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Estimation of Optimum Production Capacity Using Modified O’Hara Relations

Authors:
[ B. Farshadi ] - B.Sc. in Mining Engineering, Kavoshgaran Consulting Engineers
[ M. Hadimosleh ] - B.Sc. in Geology, Kavoshgaran Consulting Engineers

Abstract:

Definition of production capacity is of a prime importance in open cast mining. Mine design, selection of machineries and facilities are based on production capacity, which directly affects the initial investment. Due to limited volume of mineable reserves, increasing the production capacity will increase the required investment, but also will make the life times of a project shorter. In some cases, the project may not fulfill the payback period. Decreasing the production capacity will make a long life project with small amount of investment and profits. In this case, the time value of money will reduce the net present value of project. This is the main concern of small ore bodies. This paper intends to find the optimum production capacity, which has maximum profitability for Chehel-Kureh copper deposit, making use of Modified O’Hara relations for cost estimation. In first step, by using feasibility studies in a similar nearby deposit O’Hara relations were modified to obtain a proper relation for such ases, which were then adopted for Chehel-Kureh deposit. With these relations, required investment as well as operating costs of the project was defined as a function of production capacity. By using these functions, production cost and net present value can be calculated according to the desired production capacity. Variation of net present value versus production capacity provided a sound base to estimate the optimum production capacity in Chehel-Kureh deposit.

Keywords:

Production capacity, Initial investment, Current costs, O’Hara relations, Net present value