Mineral Economics, Mine Planning, Systems Engineering · Mineral Economics · 2 marks · Numerical answer
A three-year quarry mines 3 million tonnes ore each year. Waste volumes in years 1, 2, 3 are 5.0, 5.5, 5.0 million m³. Ore sells at₹1500/t; ore mining costs₹500/t and waste mining₹500/m³. Initial capital is₹1000 million and discount rate 10%. Ignoring depreciation, salvage and tax, find NPV in million rupees, to two decimals.
Annual ore margin is 3 million×(1500−500)=₹3000 million. Subtract waste costs 2500, 2750, 2500 million to obtain year-end cash flows 500, 250, 500 million. Their discounted sum is 500/1.1+250/1.1²+500/1.1³≈1036.8144 million. Deduct initial capital 1000 to obtain NPV₹36.81 million.
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