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Mine Economics
Mining Revenues and Costs

By
Dr. Mehmet Cigla
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1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

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Financial Optimisation
Capital and operating summation
Revenue
Cash flow statement
Marginal ore utilisation
Rate of return

Ore Reserve Analysis

Refined ore Reserves
Break-even analysis
Cut-off grade
Drill-hole evaluation
Marginal analysis
Pit design
Design alternatives
Marginal analysis

Production Scheduling
Pre-production costs
Equipment and Facilities
Working room
Capital intensive
Stripping ratios
Equipment selection
Sequencing
Operation costs
Reclamation
Capital depreciation
Operating schedules
Selective mining
Financial
Constraints

Dohm, G.C., Jr. 1979. Circular analysis–Open pit optimization. Chapter 21 in Open Pit Mine Planning and Design (J.T. Crawford, III and William A. Hustrulid, editors). AIME. Pp 281-310. 3

1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

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Time value of money – a principle based on the timing of cash flows that states $1 to be received in the future is less valuable than $1
received today.

Discounting – A large future amount of cash is reduced to its smaller current equivalent.

Compounding – A smaller amount of cash earns interest and accumulates to a larger amount in the future.

A mining company aims to maximise the value of a mining operation.

• A mining project operates over number of years

• Develop a production plan that ensures maximum value
• Mine high-grade material as early as possible
• Higher cash flows as early as possible (time value of money)

A mining project operates over a number of periods or years

𝑛 = life of a mining project in number of years (number of interest compounding periods)

Cash flow

• Cash outflows – cash costs (capital costs, operating costs, development cost, mineral rights acquisition cost, etc.)
• Cash inflows – revenue from sales
• Cash flow (+/-) = cash inflow – cash outflow

Project time diagram – a presentation of project cash flows

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1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

Calculate Given
(calculated) (known) Appropriate
Quantity Quantity Factor
P F P/Fi,n

P A P/Ai,n

F P F/Pi,n
𝑃 = present value F A F/Ai,n
𝐹 = future value A P A/Pi,n
𝐴 = uniform series of equal payments made at each period (year)
A F A/Fi,n
𝑖 = interest rate or discount rate or rate of return
𝑡 = number (compounding) of years

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1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

Single payment present worth factor

Calculate Given P = present value

(calculated) (known) Appropriate 𝑖 = interest rate or discount rate or rate of return = 10%
Quantity Quantity Factor
𝑡 = number of (compounding) periods
P F P/Fi,n

P A P/Ai,n

F P F/Pi,n

F A F/Ai,n

A P A/Pi,n

A F A/Fi,n

F
𝐏= t
1+i

F −3,400,000 1,697,857 1,481,357 1,640,327 1,816,404 2,397,109

𝐏= = + + + + + 𝐏 = $3,329,215
1+i t 1+0.1 𝟎 1+0.1 𝟏 1+0.1 𝟐 1+0.1 𝟑 1+0.1 𝟒 1+0.1 𝟓

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Uniform series present worth factor

Calculate Given P = present value

(calculated) (known) Appropriate 𝑖 = interest rate or discount rate or rate of return = 10%
Quantity Quantity Factor
𝑡 = number of (compounding) periods
P F P/Fi,n

P A P/Ai,n

F P F/Pi,n

F A F/Ai,n

A P A/Pi,n

A F A/Fi,n

F
𝐏= t
1+i
F −3,400,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000
𝐏=
1+i t = + + + + + = $2,286,180 𝑷 = $2,286,180
1+0.1 𝟎 1+0.1 𝟏 1+0.1 𝟐 1+0.1 𝟑 1+0.1 𝟒 1+0.1 𝟓

𝐴 1+𝑖 𝑡−1 1,500,000 1 + 0.1 5 − 1

𝑷= 𝑃= − 3,400,000 𝑷 = $2,286,180
𝑖 1+𝑖 𝑡 0.1 1 + 0.1 5

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11

1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

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Single payment compound amount factor

Calculate Given F = future value

(calculated) (known) Appropriate
𝑖 = interest rate or discount rate or rate of return = 10%
Quantity Quantity Factor
𝑡 = number of (compounding) periods
P F P/Fi,n

P A P/Ai,n

F P F/Pi,n

F A F/Ai,n

A P A/Pi,n

A F A/Fi,n

𝐅
P= t
F=𝑃 1+i t
1+i

F = 𝑃 1 + i t = 2,397,109 1 + 0.1 0
+ 1,816,404 1 + 0.1 1
+ 1,640,327 1 + 0.1 2
+1,481,357 1 + 0.1 3
+1,697,857 1 + 0.1 4
−3,400,000 1 + 0.1 5

𝐅 = $5,361,734

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Uniform series compound amount factor

Calculate Given F = future value

(calculated) (known) Appropriate
𝑖 = interest rate or discount rate or rate of return = 10%
Quantity Quantity Factor
𝑡 = number of (compounding) periods
P F P/Fi,n

P A P/Ai,n

F P F/Pi,n

F A F/Ai,n

A P A/Pi,n

A F A/Fi,n

F=𝑃 1+𝑖 𝑡

F = 𝑃 1 + 𝑖 𝑡 = 1,500,000 1 + 0.1 0 + 1,500,000 1 + 0.1 1 + 1,500,000 1 + 0.1 2 +1,500,000 1 + 0.1 3 +1,500,000 1 + 0.1 4 − 3,400,000 1 + 0.1 5 𝐅 = $3,681,916

𝐴 1+𝑖 𝑡 −1 5
1,500,000 1 + 0.1 −1
𝑭= 𝐹= − 3,400,000 1 + 0.1 5 𝐅 = $3,681,916
𝑖 0.1

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1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

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Capital recovery factor

Calculate Given A = uniform series of equal payments made at each period

(calculated) (known) Appropriate 𝑖 = interest rate or discount rate or rate of return = 10%
Quantity Quantity Factor
𝑡 = number of (compounding) periods
P F P/Fi,n

P A P/Ai,n

F P F/Pi,n

F A F/Ai,n

A P A/Pi,n

A F A/Fi,n

𝑃𝑖 1 + 𝑖 𝑡 3,400,000 0.1 1 + 0.1 5

𝐀= 𝐀= 𝐀 = $896,911
1+𝑖 𝑡−1 1 + 0.1 5 − 1

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Sinking fund factor

Calculate Given A = uniform series of equal payments made at each period

(calculated) (known) Appropriate 𝑖 = interest rate or discount rate or rate of return = 10%
Quantity Quantity Factor
𝑡 = number of (compounding) periods
P F P/Fi,n

P A P/Ai,n

F P F/Pi,n

F A F/Ai,n

A P A/Pi,n

A F A/Fi,n

𝐹𝑖 3,400,000 0.1
𝐀= 𝐀= 𝐀 = $556,911
1+𝑖 𝑡−1 1 + 0.1 5 − 1

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1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

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Ore is a natural aggregation of one or more solid minerals that can be mined, processed and sold at a profit.

For mining engineers, profits can be expressed in simple equation form as

Gold

Profits = Revenues − Costs $/g or $/t.oz

Revenues = Material sold (units) × Price/unit

Costs = Material sold (units) × Cost/unit Copper

$/lb or $/t
Profits = Material sold (units) × (Price/unit − Cost/unit)

A failure to keep up is reflected quite simply by the profit equation as

Iron
Profits < 0
$/t
For mining engineers (including students and practicing), the meaning of ore is:

Ore ≡ Profits ≡ Jobs

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https://goldprice.org/

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21

1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

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1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

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25

1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

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0.6 𝑡𝑜𝑛𝑛𝑒𝑠 𝑜𝑓 𝐶𝑢
𝟎. 𝟔% 𝑪𝒖 = =⇒
100 𝑡𝑜𝑛𝑛𝑒𝑠 𝑜𝑓 𝑜𝑟𝑒

Cu Price
25 𝑡𝑜𝑛𝑛𝑒𝑠 𝑜𝑓 𝐶𝑢 NSR = ? $/tonne
𝟐𝟓% 𝑪𝒖 = =⇒ 8,000 $/tonne
100 𝑡𝑜𝑛𝑛𝑒𝑠 𝑜𝑓 𝑐𝑜𝑛𝑐𝑒𝑛𝑡𝑟𝑎𝑡𝑒

(Wellmer et al, 2008)

Calcopyrite CuFeS2

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Refinery Metal Economy

Stockpile Product
𝐆 CM = Contained metal (tonne)
𝐂𝐌 =
100 G = Metal concentrate percent (%)

Reclaim 𝐂 G−𝐮 Me = The payable metal content (tonne)

𝐌𝐞 = C = The credited percentage of the metal content (%)
100 100
u = The fixed unit deduction (%)

C G−u GV = the gross value ($/tonne of concentrate)

Ore
Process 𝐆𝐕 =
100 100
𝐏 P = Current price ($/tonne)
Mine Sag Mill
Ball mill
Flotation
BSR = Basic smelter return (($/tonne)
C G−u
𝐁𝐒𝐑 = P−𝐫 −𝑇 r = The refining and selling cost ($/tonne of payable metal)
100 100 T = The treatment charge ($/tonne of payable metal)

C G−u X = The penalty charge due to excessive amounts of

Waste Waste 𝐍𝐒𝐑 = 𝑃−r −𝑇−𝑿+𝒀 certain elements ($/tonne of concentrate)
100 100
Y = The credit for valuable by-products recovered
($/tonne of concentrate)

𝐀𝐌𝐑 = 𝑁𝑆𝑅 − 𝑅 AMR = At-Mine-Revenue ($/tonne)

R = Realization Cost ($/tonne)
Waste Dump Tailings
𝐴𝑀𝑅
𝐏𝐏 = 100 PP = Percent payment (%)
𝐺𝑉

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Metal Content Cu GCu 30 % The copper provides the major source of income.
Gross value GVCu 2273.60 $/t of concentrate C G−u
Ag GAg 30.00 t.oz/t
G = P
GPb 2.0 % 100 100
Pb
Payments Credited % Ccu 98 % G =𝑀 P
Fixed unit deduction ucu 1.0 %
Credited % CAg 95 % Basic smelter return BSRCu 2102.55 $/t of concentrate
C G−u
Fixed unit deduction uAg 1.00 t.oz = P− 𝑟 −𝑇
100 100
Credited % CPb NA %
uPb NA % = 𝑀 𝑃− 𝑟 −
Fixed unit deduction
Price Copper price PCu 8,000 $/t Element assessment Deleterious element Pb 75.00 $ per unit
Silver price PAg 25.00 $/t.oz 1.0 % unit is free
0.00 $ per unit
Lead price PPb 4,000 $/t 0.00 % unit is free
Deductions Treatment charge TCu 100 $/t of concentrate 0.00 $ per unit
rCu 250.00 $/t of concentrate 0.0 % unit is free
Refining/selling cost
XPb 75.00 $/t
rAg 1.50 $/t.oz of accountable metal
X 0.00 $/t
rPb NA X 0.00 $/t
Contained metal CMCu 0.30 t Total 75.00 $/t
G By-product credit Ycu 0.00 $/t of concentrate
CMAg 30.00 t.oz C = 𝐶 𝐺 −𝑢
100 YAg 647.43 $/t of concentrate = 𝑃 −𝑟
CMPb 0.02 t 100 100
YPb 0.00 $/t of concentrate
Payable metal content MeCu 0.28 t
C 𝐺−𝑢 Net Smelter Return NSR 2674.98 $/t of concentrate C G−u
MeAg 27.55 t.oz = = 𝑃− 𝑟 −𝑇 − +
100 100 100 100
MePb NA t
= 𝑆𝑅 − +

Transport (freight) cost F 50.00 $/t of concentrate

Insurance I 0.00 $/t of concentrate
Sales agent commision S 0.00 $/t of concentrate
Realization cost R 50.00

At mine revenue AMR 2,624.98 $/t of concentrate = 𝑁𝑆𝑅 − 𝑅

Gorss value of the metal contained GV for Cu 2,400.00 $/t of concentrate G

GV for Ag 750.00 $/t of concentrate G = P
100
GV for Pb 80.00 $/t of concentrate
GV 3,230.00 $/t of concentrate
𝐴𝑀𝑅
Percent payment PP 81 % PP = 100
𝐺𝑉

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1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

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Refinery Metal Economy

Stockpile Product
𝐆 CM = Contained metal (tonne)
𝐂𝐌 =
100 G = Metal concentrate percent (%)

Reclaim 𝐂 G−𝐮 Me = The payable metal content (tonne)

𝐌𝐞 = C = The credited percentage of the metal content (%)
100 100
u = The fixed unit deduction (%)

C G−u GV = the gross value ($/tonne of concentrate)

Ore
Process 𝐆𝐕 =
100 100
𝐏 P = Current price ($/tonne)
Mine Sag Mill
Ball mill
Flotation
BSR = Basic smelter return (($/tonne)
C G−u
𝐁𝐒𝐑 = P−𝐫 −𝑇 r = The refining and selling cost ($/tonne of payable metal)
100 100 T = The treatment charge ($/tonne of payable metal)

C G−u X = The penalty charge due to excessive amounts of

Waste Waste 𝐍𝐒𝐑 = 𝑃−r −𝑇−𝑿+𝒀 certain elements ($/tonne of concentrate)
100 100
Y = The credit for valuable by-products recovered
($/tonne of concentrate)

𝐀𝐌𝐑 = 𝑁𝑆𝑅 − 𝑅 AMR = At-Mine-Revenue ($/tonne)

R = Realization Cost ($/tonne)
Waste Dump Tailings
𝐴𝑀𝑅
𝐏𝐏 = 100 PP = Percent payment (%)
𝐺𝑉

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Refinery Metal Economy

Stockpile Product

C G−u
= 𝑃−𝑟 −𝑇− +
100 100
Reclaim

C G−u
= P − 𝑟 ± e1 − ± e2 − X +
100 100

Ore
Process
Mine Sag Mill
Ball mill
Flotation C = The credited percentage of the metal content (%)
G = Metal concentrate percent (%)
u = The fixed unit deduction (%)
P = Current price ($/tonne)
r = The refining and selling cost ($/tonne of payable metal)
Waste Waste T = The treatment charge ($/tonne of payable metal)
e1 e2 = Cost escalation ($/tonne)
X = The penalty charge due to excessive amounts of certain elements ($/tonne of concentrate)
Y = The credit for valuable by-products recovered ($/tonne of concentrate)

Waste Dump Tailings

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1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

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Capital cost
Operating cost
General and administrative cost (G&A)

Shovel and Truck Wheel Loader Drill Rigs

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Capital cost
Operating cost
General and administrative cost (G&A)

Haul Road

4. Haul

Haul Trucks being Loaded

3. Load

2. Blast Broken ore or waste

Blast holes

1. Drill

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Capital cost
Operating cost
General and administrative cost (G&A)

The G&A cost could include one or

more of the following:

Area supervision;
Mine supervision;
Employee benefits;
Overtime premium;
Mine office expense;
Head office expense;
Mine surveying;
Pumping;
Development drilling;
Payroll taxes;
State and local taxes;
Insurance;
Assaying;
Mine plant depreciation.

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1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

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AusIMM Cost Estimation Handbook AusIMM Cost Estimation Handbook

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1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

39

39

Assume that the cost of the mine maintenance building

was $100,000 in June of 1978.

uilding cost index (June 1989)

Cost June 1989 = Cost June 1978 ×
uilding cost index (June 1989)

2634
Cost June 1989 = $100,000 ×
1674

Cost June 1989 = $100,000 × 1.57

Section 2.4.3, page 126-131)

Cost June 1989 = $156,000

40

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Section 2.4.3, page 126-131)

41

41

1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

42

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Sherpa for Surface Mines

https://www.youtube.com/watch?v=shAkHI1eebg

43

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Sherpa for Surface Mines

Chapter 2.6.3, pages 405-424)

?

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44

22
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1. Economic Concepts - Basic Concepts and Terminology

2. Economic Concepts - Compound Interest
3. Economic Concepts - Present Value
4. Economic Concepts - Future Value
5. Economic Concepts - Uniform Series of Payments
6. Estimating Revenues – Current Metal Prices
7. Estimating Revenues – Historical Price Data
8. Estimating Revenues – Trend Analysis
9. Estimating Revenues – Net Smelter Return
10. Estimating Revenues – Price-cost Relationships
11. Estimating Costs – Types of Costs
12. Estimating Costs – Costs from Actual Operations
13. Estimating Costs – Escalation of Older Costs
14. Estimating Costs – Software for Cost Estimating
15. Estimating Costs – Current Equipment, Supplies and Labor Costs

45

45

https://www.caterpillar.com

https://www.hitachicm.com

https://www.lnh.net

https://www.komatsu.com.au

https://www.liebherr.com

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46

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