If you’re reading a mining news release and see a company say something like “1.5 g/t AuEq” or “2.4 per cent CuEq,” that’s an equivalent grade. It is a way of combining multiple metals in a deposit into one simplified number. The problem, however, is that the equivalent grade calculation is often done incorrectly!
Our friend the straw man is confused: “But an equivalent grade just adds up the value of each metal using today’s prices. Everybody does it!”
And that is where the trouble begins.
Let’s think about it in terms of making a smoothie. Imagine you’re blending a smoothie with bananas, strawberries and spinach. You decide to call it a “banana-equivalent smoothie” by counting how much each ingredient costs, and then converting it into banana terms.
But here’s the thing: you don’t absorb all the nutrients equally, and not everything blends the same way. The blender (your processing plant) handles bananas better than spinach. Plus, you’re throwing some of it away (like smelter losses). So, while it sounds like all the ingredients are giving you equal banana power, they’re not!
Only considering price-weighted equivalent grade—simply adding together the grades of each metal, multiplied by their market price—suggests that all the metals are equally recoverable, equally payable and equally marketable. In the real world, they are not because:
» You never recover 100 per cent of any metal;
» You recover some metals better than others. Most mines are built to prioritize one key metal; and
» No smelter will pay you for all the metal you recover. Payables, deductions and penalties are part of mining. You’re selling concentrate under specific commercial terms, not a theoretical blend.
So, if you only use price to calculate an “equivalent” grade, you’re really just expressing a gross metal value. And that just doesn’t tell the whole story.
Wait a minute...an equivalent grade is not a gross value?
Yes, it is. When you take the total price of all the metals in a rock and divide it by the price of one main metal (like gold or copper), you’re not doing anything special. You’re just turning a dollar amount into “metal units.” It’s still the same total value, just written in ounces of gold or tonnes of copper instead of dollars. That doesn’t make it a true equivalent grade, it’s just a fancier way of showing the same number.
Gross value doesn’t consider recovery, payables or processing costs, and neither does a price-weighted “equivalent.”
So, what is the real-world equivalent grade?
Take the grades of each commodity and multiply each by that commodity’s unit price, its recovery and the payable fraction of its price. Then divide by the unit price, recovery and payable fraction that applies to the principal commodity.
Equivalent grade =
(Grade₁ × Price₁ × Recovery₁ × Payable₁
+ Grade₂ × Price₂ × Recovery₂ × Payable₂ + …)
÷ (Pricem × Recoverym × Payablem)
Where:
» Each “₁,₂…” is a commodity in your resource;
» “m” is the main commodity, the unit you want to express your equivalent grade in (e.g., copper (CuEq), gold (AuEq));
» You apply metallurgical recoveries and commercial payables to each metal; and
» Include the formula in your disclosure! Math makes it real.
But we’ve always done it this way.
Not really. One of us looked back through the archives of The Northern Miner and equivalent grades weren’t commonly reported until the mid-1980s, when gold-silver producers reported “gold-equivalent” production and platinum producers reported equivalent grades in concentrates. Those numbers—recovered and payable metal—made sense. Moreover, mine operators using equivalents recognized that any “equivalency” between metals had to take both price and recovery into account. But around 1988, equivalent grades started showing up in resource estimates, before anyone knew whether those resources would be economically extractable. That’s when the shortcut turned into a marketing tool.
So, it’s not traditional. But isn’t it a requirement?
Not at all. Back in 2003, the CIM Estimation of Mineral Resources & Mineral Reserves Best Practice Guidelines said this about grade equivalents:
Reporting of mineral or metal equivalence should be avoided unless appropriate correlation formulae, including assumed metal prices, metallurgical recoveries, comparative smelter charges, likely losses, payable metals, etc., are included.
Even before that, Raymond Goldie and Peter Tredger’s classic 1991 paper on net smelter return models conceded equivalent grade was widely used but was “misleading” and “should be avoided.” No literature we’ve been able to find accepts pure price-weighting as an equivalent grade. Authors always include recovery and most also include costs. Regulators are not alone in their thinking.
If we have to include recovery factors, what if we assign a partial recovery—say 80 per cent—to all the metals in the equivalent?
Let’s check that math. Multiply the numerators by 0.8 and the denominator by 0.8 and you’ve multiplied the grade by...one. Sadly, you haven’t corrected anything. You must apply actual or reasonably assumed recoveries and payables.
Other standards like JORC (Australian Joint Ore Reserves Committee) and SAMREC (South African Mineral Reporting Code) don’t restrict price-weighted equivalents.
Both JORC Clause 50 and SAMREC Clause 74 require individual metal grades and recovery factors. SAMREC goes further, requiring the equivalent to take account of netback. So yes, other jurisdictions agree that price-weighted equivalents don’t meet best-practice standards.
What about sums of grades, like total platinum group elements? Those aren’t equivalents.
Those are equivalent grades too, just without any weighting. They treat all metals as equally valuable and recoverable, which is rarely true.
But total rare earth oxides are an industry standard.
Let’s examine this. Total rare earth oxides include unmarketable rare earths and low-priced commodities that may not figure into a project’s economics. Only a few rare earths (like neodymium, praseodymium, dysprosium and terbium) are actually valuable. A lot of public companies think reporting in this way is meaningful, but just because others do it doesn’t make it right.
Equivalent grades have to be calculated with care and attention to all the economic factors as they apply to each payable commodity. We leave the last word to Foghorn Leghorn in the classic Warner Brothers cartoon A Fractured Leghorn: “It’s mathematics, son. You can argue with me, boy, but you can’t argue with figures.”
Vanessa MacLean is a senior geologist at the British Columbia Securities Commission. James Whyte retired in 2023 from his role as a senior geologist at the Ontario Securities Commission. Both authors are writing in their private capacity.
