1. Jeffrey mine shaft is to be sunk at a cost of $5.6 million. The life of the shaft is estimated to be 15 years and the expected average mine production over the economic life of the shaft is 1.6 million tonnes per year. Assuming an annual interest rate of 8.75 percent, calculate: (6 points)

1. The annual equivalent cost of owning the shaft.

2. The annual equivalent production cost ($/tonne) of owning the shaft.

3. Assuming a Mill recovery of 92% and a Mill feed grade of 13 g/tonne, calculate the annual equivalent production cost of owning the shaft in $/oz gold.