Mining capital cost (MCC) is one of the essential criteria for assessing the feasibility of an open-pit mine (or underground mine). The MCC heavily influences the net present value (NPV) of the projects over the lifetime of the mine.
What is a capital cost Meaning?
(ˈkæpɪtəl kɒst ) finance. a cost incurred on the purchase of land, buildings, construction and equipment to be used in the production of goods or the rendering of services.
What is mining capital expenditure?
A capital expenditure 1 (CAPEX) is money spent to buy, build or upgrade assets, such as mines, machinery and equipment, that will benefit a company over an extended period of time.
What are costs of mining?
Opening a mine and separation plant can cost from $500 million to $1 billion, depending on the location, element, ore grade, and a variety of other factors (Schuler, 2011).
What is capital cost of a plant?
Capital costs include expenses for tangible goods such as the purchase of plants and machinery, as well as expenses for intangibles assets such as trademarks and software development. Capital costs are not limited to the initial construction of a factory or other business.
What is capital cost example?
Examples of capital expenses include the purchase of fixed assets, such as new buildings or business equipment. They also include upgrades to existing facilities and the acquisition of intangible assets, such as patents and other forms of technology.
How is cost of capital calculated?
Cost of capital is based on the weighted average of the cost of debt and the cost of equity.
In this formula:
- E = the market value of the firm’s equity.
- D = the market value of the firm’s debt.
- V = the sum of E and D.
- Re = the cost of equity.
- Rd = the cost of debt.
- Tc = the income tax rate.
Is investment a capital expenditure?
Key Takeaways
Capital expenditures are long-term investments, meaning the assets purchased have a useful life of one year or more. Types of capital expenditures can include purchases of property, equipment, land, computers, furniture, and software.
What are revenue expenditures?
Revenue expenditures are short-term expenses used in the current period or typically within one year. Revenue expenditures include the expenses required to meet the ongoing operational costs of running a business, and thus are essentially the same as operating expenses (OPEX).
What are capital expenditures Canada?
Capital expenditures refer to the acquisition or construction of (new or refurbished) non-residential buildings, engineering structures, and machinery and equipment, which normally have a life of more than one year.
What are some costs of production that we need to consider when mining?
These costs can be placed into three important categories – energy costs, resource (and equipment) costs, and safety costs. The mining industry spends time and money working to increase the productivity of their mines, while reducing the energy costs and ensuring the safety of their workers.
What is AISC gold?
The All-In Sustaining Cost (AISC) is an advanced metrics used by mining companies to report their cost of gold mining. AISC is an extension of currently existing “cash cost” metrics which includes sustainable production costs too.
What is the profit margin on gold mining?
Gold producers had their most profitable year ever in 2020, based on average all-in-sustaining cost (AISC) margin. For every ounce of gold a mining company produced last year, it got to pocket $828 on average.
What are capital costs and what are operating costs?
Capital expenditures (CAPEX) are major purchases a company makes that are designed to be used over the long term. Operating expenses (OPEX) are the day-to-day expenses a company incurs to keep its business operational.
What are working capital costs?
Working capital is the money used to cover all of a company’s short-term expenses, including inventory, payments on short-term debt, and day-to-day expenses—called operating expenses.
What are the components of cost of capital?
The three components of cost of capital are:
- Cost of Debt. Debt may be issued at par, at premium or discount.
- Cost of Preference Capital. The computation of the cost of preference capital however poses some conceptual problems.
- Cost of Equity Capital. The computation of the cost of equity capital is a difficult task.
Why is cost of capital important?
The cost of capital aids businesses and investors in evaluating all investment opportunities. It does so by turning future cash flows into present value by keeping it discounted. The cost of capital can also aid in making key company budget calls that use company financial sources as capital.
What are the different types of cost of capital?
Various types of cost of capital are described below:
- i. Explicit Cost of Capital:
- ii. Implicit Cost of Capital:
- iii. Specific Cost of Capital:
- iv. Weighted Average Cost of Capital:
- v. Marginal Cost of Capital:
What are capital items?
Capital Items means capital assets with a life expectancy of more than one financial year such as property, plant and equipment, intangible assets, heritage assets and investment properties and of which the cost is normally written off over a number of fiscal periods; Sample 1.
How can cost of capital be reduced?
You can reduce your firm’s cost of capital by actively managing its environmental risks, for example, by choosing strategic investments that reduce emissions and pollution. In doing so, you mitigate risks from litigation and reduce the potential for expensive environmental claims, settlements, and compliance.
Which is not an example of capital expenditure?
Goodwill once purchased will increase the profits of the company for more than one accounting period. Only the expenditures which does not result in an increase in capacity or in reduction of day to day expenses are not capital expenditure.
