A CRITICAL-EXAMINATION OF THE METHODS AND FACTORS AFFECTING THE SELECTION OF AN OPTIMUM PRODUCTION-RATE

The selection of the production rate is one of the most crucial decisi ons to be made in the development of a mineral properly. However, it i s not uncommon for the production rate to be decided arbitrarily befor e any technical evaluations begin, and it is often not reconsidered wh en better data becomes available. A number of methods are used in the mineral industry to select the production rate for a project. There is general agreement that the size of the ore reserve has a strong influ ence on this decision, but what other factors are involved? is there a way to identify an optimum rate? This paper examines the factors that influence the selection oi a production rate from the perspective of project economics. The NPV maximum value should be viewed as a ''failu re'' point. The ''two times capital'' maximum is proposed as a lower l imit. A practical check is suggested to confirm that a selected rate i s in an optimum range. Production rate assumptions are much more likel y to be reviewed for marginal projects, but they should also be review ed for viable projects.