Question: Sasol Limited is considering one method for developing a mine containing an estimated 100,000 tons of iron ore. This method will result in the recovery

Sasol Limited is considering one method for developing a mine containing an estimated 100,000 tons of iron ore. This method will result in the recovery of 62% of the available ore deposit and will cost US$23.00 per ton of removed material.

Sasol Limited is also considering a second method of development which will recover 50% of available ore deposit. The second method will cost US$15.00 per ton of removed material.

Subsequent processing of the removed material will recover 300 pounds of metal from each ton of processed ore, and will cost US$40.00 per ton of ore processed. The recovered metal can be sold for US$0.80 per pound.

If Sasol Limited is to maximize profit, which method should Sasol Limited use for developing the mine?

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