One method of exploitation of an ore mine that contains 1 million metric tons of ore...

One method of exploitation of an ore mine that contains 1 million metric tons of ore will result in a recovery of 70% of the available ore deposit and will cost $25 per ton of material removed. Another method of exploitation will recover 60% and will cost $20 per metric ton of material removed. Subsequent processing of the removed ore recovers 200 kg of metal from each ton of processed ore and cost $50 per metric ton of ore processed. The recovered metal can be sold for $2.0 per kg. Which method for developing the mine is preferred to maximize total profit from the mine?

Solutions

Expert Solution

Available Capacity (in mt tonne)	10,00,000
Particulars	Option 1	Option 2
Recovery Rate	70%	60%
Recovered (in mt Tonnes) A	7,00,000	6,00,000
Tonne per Metric Tonne (B)	1.10231	1.10231
Tonnes (C=A*B)	7,71,617	6,61,386
Cost of removal	25	20
Total Cost of removal	1,92,90,425	1,20,00,000
Processing Cost (50 per mt tonne) (B*50)	3,50,00,000	3,00,00,000
Metal Recovery (In Kgs) (D=C*200)	15,43,23,400	13,22,77,200
Revenue (E=D*2)	30,86,46,800	26,45,54,400
Profits (E-Proc Cost - Cost of removal)	25,43,56,375	22,25,54,400

Catch in this question in Cost of removal.

For Option 1 it is 25 per tonne (25*771617)

For Option 2 it is 20 per metric tonne (20*600000).

Recommended to go ahead with Option 1.

Please Like and Support!!

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

ABC, Inc. purchased for $3,800,000 a mine estimated to contain 2.5 million tons of ore. When...

ABC, Inc. purchased for $3,800,000 a mine estimated to contain 2.5 million tons of ore. When the ore is completely extracted, it was expected that the land would be worth $200,000. A building and equipment costing $1,800,000 were constructed on the mine site, and they will be completely used up and have no salvage value when the ore is exhausted. During the first year, 750,000 tons of ore were mined, and $300,000 was spent for labor and other operating costs....

Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded...

Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 63,400 pounds of copper. The joint cost related to the operation was $500,000. Gold sells for $325 per ounce and copper sells for $0.85 per pound. Allocate the joint costs using the relative sales values. With these costs, what is the profit or loss associated with Copper?

Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded...

Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 62,800 pounds of copper. The joint cost related to the operation was $500,000. Gold sells for $325 per ounce and copper sells for $0.89 per pound. Allocate the joint costs using the relative sales values. With these costs, what is the profit or loss associated with Copper?

Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded...

Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 63,700 pounds of copper. The joint cost related to the operation was $500,000. Gold sells for $325 per ounce and copper sells for $0.85 per pound. Allocate the joint costs using the relative sales values. With these costs, what is the profit or loss associated with Copper? Round to two decimal places.

Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded...

Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 63,400 pounds of copper. The joint cost related to the operation was $500,000. Gold sells for $325 per ounce and copper sells for $0.91 per pound. Allocate the joint costs using the relative sales values. With these costs, what is the profit or loss associated with Copper? Round to two decimal places

Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded...

Landmark Coal operates a mine. During July, the company obtained 500 tons of ore, which yielded 250 pounds of gold and 62,500 pounds of copper. The joint cost related to the operation was $500,000. Gold sells for $325 per ounce and copper sells for $0.85 per pound. Allocate the joint costs using relative weight. With these costs, what is the profit or loss associated with Copper? Round to two decimal places.

A power plant burns 220.0 metric tons of coal that contains 2.50 % (by mass) sulfur....

A power plant burns 220.0 metric tons of coal that contains 2.50 % (by mass) sulfur. The sulfur is converted to SO2 during combustion. How many metric tons of SO2 are produced? blank.png _____ metric tons When SO2 escapes into the atmosphere it may combine with O2 and H2O, forming sulfuric acid (H2SO4) as the only product. Write a balanced equation describing this reaction - you may ignore the states of matter.How many metric tons of sulfuric acid, a component...

A power plant burns 190.0 metric tons of coal that contains 3.80 % (by mass) sulfur....

A power plant burns 190.0 metric tons of coal that contains 3.80 % (by mass) sulfur. The sulfur is converted to SO2 during combustion. How many metric tons of SO2 are produced? How many metric tons of sulfuric acid, a component of acid rain, could be produced from the quantity of SO2 calculated in Part 1?

1.A stockpile of approximately 50 metric tons of plutonium exists in the United States as a...

1.A stockpile of approximately 50 metric tons of plutonium exists in the United States as a result of disassembling warheads from the nuclear arms race. What is the likely fate of this plutonium? (Hint: Search for plutonium disposal. Try also including United States and DOE in your search string.) a. Some propose that the plutonium be sent to local nuclear power plants to “burn” as fissionable fuel. What are the advantages and disadvantages of such a course of action? b....

1. Suppose tin mine’s workers can dig up two tons of tin ore per hour and...

1. Suppose tin mine’s workers can dig up two tons of tin ore per hour and tin ore sells for $20 per ton. Also assume that the tin mine is the only hirer of miners and faces the following labor supply function: I =30w where I is the number of workers per hour and w the wage rate per hour and that the firm’s hiring decisions affect wages. Calculate the following: a. the marginal revenue product per hour of the...

Subjects