QUIZ EVALUASI PROYEK TAMBANG-1

An investor has requested that you evaluate the economic potential of

purchasing a gold property at time zero for $1 million mineral rights acquisition
cost. Mining equipment cost of $3 million will be incurred at year one.
Mineral development costs of $2 million will be incurred at time zero and $1,5
million at year one. Gold ore that will be mined at year one is 150000 tons of gold
ore, the uniform production of 250000 tons of gold ore per year in each of years 2,
3, and 4.
Gold ore reserves are estimated to be depleted at the end of year 4. Reclamation
costs $0,5 million and equipment salvage value $1 million will be incurred at the
end of year 4. Average grade of gold is 0,1 ounces of gold per ton of ore with
metallurgical recovery estimated 90%.
Price of gold is $300 per ounce in year one and to escalate 15% in year 2, 20%
in year 3, and 10% in year 4. Operating costs are $20 (or $222,22 per ounce of
gold produced and sold) per ton of ore produced in year 1 and to escalate 8%
per year.
Calculate project ROR, NPV and PVR for minimum ROR 15%.