Assessment Task 2: Business Study Report on Golden Mile Resources Ltd.

This business study report examines Golden Mile Resources Ltd., an Australian company involved in gold and base metal exploration and development. The report begins with an introduction to the business and its competitive environment, highlighting its location in Western Australia, its customers, and its competitors like BHP Group Ltd and Fresnillo, concluding that the competitive environment is closer to perfect competition. It then delves into the factors of production, categorizing them into fixed (land, enterprise) and variable (labor, capital) factors, discussing their characteristics and importance to the company's production process. The report analyzes the interplay between these factors, such as the impact of capital on labor and the optimal utilization of resources. The study further investigates the macroeconomic environment, focusing on political stability, inflation, and interest rates in the Australian economy and their influence on the company's operations and profitability. The report concludes by synthesizing these elements to provide a comprehensive analysis of Golden Mile Resources Ltd.'s business environment and operations.

Running head: ASSESSMENT TASK 2: DESCRIPTION 1
Company Name: Golden Mile Resources Ltd. (ASX: G88)
Assessment Task 2: Description
Name
Affiliation
Author’s note

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Introduction to the business and general business environment
The company chosen for investigation is the Golden Mile Resources Ltd. The
company is engaged in the whole sale exploration and development of Gold and base metals.
The company is engaged in the production and selling of Gold products. Golden Mile
Resources Limited is located in Western Australia. Its projects are divided into two regions
that is to say North-eastern Goldfields Project and regional Western Australia Project. The
organisation’s major customers include other businesses engaged in the jewellery and
ornamental industry. Most of the company’s customers are located in Western Australia and
across the internet (Ochieng, Seanego, and Nkwonta, 2010). The organisation’s major
competitors include BHP Group Ltd which is a global resources company. It is located in the
USA. Fresnillo is also a huge competitor and is involved in the exploration and production of
precious metals and it’s located in UK, London. BHP Group Ltd has a market share of 2%
compared to its competitors that have 5% and 20% for BHP Group Ltd and Fresnillo
respectively. On the basis of the above information, the organisation’s competitive
environment is closer to a perfect competition. The demand curve facing the firm is likely to
be relatively elastic. The implication for this is that the company has a high ability to ‘mark-
up’ its price above marginal cost (Blignaut, etal.2010).
Production Cost and Scale
In production process, there are resources that are used in producing final goods
(Output) and these are termed as factors of production. In economic terms, factors of
production are briefly defined as the inputs used in the process of production with the aim of
making abnormal profit. In this case, the factors of production are land, capital, labour and
enterprise (Ravix, 2014). Most significant is that, Land as factor of production involves all
natural features, labour involves human resources, capital entails all the manmade resources

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and enterprise entails all the other factors of production (Nitisha. 2018). In order to feel the
presence of all factors, all the factors are equally important for the production process of the
company.
The descriptions of factors of production are as follows;
Fixed factors of production
Land: In this context, land is taken as soil. On the broader term, land is a factor of
production that has much and larger scope. According to Alfred Marshall, Land refers to the
forces and materials with which the nature provides to the man freely for help. In the context
of the company, land is pre-termed as the natural resource that is used to produce goods and
services in order to generate income. However, Land with its natural resources (raw
materials) are considered to be limited in quantity. This means that when used in awkward or
wasteful way, it can be exhausted. Also, land is considered to have zero price on supply. This
depicts that any shift in the land’s price cannot necessarily affect the supply. It is also taken
as the factors of production that is immobile with permanent inherit properties. Besides, land
has got variations in terms of yields or fertility, this implies that it depends the nature of land
in order to gain more out of production process.
Enterprise: In this case, the enterprise is Golden Mile Resources Ltd which undertakes
the business ventures in order to get positive end result. An enterprise is categorized with the
individuals and physical assets who are entitled to the common goal of getting abnormal
profits. By considering the ‘Micro, Small and Medium Enterprises Development’ (MSMED)
act of 2006, enterprise is the company that undertakes all the activities entailed in the
production or manufacture of goods (Ravix, 2014). According to Schumpeterian theory, an
entrepreneur has all the powers of changing the way how the business operates since he is the
one who decides on the other factors of production to yield efficient process of production.

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Furthermore, Schumpeter urged that an entrepreneur is the one responsible to undertake risks
and at the same time possess capabilities of innovation through provision of resolutions for
the business to operate on optimal level.
Variable factors
Labour: Labour is considered as the most vital ‘Factors of production’ (FOP). It
therefore includes the issue of services rendered by individuals and efforts of goods and
services production. In economic knowledge, labour is termed as the work, mental or
physical carried in order to achieve monetary values. When any activity done by the worker
is taken for the sake of just doing, it is considered as wastage of time. Marshall urged that
labour is when the individual puts all the minds or body to fully or partially complete work
with a certain goal. Labour is the only factor of production that still lives (Mohr, 2014). The
following are the peculiarities of labour that is taken as the ‘non-durable’ factor of production
since it has no price that is reserved. It is also constituted as the weakest product in terms of
‘bargaining power’. This implies that, a shift in labour’s price automatically affects supply or
demand for labour accordingly. In this context, the supply of lab or will reduce when there is
some increment in wages and the opposite is true. On a company level as in this paper, it is
essential to organize division of lab or in order to maintain the flow of production process
since lab or is considered to be tiresome at any point.
Capital: Capital in this case refers to the income of the individual that is used for
creating more income. In this case, capital does not necessarily regarded as the initial ‘factor
of production’. Furthermore, Capital involves goods such as raw materials, machinery among
others. However, machinery and capital are goods that are initially purchased once. Also,
land cannot be taken to be capital since capital differs from land. For instance, land is natural,
immobile whereas capital is considered as manmade factor that is mobile. It is evident that

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the process of capital cannot take place when capital is not involved. With this, the company
needs a lot capital goods such as machinery in order to produce goods (Mohr, 2014). More
so, capital is fundamental in economic development through raising its productivity.
Therefore, a company should have sufficient capital used in investing in other projects such
as rehabilitation and construction of infrastructures. This in turn helps to generate more
profits t the company since most of the needs at the site are being resolved by capital.
Comment on the factors of production of the company
Since Capital for the company varies at any time, the sales of goods and increased
production of goods are likely to exist in the company. It is evident that, as the company
advances to new technology about production of goods, costs are likely to be high since
technological advancement requires more funds than human labour (Etemad, 2015). In this
case, there are variable costs in the company as capital keeps on changing with technology.
The process of production in the company is likely to be efficient, if optimum
utilization of factors exits. This therefore implies that the factors of production should be
used in combinations without neglecting one or the other aside in order to achieve the
obligated targets of the company. In this case, the factors of production are used both as
substitute of each other or complementary. For instance, if the company has got sufficient
capital and thus it is in need of hiring labour when it is ready to yield goods and services.
With all these, company neither invest capital nor to start the production process. Therefore,
it is evident that capital and land are complementary, when the company has got inadequate
capital to buy machineries, this would reduce the number of labour employed (Ravix, 2014).
On the other hand, if the company is in the shortage of capital, then it is likely to utilize more
labour than advanced technology or machineries. Therefore, Capital and labour acts as
substitute factor for each other. In such a case, land and capital are complementary to each

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other. On the other hand, if an organization has enough capital to purchase advance
technology, then it would prefer to reduce the number of labour. However, when the
business entity has run short of capital, it therefore opts to use more labour than capital.
(Etemad, 2015). This therefore implies that capital acts as a substitute for labour. With all
this, the company is likely to experience medium optimal level. This is because it has not yet
decided on which type of labour it should use which is likely to drive into lowest production
costs per unit volume of goods.
Macro business environment
A macro business environment of a company is the composition of the external
factors that have significant and uncontrollable influence on the daily operations, activities,
and profitability of a business entity. These factors majorly consist of the political stability,
level of unemployment, inflation, interest rates, technological changes and so many other
factors. This paper will however focus on specifically three macro-economic factors and they
include the general political environment, the level of inflation, and the average interest rates
of the Australian economy.
The overall political stability of the Australian economy
The major products are likely to be ‘normal’ and hence the demand is likely to rise
during recessions and hence the economic climate of the countries in which most of the
business’ customers live is likely to reflect well on the business’ sales. The business will have
less problems getting access to key factors of production. The Australian socio-political
environment has somewhat been promising over the recent periods. This has been potentially
reflected through the continued creation of international relations with other countries such as
the United States of America. For instance the country entered into an agreement known as
the US –Australia free trade agreement in which trade between the two countries was to be

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effectively boosted (U.S Department Of State, 2018). Such an agreement further strengthened
the relations and therefore, as a result to the business entity that is producing goods this is an
advantage. The trade agreement implies that there is presence of a wider market for the
business products in the United States. With a wider market created though the strong
political ties between Australia and the United States, many Australian producers and
manufactures will have free and a direct access to the US economy.
The Australian political environment is relatively an attractive as it is characters by a
moderate level of stability, transparency, an effective regulatory system and governance
frameworks. It is through such effective governing condition and regulatory bodies that
business within the economy is facilitated to flourish. Globally a politically stable economy is
an attractive place of conducting trade as such an economy if fully characterized by free trade
and movement. With such an existing free ate of movement and trade, there comes an
increase in the level of consumption and ultimately better trading profitability (Santander,
2019). For instance the Australian economy is rated as one of the top five countries that are
politically stable on the global scale according to the index of economic freedom.
The general level of inflation
Inflation has a significant role towards determining the direction of economic growth
of any country or state. Low levels of inflation imply that the country is performing
economically strong and with increasing levels, the economic strength weakens. Therefore if
a country’s economy is to be viable then average level of inflation is most favourable. Having
very low levels of inflation imply that there is low consumption and demand for goods and
with a high inflation the impact is that the level of purchasing power is very low. Therefore
an average rate of inflation that is not too or too is likely to be most favourable. For over 26
years, the Australian economy has been characterized with, a continuously steady economic

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growth and development (Reserve Bank of Australia, 2019). For instance during the 2008
American financial crisis, Australia was the only country that did not experience any
recession. Globally Australia is ranked as the 13th fastest growing economy with an estimated
GDP of about 3.2% by the year 2018 (Reserve Bank of Australia, 2019). However by 2018,
the Australian economy registered an inflation rate of about 2.2%. On a sad note this rate of
inflation is expected to grow further to a rate of about 2.3% in the year 2019 and even much
higher to about 2.5% during 2020. These are therefore, worrying trends of economic
performance. Due to such poor economic performances, even the GDP is showing negative
trends as it has reduced by around -1.2%. Economically, an increase in inflationary
tendencies implies that even the commodity prices are gradually increasing. Consequently
this increase in the general commodity prices signifies a reduction in purchasing power of the
Australian citizens. To companies such as the golden mile resources, inflation as one of the
macro-economic factors is negatively impacting business.
Unemployment
Unlike the increasing inflationary climate, unemployment in the economy is identified
to be at relatively low rates. For instance the country was estimated to be having a general
level of unemployment of about 5.3% by 2018. By the same year o 2018 about725, 000
Australians were unemployed and this number was significantly declining or reducing.
According to the ABS the country on the other has a total of about 1.1 million Australians
who are under employed and this is part of the international trend on average. Generally the
unemployment levels in the country had fallen by around 0.4% during the year 2016. Such
declines in the levels of unemployment indicate a positive trend of economic performances
within the country. With flow levels of unemployment for example, the people are a assumed
to have the purchasing power and capacity to buy goods and services o market. Therefore,
this results into a stable market demand that can effectively match the level of existing

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supply. To the business entities such as the god mile resources, the Australian economy is a
viable pace t operated and produces goods.
Interest rates and currency exchange rates
Over the years the interest rates in the country have been declining and falling. This
is further illustrated by the decision to maintain the interest rates in Australia at 1% by the
Reserve Bank of Australia. This cut in interest rates is known to be the record low interest as
compared to the 4.37 % of 1990-2009 average level of interest rates in the country. The
choice to maintain the record low interest rate would imply that there is a move to increase
the level of money in circulation within the economy. Keeping interest rates at their lowest
implies that people are encouraged to borrow more money and carryout business.
Sustainability practice of the business
a) Does the production process of the business generate any positive or negative
externalities?
The production process of the business is associated with several negative
externalities. Generally the mining processes and the entire process of production involved
puts so much stress on the environment. This is usually during the processes of extraction,
beneficiation as well as transportation of the mined products. There are several health as well
as environmental hazards that come along with the production processes of the company
(Jongwanich, 2009). Most of the negative externalities associated with the compony activities
come in the form of air pollution, greenhouse gas emissions, global warming, accidents,
biodiversity effects as well as pollution of the water. Additionally, the entire process of
mining and production processes of the company do produce noise pollution, pathway
damages and general congestion. In the same manner, some of the chemicals used in the
processing and production processes of the compony are known to be carcinogenic and hence

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they are associated with dangerous ailments like lung damage and heart failure. Moreover,
the damage caused to the environment because of the environmental pollution associated with
the mines usually leads to acidic rains which are detrimental to the livelihoods of farmers
(Blignaut etal.2010).
Measures put in place to mitigate the negative externalities
There are several measures put in place by the company its self and the government to
overcome the negative impacts associated with the business production process. The
company undertakes to practice the process of reclamation (Inglesi-Lotz and Blignaut, 2012).
The reclamation processes entails the processes of re-establishing of potentially viable soils
as well as vegetation at the mining sites. The reclamation processes has been undertaken
through the application of both simple and complex designs. One of the approaches that the
company uses is to add lime and any other material that might help in the neutralization of
the acidity plus a cover of the top soil or any other suitable medium of growth necessary to
ensure the promotion of the growth of vegetation. The business is also involved progressive
practices for the protection of soil such as the use of sludge, attained from the municipal
waste water treatment processes.
There is also the treatment of soil as a major mitigating factor for the negative
externalities. The company recognises that the existence of high levels of metals within soils
could be very harmful to both plants, animals and even people. The company is involved in
the treatment of the affected soils through moving the contaminated soils to specially
designed depositories. Through the use of this particular approach, the organisation, is able to
relocate the toxic soils.
The company is also engaged in water treatment. The most popular technique used in
the mitigation of the dangers associated with polluted water is the addition of a neutralizing

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material. Some of the materials used include lime because it reduces on the acidity
(Jorgensen, 2010).
Does the consumption of the good produced by the business generate any
positive or negative externalities?
The consumption of Gold as the primary product produced by the company is
associated with several positive impacts. Gold has been used in the manufacturing of
ornamental objects as well as jewellery. Designer companies have taken advantage of this
important quality to enhance their businesses. Gold produced is also associated with unique
social properties that make it a perfect material for the manufacturing industry (Blignaut,
2012). To take full advantage of the positive externalities of the consumption of the company
products, the government has strictly emphasised the need for responsible gold mining. It has
focused on a mining process which focuses on job creation and other related economic
opportunities. It has also put in place favourable policies to create a positive environment that
enhances the development of social infrastructure.
How the sustainability practice by this business and other businesses in the same
industry would affect their long-term business viability.
The company and overall industry has been subjected to high pressure particularly in
regard to ensuring that there is an improvement in the social, developmental as well as
environmental performance(Epstein etal. 2011).The company has although been involved in
more sustainably consistent practices. The company has maintained a transparent production
and business process which helps it to maintain a balance between environmental protection
and organisational profitability. The company is more focused on going green and as soon as
it has gone green, it will be possible for the company to integrate its environmentally-

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conscious and advanced methods and hence make more profits in an environmentally
sustainable manner.
Conclusion
The low interest rates further have a positive impact to the companies such as the gold
mile resources limited in such a way that that these companies can have low costs of
production and operation. The exchange rate performance of the Australian currency is
relatively performing well on the exchange market. For example the Australian dollar was
expected to remain stable at around 75 cents December 2018 and 77 cents per United States
dollar during December 2019. Although this shows a slight depreciation in the Australian
dollar, there is still a relative value. Therefore, an Australian manufacturing firm or company
can still be confident that the value of the currency will be stable. With such a forecast of the
futures performance of the Australian currency on the exchange market, alternative strategies
such as hedging can be undertaken as one was of protecting against the exchange fluctuations
in the long run if the company was to export t the international market.

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