Determination of Revenue

Determination Of Revenue
The first component of revenue estimation is metal or commodity price, With the exception of
gold, estimation of revenue of mine product.
Calculation of revenue requires
1) An estimation of grade of the run of mine ore, which includes an estimate or assumption
of mine dilution
2) An estimate or assumption of mill recovery
3) A forecast of product price for the mine left, which might be equal to lower or higher than
the current price
4) Deducation of transport, stevedoring and smelter charges for concentrates
Quatation Of Metal rices

Metal are traded internationally and metal prices negotiated on the major Metal Exchanges of
Londoon (the LME) and New York (the NYME) are quoted at least daily in capital city
newspaper around the world
Mine Dilution
Is delution of ore with waste of mining to unven geological or grade boundaries between ore and
waste, an one which is commonly not paid sufficient attention, given thata it can be a major cost
factor.A common delution figure is 15% although actual dilution may be less than 10% r may be
very much higer.
Typical recoveris for other major metal using industry-standard technologies and good operating
practice to deal with non refractory ores are :
Chalcopyrite 80-90%
Sphalerite
60-80%
Galena
60-80%
Determination of an appropriate mill recovery factor to use in a financial model requires

information from metallurgical laboratory and pilot scale testing. The test should be carried out
on truly representative samples identify major mineralogical or textural variations which may
affect mil recovery.
It also important that the drilling has not physically altered the sample in a way which effect
metallurgical tests, and that artificial weathering, Because it is often within the exploration
managers power to ensure adequate geological inut to this sampling which is so critical to the
projects success.
Smelter Charges And Calculation Of Revenues
If the mine product is a concentrate, the revenue will be derived from the sale of concentrate to
smelters. The smelter s buy the concentrate subject to a number of charges, collectively called
smelter charges.
To the newcomer, smelter contacts and quotes are couched in terms which appear intended to
confuse, smelter charges can very quite significantly (50% or more) accoarding to varations in
the metals maret.
Smelter Specifications
The smelter industry sets specifications for concentrates, which relate to the technology used for
smelting, the specifications are flexible according to supply and demand. The following are some
of the more common specifications set by smelter for concentrates :
Ccopper
: concentrates to contain > 28% copper metal and less than 2% lead
Lead
: concentrates to contain > 50% lead metal and less than 2% silica,2%
copper,
Zinc
: concentrates to contain > 52% zinc metal and less than 2% silica,2%
manganese,
Tin
: concentrates to contain more than 76% cassiterite (SnO2) and less than
0,05% bismuth, less than 2,5% Sulphur
Example 1. A Gold-Copper concentrate

A gold copper concentrates containing 20,7% copper and 367gm/tonne gold, 4,95% bismuth and
0,37% ttal antimony nd arsenic, to be sold from an Australian mine:
Metal
Paayment:
Copper
Gold
Silver
Treatment
Charge
Deduct 1.0 unit, remainder at LME settlemet for A grade

Pay for 96% of full gold content at mean of LMe fix
Less than 50gm/t, no payment,over 50gm/t pay for 96%
US$ 150 per DMT (dry metric tonne)
Refine
Charge
Copper
Gold
Silver
US$0.085 per lb. of payable copper

US$8.00 per Troy ounce of payable gold
US$0.40 per Troy ounce of payable silver
Penalties
Bismuth
US$3.25 each 0.1% above ).1%
Financial evaluation of minning projects

US$4.25 each 0.1% above 4.0%
US$5.25 each 0.1% above 6.0%
US$6.25 each 0.1% above 8.0%
Rejection at 9.0%
Arsenic
US$3.00 each 0.1% above 0.3%
Antimony
US$4.50 each 0.1% above 1.2%
Mercury
US$2.00 each 10ppm above 10ppm.
At the time this quote was received, the copper price was US$2557 per tonne and gold US$452
per ounce. The exchange rate was A$1.00 US$0.74
Example 2. A lead zinc concentrate
The lead zinc ore contained 2% lead, 14% zinc. In the calculations below, mine delution of 15%
was allowed for. The calculations are made in terms of net revenue per tonne of ore.
Lead:
Price of the day A$796/tonne, A$1.00=US$0.77
The mill recovered 80% of the lead and produced a concentrate containing 50% lead metal.
Treatment charge US$150/tonne, payment for 95% of metal in concentrate
Recovered lead grade = 2% x .85(mine dilution factor) x .8 ( mill recovery factor) =.0136 or
1.36%
36.76 tones of ore are mined and milled for 1 tonne concentrate of 50% Pb(50/1.36)
Value of recovered lead per tonne of ore = $10.82 (796/0.0136)
Treatment charge concentrate = $150/0.77
=A$194.8 per tonne of

=194.8/36.76
=A$5.29/t.ore

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Determination Of Revenue

Quatation Of Metal rices

Determination of an appropriate mill recovery factor to use in a financial model requires

Example 1. A Gold-Copper concentrate

Deduct 1.0 unit, remainder at LME settlemet for A grade

US$0.085 per lb. of payable copper

US$3.25 each 0.1% above ).1%

Financial evaluation of minning projects

=A$194.8 per tonne of

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