Recovery, in mining, most often refers to the ratio between the amount of desired material that is actually produced to that which is handled. For instance, if 1 ton of iron (contained in it's ore) is mined and processed, but only 0.75 tons of iron are actually produced for sale, the recovery is 75%. This means that 25% of the iron was lost along the way (i.e., during transport, processing, etc.) Significant increases in recovery are usually only obtained during the processing of an ore; better technologies allow more of the valuable minerals to be extracted from the gangue.
Dilution, refers to case where unwanted material (i.e., over- or inter-burden) is mined with the desirable ore. This happens because extracting purely the desired mineral is nearly impossible; the waste rock that is mined with the ore dilutes the overall grade of the ore. For instance, suppose an ore has a grade of 1% Cr and the waste rock around it has no chromium. If every ton of rock mined contains 90% ore and 10% waste, the overall grade for the material that must be processed will be 0.9% Cr; it has been diluted. Careful mine design and planning can reduce dilution by mining more ore and less waste.