RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:hey, Mac, screen change questionMacloud1 wrote: That is why I increased the tons by 10% and decreased the grade by 19% which is 1.76 instead of 2.17 in the example .
OK now you have made clear to me what you were doing. I had not understood what you were doing up until now – I think because you did not explain clearly, but perhaps because I was obtuse. Nevertheless, the reason it did not make sense to you, and you thought that “something is drastically wrong” is because of the mistakes you made which I will point out below.
You increase ore by 10% from 3,194 to 3,513.
Next you decrease the grade, AND I ASK, "WHY?" The mine is still going to produce at 2.17 the only change is that we are going to throw more fines away. (BTW, I do not expect a response.)
So now we are going to get our original 3,399 carats plus 340 additional carats = 3,739,000 carats.,
But now we are going to throw away 19% pf the fines, which is 710,000 carats. and we will keep 81%. So carats we will keep and sell will be 3,029,000 carats for sale.
That breaks down into keeping 2,753 carats and throwing away 646 carats of the original 3,399 carats, and keeping 275.carats and throwing away 65 carats of the 340 additionally mined carats.
From our original sale of $311 we will still throw away the revenue we got from the 646.000 carats we sold at $8. So from our original revenue of $311,000,000 we will lose 646,000 X $8 = $5,168,000, Thus our revenue from the original 2,753,000 carats will be $311 - $5.2 = $305,800,000.
That is equal to $305.8 / 2,753 kept carats = $111.1/kept carat.
Since we are keeping a new total of 3,029 carats, and will sell them at $111.1/carat, our new revenue will be $336.5, for an increase in revenue of $25,500,000.
Your mistake is that you thought the mine would stop producing at 2.17 and failed to recognize that throwing away the additional fines would increase the average sales price to $111 per carat kept.