Freelance geologist asked for advice in respect of two mining claims to property on Sturgeon Lake, near Thunder Bay, Ontario. In particular, he asked if there was enough gold on the property an economically viable mining opportunity. Geologist determined that the analytical approach best help in the analysis of a number of factors must be taken into account in reaching a decision on whether to proceed with the production. In the first stage production of ore involves construction of access roads, and the second step is the implementation of the drilling program. There is considerable uncertainty about the actual costs and the possibility of the completion of these steps, but only when these steps have been completed can begin actual mining property. If production continued, it is expected will take 10 years to remove all the gold from the site, and the total amount of gold in the mine would be extracted at a uniform rate over a 10-year period. Mining costs were considered as $ 30 per ounce, and geologists have used a discount rate up to 20 percent of the taxes in the evaluation of projects. "Hide
by Peter C. Bell, Gregory S. Zaric Source: Richard Ivey School of Business Foundation 7 pages. Publication Date: November 24, 2009. Prod. #: 909E18-PDF-ENG
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