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?

Answer 1

		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