Mine Economics

Question 1

Rock containing metal that is economic to mine (measured in metric tons)

Answer 1

Ore

Question 2

The amount of metal contained per unit of ore (grams/ton or %)

Answer 2

Grade

Question 3

The percentage of metal that is recoverable from ore after the extraction process (%)

Answer 3

Recovery

Question 4

The amount of metal produced (oz/year)

Answer 4

Production

Question 5

Based on smelter terms, refers to the amount of money that is paid or the percentage of the metal that is paid full price for

Answer 5

Payability

Question 6

Payment made by a producer of minerals, oil, or natural gas to the owner of the site or of the mineral rights over it

Answer 6

Royalties

Question 7

Includes initial capital (construction of mine) and sustaining capital (ongoing equipment, etc.)

Answer 7

Capital costs

Question 7

Mine site operating costs include mining, milling, labor, energy, and consumables (measured in cost per ton of material)

Answer 7

Cash costs

Question 7

Per ton basis (e.g., $2.50/ton for mining)

Answer 7

Operating Costs

Question 7

Ore (tons) x Grade (g/t) x Recovery x Payability x Metal Price

Answer 7

Revenue

Question 7

Mine site costs + corporate G&A + sustaining capital to maintain the mine + capitalized exploration to continue to explore for reserves and resources (exclude interest or taxes)

Answer 7

All-in sustaining costs

Question 8

A percentage of production bases over the entire life of the mine

Answer 8

Depreciation

Question 9

Takes place at the end of a mine’s life; accrued for accounting purposes but not accrued in a cash flow model

Answer 9

Reclamation costs

Question 9

Can often be complicated with mining companies operating in several countries; mining specific taxes and royalty agreements need to be considered

Answer 9

Taxes

Question 10

Changes in accounts receivable, inventory, and accounts payable should be factored into a cash flow model.

Answer 10

Changes in working capital

Question 11

Expenses incurred but not charged against the current year’s operation.

Answer 11

Deferred charges

Question 12

An accounting device, used primarily in tax computations. It recognizes the consumption of an ore deposit, a mine’s principal asset.

Answer 12

Depletion

Question 13

The periodic, systematic charging to expense of plant assets reflecting the decline in economic potential of the assets.

Answer 13

Depreciation

Question 14

Underground work carried out for the purpose of opening up a mineral deposit. Includes shaft sinking, crosscutting, drifting and raising

Answer 14

Development

Question 14

The minimum price below the par value at which treasury shares may legally be sold

Answer 14

Discount

Question 15

Made when a dividend has been paid to the previous holder because stock has not yet been transferred to the name of the new owner.

Answer 15

Dividend claim

Question 16

Cash or stock awarded to preferred and common shareholders at the discretion of the company’s board of directors.

Answer 16

Dividend

Question 17

Possessions such as buildings, machinery and land which, as opposed to current assets, are unlikely to be converted into cash during the normal business cycle

Answer 17

Fixed Assets

Question 18

are not traceable to an individual product. They are used to generate more than one product, but not all of them. Truck and shovel maintenance costs that are used in more than one product are example of this.

Answer 18

Indirect costs

Question 18

are traceable directly to one product. The blast and drilling cost that it takes to generate a product in one mine front are an example of it.

Answer 18

Direct costs

Question 18

A portion of the profit remaining after all charges, including taxes and bookkeeping charges, such as depreciation, have been deducted.

Answer 18

Net profit interest

Question 19

expenses that does not change when sales or production volumes increase or decrease

Answer 19

Fixed Cost

Question 20

expenses that change directly and proportionally to the changes in business output or volume

Answer 20

Variable Cost

Question 21

fixed operating expenses that aren't linked to a product or a service

Answer 21

Overhead Cost

Question 22

number of years required to recover original cash investments

Answer 22

Payback Period

Question 23

net gain or loss of an investment over a specified time period

Answer 23

Rate of Return

Question 23

valuation method that estimates the value of an investment using its expected future cask flows

Answer 23

Discounted Cash Flow

Question 24

A formal statement of the financial position of a company on a particular day, normally presented to shareholders once a year.

Answer 24

Balance sheet

Question 24

Term used to describe market conditions when share prices are declining.

Answer 24

Bear market

Question 25

A secondary metal or mineral product recovered in the milling process.

Answer 25

Byproduct

Question 26

A financial term used to describe the value financial markets put on a company. Determined by multiplying the number of outstanding shares of a company by the current stock price.

Answer 26

Capitalization

Question 27

The total ownership of a limited liability company divided among a specified number of shares.

Answer 27

Capital stock -

Question 28

The net of the inflow and outflow of cash during an accounting period. Does not account for depreciation or bookkeeping write-offs which do not involve an actual cash outlay.

Answer 28

Cash flow

Question 29

Shares in a company which have full voting rights which the holders use to control the company in common with each other. There is no fixed or assured dividend as with preferred shares, which have first claim on the distribution of a company's earnings or assets

Answer 29

Common stock

Question 30

A company's debts that are payable within a year's time.

Answer 30

Current liabilities

Question 31

a concentration or occurrence of solid material of economic interest in or on the Earth's crust

Answer 31

Mineral Resource

Question 32

the economically mineable part of a measure and/or indicated mineral resource

Answer 32

Mineral Reserve

Question 33

Categories of Mining Assets

Answer 33

Projects and Operating Mines

Question 33

Stages in Projects in the Mining industry

Answer 33

Exploration and Feasibility, and Planning and Construction

Question 34

Main assets of a mining company

Answer 34

reserves and resources