As a mineral economist, evaluate the profitability and viability of a mineral project made up of

a mobile processing plant designed to process 360,000 tonnes of copper reserves at an average

grade of 2.25% Cu and 90% recovery. The following information on the reserve is established

for use.

Commodity selling price US $2,000/tonne

Production rate 3,000 tonnes per month

Mining/Processing cost escalates @ 3% per annum $45/tonne

Corporate tax 35%

Mineral royalty 6%

Capital Expenditure $1,800,000

Depreciation scrap value on SYD method $80,000

Discount rate 20%

Commodity price increase by 5% per year

Required:

(i) Compute the Net Operating Cash Flows (NOCF)

(ii) Determine the project viability by using the NPV method

(iii) What monetary value is attached to the project at 30% discount rate

(iv) Explain with figures the acceptability of this project at 40% discount