I Traworld Nickel Company operaes a ickel mine. The ore comes ous of three pits

Question

I Traworld Nickel Company operaes a ickel mine. The ore comes ous of three pits he tahle below Vorisble mining cost S I in ore ( de ore to a fine grind for sinon. Finely round ore produces 90% of the nickel th is in the ore The current price ofr current price of nickel is $2.40 pound What is the equation for the cost of operating Pi? What is the equation for the cost of operating Pit 2? What is the equation for the cost of operating Pit 37 What is the equation for the cost of operating the grinder? What is the equation to calculate revenue of the operation? What is the profitloss of the three nickel mines?

Explanation / Answer

Pit 1 Pit 2 Pit 3 Conveyor capacity (tons per week) 20000 25000 21000 Variable mining cost ($/ton) 10 9 9.5 Mining cost 200000 225000 199500 Total Crusing cost ($1/ton) 20000 25000 21000 Nickel in ore (%) 2.5 1.8 2.4 Nickel in pounds 100000000 90000000 100800000 Revenue (Nickel $2.4/pound) 240000000 216000000 241920000 (Mining cost + crushing cost)*Capacity Cost Cost of operating for Pit 1 (10+1)*20000 220000 Cost of operating for Pit 2 (9+1)*25000 250000 Cost of operating for Pit 3 (9.5+1)*21000 220500 Cost of operating the grinder (Capacity of Pit 1 + Capacity of Pit 2 + Capacity of Pit 3)*Cost per ton (20000+25000+21000)*1 66000 Revenue of the operation $ R1 Capacity of Pit 1 (tons) * Nickel % in ore in Pit 1 * (2000 pounds/ton) * Cost of Nickel 240000000 R2 Capacity of Pit 2 (tons) * Nickel % in ore in Pit 2 * (2000 pounds/ton) * Cost of Nickel 216000000 R3 Capacity of Pit 3 (tons) * Nickel % in ore in Pit 3 * (2000 pounds/ton) * Cost of Nickel 241920000 Profit is revenue - cost Revenue Cost Profit/Loss Pit 1 240000000 220000 239780000 Pit 2 216000000 250000 215750000 Pit 3 241920000 220500 241699500

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