Decision Making in Mining Operations
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Questions and Answers

What is Murphy's main concern regarding the decision to build a permanent road before doing the diamond drilling?

  • Delaying the extraction of gold by focusing on road construction first.
  • Risking the success of the gold vein if the road construction fails.
  • Incurring higher costs with no guarantee of success in finding gold.
  • Not being able to start commercial operations immediately if the gold vein is accessible. (correct)

    • What does Murphy assume about extracting gold from the mine over a 10-year period?

  • The total amount of gold will be extracted at an even rate over 10 years. (correct)
  • The cost of mining will decrease over time due to technological advancements.
  • Mining will not be profitable if the discount rate increases.
  • The total amount of gold will be extracted at an uneven rate over 10 years.

    • What discount rate did Murphy use when evaluating projects related to the gold mine?

  • 20% (correct)
  • 15%
  • 10%
  • 25%

    • Why did Murphy consider using an ice road for exploratory drilling?

    <p>To avoid building a permanent road before confirming the presence of gold.</p> Signup and view all the answers

    What was the range of probability associated with the success of diamond drilling?

    <p>60% - 70%</p> Signup and view all the answers

    How did Murphy plan to proceed in extracting gold if the gold vein was economically accessible?

    <p>He would begin mining the property and extract ore over a 10-year period.</p> Signup and view all the answers

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