The production obtainable from a given gold mine project obviously dependent not only on the size of the deposit, but also on the type of equipment provided, in which equipment means the whole working appliances, surface and underground. A rough and ready idea of production possibilities of inclined deposits can be secured by calculating the tonnage available per meter of depth from the horizontal cross-section of the ore-bodies exposed and assuming an annual depth of exhaustion, or in horizontal gold deposits from an assumption of a given area of exhaustion.
Few gold mines, at the time of initial operations, are developed to an extent from which their possibilities in production are evident, for wise finance usually leads to the erection of some equipment and production before development has been advanced to a point that warrants a large or final installation. Moreover, even were the full possibilities of the mine known, the limitations of finance usually necessitating a less plant to start with than is finally contemplated. Therefore output and equipment are usually growing possibilities during the early life of a gold mine. There is no better instance in mine engineering where pure theory must give way to practical necessities of finance than in the determination of the size of equipment and therefore output.
It has been noted that where finance even is no obstruction, there are other limitations of a very practical order which must dominate the question of the size of plant recovery giving the greatest technical economy. It is, however, useful to state the theoretical considerations in determining the ultimate volume of output and therefore the size of equipments, for the theory will serve to indicate the practical limitations. The discussion will also again demonstrate that all engineering is a series of compromises with natural and economic forces.
As one of the most important objectives is to treat the ore at the lower cost per ton, it is not difficult to demonstrate that the minimum operating costs can be obtained only by the most intensive production. To prove this, it need only be remembered that the working expenses of a gold mine are of two sorts: one is a factor of the tonnage handled, such as ore-dressing; the other is wholly or partially dependent upon time. A large number of items are of this last order. Pumping and head-office expenses are almost entirely charges independent of the tonnage handled. Superintendence and staff salaries and the like are in a large proportion dependent upon time. Many other elements of expense, such as the number of engine-drivers, etc., do not increase proportionately to increase in tonnage. These charges, or the part of them dependent upon time apart from tonnage, may be termed the fixed cost.
There is another fixed cost more obscure yet no less certain. Ore standing in a mine is like money in a bank drawing no interest, and this item of interest may be considered a fixed cost for if the ore were realized earlier, this loss could be partially saved. This subject is further referred to under amortization. If, therefore, the time required to exhaust the mine be prolonged by the failure to maintain the maximum output, the total cost of operating it will be greater by the fixed charges over such an increased period. Conversely, by equipping on a larger scale, the mine will be exhausted more quickly, a saving in total cost can be made, and the ultimate profit can be increased by an amount corresponding to the time saved from the ravages of fixed costs. In fine, the operating costs may be reduced by larger operations, and therefore the value of the gold mine increased. The problem in practice usually takes the form of the relative superiority of more or of fewer units of plant.