Economic Evaluation of Mine Plans

Feasibility studies for mine lease renewal require NPV positive at hurdle rate (often 12–15% real for Indian PSUs). Sensitivity spider charts show NPV vs price, grade, and capex — bankers focus on downside case.

Capital vs operating trade-off: in-pit crusher high capex, lower $/t haul; smaller fleet opposite. Payback simple metric but ignores time value — use discounted payback for comparison.

Hartman & Mutmansky cash flow templates include working capital, salvage, and closure costs — omitting closure violates DMF and EIA commitments.

operating cost $/t moved or$/t ore

Relation 1 —

Write this relation with symbols exactly as in Hustrulid Open Pit Mine Planning — Standard reference before substituting numbers. Examiners award partial marks for a correct setup even when arithmetic slips.

Relation 2 —

Write this relation with symbols exactly as in Hustrulid Open Pit Mine Planning — Standard reference before substituting numbers. Examiners award partial marks for a correct setup even when arithmetic slips.

Relation 3 — operating cost $/t moved or$/t ore

operating cost $/t moved or$/t ore

Write this relation with symbols exactly as in Hustrulid Open Pit Mine Planning — Standard reference before substituting numbers. Examiners award partial marks for a correct setup even when arithmetic slips.

IRR: discount rate r where NPV = 0 — project accepts if IRR > hurdle. Multiple IRR possible with non-conventional cash flows (sign changes). NPV more reliable for ranking mutually exclusive projects.

Payback = initial investment / annual net cash flow — simple undiscounted; discounted payback uses PV of flows until cumulative ≥ 0.

Operating cost $/t ore or$/t moved — strip cost often $/t waste separate from$/t ore mining and milling. Benchmark against similar Indian deposits — low grade needs low operating cost.

Sensitivity: vary metal price ±20%, grade ±10%, forex — tornado chart ranks drivers. Monte Carlo assigns distributions to inputs for P10/P50/P90 NPV — used in bankable feasibility for foreign investment.

State assumptions explicitly before using any relation for economic evaluation of mine plans — steady state, uniform properties, linear elastic material, ideal gas, incompressible flow, etc., as applicable.

Wrong assumptions invalidate the entire solution even when the formula is correct. In Mine Planning viva and GATE descriptive questions, listing valid assumptions often earns separate marks.

1. Read the question and list given data with SI units (common in Mine Planning papers).
2. Draw a neat labelled diagram where applicable — examiners in Indian universities award diagram marks even when arithmetic slips.
3. Identify which relation from this topic applies to economic evaluation of mine plans.
4. Use equation 1: .
5. Use equation 2: .
6. Substitute values, compute, and verify units and sign (direction).
7. State conclusion in one line — e.g. safe/unsafe, stable/unstable, feasible/infeasible.

Economic Evaluation of Mine Plans appears in life-of-mine studies. In Indian mining curricula this topic is tested because it connects theory to reserves, layout, and scheduling.

GATE and semester exams often combine economic evaluation of mine plans with earlier units — revise prerequisites before attempting mixed problems.

Industry interview panels sometimes ask: "Where did you use economic evaluation of mine plans?" — answer with a lab, mini-project, or plant visit example if possible.

• IRR comparison when projects differ in scale (use NPV at common hurdle)
• Omitting royalty (ad valorem on revenue) and DMF 10% of royalty in India
• Payback from revenue instead of net cash flow
• Sensitivity one variable at a time hides correlation (price and FX together)

Before attempting economic evaluation of mine plans problems, confirm you can:

1. Sensitivity to metal price and grade
2. Capital vs operating trade-off
3. Royalty and tax in cash flow

Revise the solved examples in Hustrulid Open Pit Mine Planning — Standard reference and one previous-year GATE or university paper for this unit.