F. Investments required: mainly in heavy extraction and crushing machinery at a cost of USD 300,000, corresponding transport and installations at an additional cost of USD 25,000; 2 hopper trucks at USD 45,000 each and 2 buildings: one for administration and storage of materials and other for casino and hostel, both in wood at a cost of USD 125,000. Working capital amounts to USD 15,000. G. Administration costs: estimated at USD 20,000 per year, including contracts for maintenance of casino and the hostel. H. Operating cost: per ton is estimated at USD 12 for first three (3) years, and USD 10 and USD 8 for following two (2) years respectively, according to following data: Periods Expenditure item 1 to 3 4 5 Labor $5 $4 $4 Supplies $1 $1 $1 Spare parts $2 $1 $0 Fuel $2 $2 $2 Other supplies $2 $2 $1 Cost per tons $12 $10 $8 1. Depreciation: is linear, recovery value amounts to 10% of total cost and profit tax rate is 12%. J. Capital required: is provided by Banco de Chile in amount of USD 300,000 and by Fabian Hernandez for needed spread. Bank does not grant grace periods and requires an interest rate of 18%. Loan is in dollars. Background A. Mine is located next to "Los Bronces" mine in Santiago, 20 km away, and is owned by Fabián Hernández, a prestigious Chilean businessman. B. Anglo American is currently interested in acquiring the deposit, mainly because of quality of ore and because there is idle capacity within "Los Bronces" smelter. Anglo American's valuation amounts to USD 125,000. C. Geological studies: ore grade is 3.2% in first layer, 3.8% in second layer and only 2.5% in last and third layer. Rest of deposit is not mineable. D. Estimated reserves: project will have a duration of 5 years, calculated at rate of extracting 30, 25 and 35 tons per day per type of layer respectively. First two layers will be mined in 2 years each and last one in only one year. E. Current prices: according to ore grade, these will be obtained by contract for sale of total deposit and are as follows: Act From To Price A 2.01% 2.50% USD 20/ton BC 2.51% 3.50% USD 30/ton с 3.51% More USD 50/ton