MINE INVESTMENT ANALYSIS 2023

Note: Student ID (D 1st 2nd 3rd 4th 5th 6th 7th 8th last)

Let’s assume a coal mining company. The company has (3,728,000 + (100 x the 8th digit of student ID)) ton
of coal, and (45,950,000 + (100 x the last digit of student ID)) bcm of waste. The economic life of the
mining is 10 years. The mining strip ratio according to the contract is 6.16. The loading cost for coal is USD
1.73 per ton, and USD 1.56 per bcm for waste.

The contract also regulates that the coal hauling distance is 5.50 km, and the waste hauling distance is
1.00 km. The actual coal distance from the pit to the stockpile is 6,350 m, and the actual waste distance
is 1,710 m. For each of the km coal hauling distance, the cost is USD (5 + (0.1 x last digit of student ID)),
while the hauling cost for the waste is USD (1.00 + (0.1 x the last digit of student ID)) per km. Additionally,
there is a coal overhaul cost rate of USD 0.14 per ton per km, and the waste overhaul cost is USD 0.31 per
bcm per km. Furthermore, there is a coal fuel cost of USD 0.58 per liter per ton, and USD 0.82 per liter per
bcm as waste fuel cost. For overdistance coal hauling, the fuel cost is USD 0.05 per liter per ton per km,
and for the overdistance waste hauling, the fuel cost is USD 0.28 per liter per bcm per km.

In term of the capital expenditure, the company spends USD (5 + (0.01 x the 4 th digit) million for the coal
handling facilities, USD 0.07 million for the equipment, USD 0.20 million for the land acquisition, and USD
0.54 million for other facilities.

Additionally, there are other mining costs listed as below:

COAL PROCESSING
Coal Crushing Rate USD / ton 0.20
Coal Treatment, Fuel and Lubrication Rate USD / ton 0.10
Repair and Maintenance Rate USD / ton 0.09
Laboratory Analysis and Others USD / ton 0.03
COAL HAULING
Haul Distance from CPP to Port km 1.35
Haul to Port Rate USD/ton/km 0.18
Haul to Port Fuel Ratio USD/liter/km 0.21
OTHER MINING
Employee Cost USD / ton 0.85
Equipment Hire Support, Fuel USD / ton 0.00
Repair, Maintenance USD / ton 0.05
Rehabilitation and Environment USD / ton 0.25
Dead Rent and Regional Tax USD / ton 0.00
Sales Tax and Bank Charges USD / ton 0.00
Other USD / ton 1.90
COAL BARGING
Coal Barging Rate USD / ton 0.81
Coal Barging Fuel Ratio USD / ton 0.71
TRANSHIPMENT
Transshipment Rate USD / ton 1.52
Dozer and Stevedore USD / ton 0.54
SELLING COSTS
Selling Expenses USD / ton 0.03
Sales Commission Rate % Revenue 1.5%
The general and administration cost is calculated as 35% of total production cost. The tax and the royalty
are paid accordingly to the Indonesian government law.

The selling price for the coal is according to the coal price index:
Index Unit Assumed Price Composition relative to total production
HBA USD / ton 80.31 35%
ICI1 USD / ton 80.48 5%
ICI2 USD / ton 68.52 15%
ICI3 USD / ton 55.82 10%
ICI4 USD / ton 38.29 15%
ICI5 USD / ton 25.28 20%

Please calculated the cash flow during the mining life, and calculate the NPV, IRR, and PBP as well.