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MI31004 Economics of Mining Enterprises ES 2017

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50 views3 pages

MI31004 Economics of Mining Enterprises ES 2017

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Sunil
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INDIAN INSTITUTE OF TECHNOLOGY, KHARAGPUR Department of Mining Engineering Economies of Mining Enterprises (MI31004) Spring 2017 Final Examination Total Points - 100 Number of Students - 62 Rules: ‘The exam is designed for 180 minutes. ‘There are two sections in this paper. Please answer all questions in each section. Answer each question on a different page. This exam is closed book. Provide clear details of your assumptions and calculations IfT cannot understand your logic, I cannot give you eredit, GOOD LUCK 1. Safety and Metal Prices a. Identify at least 5 safety hazards in the picture below. b. Discuss the link between the Indian economy and the global price of gold. 2, Time Value of Money a. Why is the risk premium higher for new charged by a financial institution for a mining project? ~05 points —05 points ing projects? How can we help reduce the risk premium ~05 points b. The following data is available for a small open cast Copper mine with average 0.9 % Cu grade: ‘Activity Time Capital | Mining Cost | Processing] Waste | Ore | (month | Expenses | (Rs/ton) Cost (Rs/ton) | (tons) | (tons) = [eees) a | Ground clearance 1 Rs_5.00 lac: 1,000. Setup 3 Rs 12.00 lacs Initial box cut 1 Rs 10.00 lacs 200 150 | 20,000 | 1,000 First benching _ 1 Rs_9.00 lacs 200 150 | 14,000 | 3,000 Year 1 ae Rs 55.00 lacs 200 | 150 | 25,000 | 16,000 Year2_ 12 [Rs 2.00 lacs 220 150 | 28,000 | 36,000 _Year 3 12 Rs_2.00 lacs 220 150 | 25,000 | 36,000 Year 4 12 Rs_2.00 lacs 240 200 | 26,000 | 36,000 [Year 5 12 Rs_2.00 lacs 250 200 | 27,000 | 36,000 Year 6 12 Rs_ 2.00 lacs 260 200 | 28,000 | 36,000 [Year 7 12 Rs 22.00 lacs 270 200 | 29,000 | 36,000 Year 8 12 Rs_3.00 lacs 280 200 | 28,000 | 36,000 | ot ae 12 Rs_2.00 lacs 300 200 | 26,000 | 36,000 Year 10 __12 Rs_2.00 lacs | _ 320 240 | 24,000 | 36,000 Year 11 12 Rs 4.00lacs | 340 240 | 18,000 | 33,000 Year 12 8 Rs 42.00 lacs 350 240 | 6,000 | 20,000 Calculate the NPV for the project making necessary assumptions. Is the project likely to be interesting to an investor? ~ 20 points 3. Write short notes on: a. Difference between Saturation Prospecting and Concept Oriented Exploration —03 points b. Objectives of mineral taxation — 03 points. ¢. Importance of trade-off studies in a mining project ~04 points 4, Material Balance a. Why is it important to track the flow of valuable minerals in a mining operation? _ — 05 points b. A large copper mine is producing 2000 tonnes per day of Run-of-Mine ore at 1.2% copper. The deposit is known to contain about | ppm of gold and 5 ppm of silver. If the recovery of copper in the concentrator is 85% and all the gold and silver is expected to be released into the tailings, what could be the value of 1 tonne of concentrate? Assume that 1000 tonnes of ore yields 30 tonnes of concentrate Show the details of your calculations ~10 points 5. Sampling and productivity a. What are the common methods of estimating mineral resources using drill hole data — 05 points b. A vein was sampled by drilling at different locations and the width and assay values at each location is given below: Drillhole_ | Northing | Easting [ Width | Assay 1 430 120 100 | 12.12 2 490[ 115 | 120 | 22.30 3 340, 135| 80 | 18.64 4 470 | 220/60 | 24.80 3 410 230[ 40 | 16.30] 6 520, 24075 [14.44 7 450 300 95 | 15.25 8 400 [310 | 110 | 17.50 9 495{305[ 85] 14.11 Make a sketch showing the drillholes and estimate the width and grade of the resource using the polygonal method (Use a graph paper to do this problem). — 10 points 6. Mine Finance a, What are the common sources of mine finance available in India? — 02 points b. Explain the concept of Weighted Average Cost of Capital = 03 points c. A mining company is looking to finance a Rs 100 crore project using different sources of finance. The cost of equity capital is currently 15%, preference share capital can be procured at 8% and term loans are available at 4%. If only Rs 30 crores is available as term loans, and preference shares cannot exceed 30% of total equity capital, what is the Weighted Average Cost of Capital for the financing of this project? = 10 points

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