Costs and net profit Given the following information. Left pit wall overall slope angle: 52 ◦ Underground total mining cost: $37.50 /tonne Surface mining cost: $21.25 /tonne Surface stripping cost: $3.90 /tonne of waste Density of ore: 2750 kg/m3 S.G. of waste: 1.8 Strike length of orebody: 485 m Grade of gold ore: 8.2 g/tonne Dilution: 0 % Gold bullion selling price: $1150/oz Mill recovery: 92% Milling cost: $32 /tonne Tax rate: 32% The orebody outcrops at the surface. The existing surface is flat/level When underground mining at this operation should be contemplated, calculate: The total cost of mining the ore of the open pit. The total cost of mining the waste of the open pit. The expected net profit after income taxes for the life of the pit operation.

Costs and net profit Given the following information. Left pit wall overall slope angle: 52 ◦ Underground total mining cost: $37.50 /tonne Surface mining cost: $21.25 /tonne Surface stripping cost: $3.90 /tonne of waste Density of ore: 2750 kg/m3 S.G. of waste: 1.8 Strike length of orebody: 485 m Grade of gold ore: 8.2 g/tonne Dilution: 0 % Gold bullion selling price: $1150/oz Mill recovery: 92% Milling cost: $32 /tonne Tax rate: 32% The orebody outcrops at the surface. The existing surface is flat/level When underground mining at this operation should be contemplated, calculate: The total cost of mining the ore of the open pit. The total cost of mining the waste of the open pit. The expected net profit after income taxes for the life of the pit operation.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 6PB: Underwoods Miners recently purchased the rights to a diamond mine. It is estimated that there are...

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Question

Costs and net profit

Given the following information.

Left pit wall overall slope angle: 52 ^◦

Underground total mining cost: $37.50 /tonne

Surface mining cost: $21.25 /tonne

Surface stripping cost: $3.90 /tonne of waste

Density of ore: 2750 kg/m³

S.G. of waste: 1.8

Strike length of orebody: 485 m

Grade of gold ore: 8.2 g/tonne

Dilution: 0 %

Gold bullion selling price: $1150/oz

Mill recovery: 92%

Milling cost: $32 /tonne

Tax rate: 32%

The orebody outcrops at the surface.

The existing surface is flat/level

When underground mining at this operation should be contemplated, calculate:

The total cost of mining the ore of the open pit.
The total cost of mining the waste of the open pit.
The expected net profit after income taxes for the life of the pit operation.

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Step 1: Explain the term costing.

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Step 2: Determine the total cost of mining the Ore of the open pit.

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Step 3: Compute the cost of mining waste.

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Step 4: Compute the net profit after tax.

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