for a mine’s annual budget, and to review the
equation only once or twice a year.

Use of Metal Equivalents in Practice

Figure 2 shows an example from a deposit with four economic metals. The resolution of the four
metals into a single CuEq value allows for a much simpler and consistent assessment of the
economic mineralisation. This allows interpretation of the mineralisation domain, in preparation for
grade estimation into a block model. The four metal grades are estimated independently, and then
a CuEq grade calculated for each block. Blocks can then be filtered by the CuEq grade for mining
evaluation.

THE USE OF METAL EQUIVALENTS IN PUBLIC REPORTING

A quick internet search for company announcements involving metal equivalents in the past 12
months gives the following examples

Example 1:
“…returned a total 100-metre intersection grading 2.51% copper, 3.03 grams per tonne (g/t) gold,
and 52.5 g/t silver for a 4.99% copper equivalent (CuEq)”. In calculating the CuEq value the company
has provided the supporting metal prices. It is important to note that the metallurgical recovery is
stated as 100%, because no metallurgical data is available. The equation also includes the full value
of the zinc, gold and silver. In practice there may be lower thresholds to achieve payment for precious
metals within the copper concentrate, and the zinc may only be valuable if sold as a separate zinc
concentrate.

Example 2:
Another recent announcement was “The combined width of mineralisation observed at XXX is now
232 meters of 0.55% copper equivalent (0.47% copper and 0.13 g/t gold).” This did include details
of how the intersection was calculated and the assumed metal prices for copper and gold ($3/lb and
$1300/oz respectively) but had no information about assumed metallurgical recovery. Check
calculation showed it to be 100% recovery. The calculation works as
CuEq = Cu + (0.63Au)
Derived from 1t of ore with 1% Cu is worth (3/ 0.000453592)/100=$66.14
1t of ore with 1g/t Au is worth (1300/31.1035)=$41.80
1g/t Au is equivalent to 41.80/66.14=0.63% Cu
Therefore CuEq=0.47+(0.63*0.13)=0.55%

Mining Geology 2019 / Perth, WA, 25-26 November 2019 84

 Figure 2 – Drill hole cross-section showing on the left-hand side copper, gold, lead and silver
grades, and on the right-hand side CuEq grades. The green line represents the significant assays
based only on the copper grade; the red line represents the significant assay based on the CuEq
grade. The blue dashed line is the mineralisation boundary

Table 3 – Example of exploration results from a company announcement

Hole From To Length Copper Gold Silver Zinc Copper Equivalent

(m) (m) (m) (2) (%) (g/t) (g/t) (%) (%) (1)
DDHXXX 517.00 617.00 100.00 2.51 3.03 52.5 0.41 4.99

(1) Assumptions used in USD for the copper equivalent calculation were metal prices of $2.80/lb
Cu, $1,200/oz Au, $15/oz Ag, $1.20/lb Zn and recovery is assumed to be 100% as no
metallurgical data is available. The following equation was used to calculate copper
equivalence:
Copper Equivalent = Cu (%) + (Au (g/t) x 0.6252) + (Ag (g/t) x 0.007815) + (Zn (%) x 0.4286).

Example 3:
A further recent announcement was “XXX is expected to produce approximately 54.5 kt of copper
and 100 kozs of gold, or approximately 75 kt of copper equivalent”. In this announcement the
company quoted the metal prices ($2.8/lb for Cu and $1250/oz for gold). The announcement uses
the word “produce” so the metallurgical recovery has already been included. This calculation works
as:

((100 koz gold * gold price)/(copper price per tonne))+54.5 kt =75 kt

Which gives (100,000*1250)/(2.8/ 0.000453592)+54,500=75,000t

Mining Geology 2019 / Perth, WA, 25-26 November 2019 85

Example 4:
In the early 2000’s a company announced to the market that it had a potentially minable open pit
project with a Mineral Resource of approximately 3.0 Mt @ 3.0 g/t gold equivalent (Table 4). It was
quite apparent that the individual grades for each of the individual metals were so low that this project
has not yet advanced to a mining stage.
Table 4 – Mineral Resource estimate from Example 4

REPORTING METAL EQUIVALENTS USING THE JORC CODE

When reporting Exploration Results, Mineral Resources, or Ore Reserves, the JORC Code 2012
Edition, Clause 50, sets out clearly the minimum reporting requirements for metal equivalents. It
defines a metal equivalent as being a single equivalent grade of one of the major metals being
reported.
It clearly states that it is essential to show details of all material factors contributing to the net value
derived from each constituent metal and report according to the following five bullet points:
individual grades for all the metals in the metal equivalent calculation
assumed commodity prices for all the metals (Companies should disclose the actual
assumed prices. It is not sufficient to refer to a spot price without disclosing the price used in
calculating the metal equivalent. However, where the actual prices used are commercially
sensitive, the company must disclose sufficient information, perhaps in narrative rather than
numerical form, for investors to understand the methodology it has used to determine these
prices);
assumed metallurgical recoveries for all metals and discussion of the basis on which the
assumed recoveries are derived (metallurgical test work, detailed mineralogy, similar
deposits, etc.);
a clear statement that all elements have a reasonable potential to be sold
show the calculation formula used
The Code logically states that “the metal chosen for reporting on an equivalent basis should be the
one that contributes most to the metal equivalent calculation and If this is not the case, then a clear
explanation of the logic of choosing another metal must be included in the report.”
When calculating a metal equivalent formula estimates of metallurgical recoveries for each metal
must be used and if metallurgical recovery information is not available it is not appropriate to report
using metal equivalents.
The Code provides some cautionary wording stating that for “many projects at the Exploration
Results stage, metallurgical recovery information may not be available or able to be estimated with
reasonable confidence. In such cases reporting of metal equivalents may be misleading”.

CONCLUSIONS
The use of metal equivalents can be helpful for representing several economic metals in terms of
the dominant value metal for operating mines and for projects in advanced study that have sufficient
information about metallurgical recoveries and likely realised prices and there is a single process
stream. Where there is more than one process stream the use of an NSR value can be more helpful.

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On early stage exploration and resource definition projects there is unlikely to be sufficient
information about metallurgical recoveries and realised prices, and so the use of a metal equivalent
value may be less helpful. Indeed, it may be at this stage which is the dominant revenue metal may
not be recognised. The use of a metal equivalent is intended to make it easier for the investor to
understand the mineralisation results. The authors suggest that until actual metallurgical and price
data is available for a project, the use of metal equivalents should be confined to internal and informal
reports.

REFERENCES
Annels, A E. 1991. Mineral Deposit Evaluation: A Practical Approach. Springer.
Baird, B K, and P C Stachwell. 1999. “Application of Economic Parameters and Cutoffs During and After Pit Optimisation.”
SME Annual Meeting. Denver: SME.
Geology for Investors. 2019. geologyforinvestors.com. 6 July. Accessed July 5, 2019.
https://www.geologyforinvestors.com/simple-metal-equivalent-calculator-for-mining-results/.
Gu, Q, J Yuan, Y Lv, Q Wu, and C Lu. 2017. “Optimization of Cut-Off Grades for Molybdenum and Tungsten Open-Pit
Mines.” Proceedings of teh 8th International Conference on Sustainable Development in teh Minerals Industry.
Canamaple Academia Services.
Hansen, Mark. 2012. Market Cap. 5 April. Accessed July 6, 2019. https://marketcap.com.au/about-equivalent-grade/.
Kitco Metals. 2019. Base Metals Stocks and Price Charts. 6 July. Accessed July 7, 2019.
http://www.kitcometals.com/charts/zinc_historical.html.
Kuchling, K J. 2015. 6. Metal Equivalent Grade versus NSR for Poly-Metallics. Preference? 1 May. Accessed July 6, 2019.
https://kuchling.com/metal-equivalent-grade-versus-nsr-for-multi-metals-preference/.
Sun Metals. 2018. Sun Metals Intersects 100 Metres Grading 5% Copper Equivalent in Drill Hole at Stardust Project. 14
November. Accessed July 7, 2019. https://sunmetals.ca/news/2018/sun-metals-intersects-100-metres-grading-5-
percent-copper-equivalent-in-drill-hole-at-stardust-project/.
Undervalued Equity. 2019. Undervalued Equity. Accessed July 6, 2019. https://undervaluedequity.com/metal-equivalent-
calculation-how-to-calculate-the-mineral-equivalents-in-polymetallic-deposits/.

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