3 - Mining Revenues and Costs

8/19/2019 3 - Mining Revenues and Costs

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Mining Revenues and Costs

Assoc/Prof Ali Karrech

School of Civil, Environmental, and mining Engineering


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Outline

• Introduction

•

Life of Mine (LOM) plan

• Financial analysis

• Estimating Revenues

• Estimating costs

Slide 2


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Introduction

•

Evaluation: Determining the numerical values and all the possible

factors that are important in establishing the worth of a project.

! mine evaluation is the assessment of the relative economic viability ofthe mining project or investment opportunity.

Slide 3

Iterative procedure of mine evaluation (source: SME)


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LOM planner’s burden

•

What can be mined profitably? (pit optimisation)

• How to mine it? (mining method selection)

•

How to access it? (pit design)

•

How to dispose of worthless materials? (waste design)

•

How the mine evolves? (scheduling/staging)

• What can be presented to the mill? (scheduling, cut-off grade, dilution)

•

What equipment to be used? (equipment selection)

•

How much equipment are needed? (productivity assessment)•

What is the mining capital cost? (cost model)

•

What is the mining operating cost? (cost model)

Source: modified from T. Elkington , MINE4161o


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Source: cost estimation handbook, 2013

Mining Studies


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Mining Studies - Scoping

•

The potential of an orebody in terms ofsize (tonnage/grade), mining and processingconditions, infrastructure, risks etc.

• Is more drilling needed before proceeding? Whereshould it be?

• Costs taken from prior experiences (within ±30%)

• Decide if further work is justified

Slide 6


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Mining Studies – Pre-feasibility

•

Additional details are developed

• Costs are defined to higher accuracy (15-25%)

• Used to consider mining, processing, sales options for

the deposit

• Focuses on key issues

Slide 7


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Mining Studies – feasibility

•

A full technical study that seeks to optimise all aspectsof the operation from environmental through to mining

•

Used to assess the commercial and technical viabilityof the preferred option(s)

• Used to apply for finance

•

Identifies key issues, risks and management strategies

•

Greater analysis of costs (10-15%)

Slide 8


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Mining Studies –

Banquable Quality Feasibility

•

Details the engineering design, validating the feasibilityor providing amendments

•

Provides specifications and implementation plans forEngineering, Procurement, Construction andManagement (EPCM) and initial operating plan andsystems

• Estimates costs to 5%

Slide 9


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Mining Studies

Source: (T. Elkington , MINE4161)


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MiningStudies

Chapters 9, 10

Chapters 6-7, 8

Chapter 5

Chapters 1-4 Ore Deposits

Grade/PotentialGrade

Net SmelterReturn of

Concentrates

Reserves/ResourcesPotentialTonnage

Optimum of Annual Mine

Capacity

OperatingCosts

InvestmentCosts

Chapter 11Payback Period, Net Present Value ,

Internal Rate of Return


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MiningStudies

Chapters 9, 10

Chapters 6-7, 8

Chapter 5


Grade/PotentialGrade


Concentrates

Reserves/ResourcesPotentialTonnage


Capacity

OperatingCosts

InvestmentCosts

Chapter 11 Payback Period, Net Present Value ,Internal Rate of Return


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Outline

• Introduction

•


• Financial analysis



Slide 14


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Project Value

Future worth

•

If a depositor puts 1$ in a savings account today at a bank paying 10%of simple interest. In one year , he would have $1.1, that is

FW = PV (1+i)FW = Future Worth,

PV=Present Value

i = interest rate

At the end of n years, the accumulated amount would be:

FW = PV (1+i)n

After 5 years, FW = 1(1+0.1)5 = $1.61

Slide 15


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Project Value

Present Value

•

The previous procedure can be reversed. For example if you are toreceive $1.61 in 5 years, and the annual interest rate during this periodis 10% (or 0.10), then the present value of this amount is?

Substituting for FW = $1.61, i=0.1 and n=5

Slide 16

PV =FW

(1+ i)n

PV =1.61

(1+ 0.1)5 = $1


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Project ValuePresent Value of a series of contributions

•

If you are to receive 1$ at the end of each year of 5 consecutive years

and the annual interest rate during this period is 10% (or 0.10), thenwhat is the present value in question?

• One calculates the present value of each of these payments

Slide 17

Year1:PV1 = $1.(1+ 0.1)1

= $0.909

Year 2 : PV2 =$1.

(1+ 0.1)2 = $0.826

Year 3 : PV3

=

$1.

(1+ 0.1)3 = $0.751

Year 4 : PV4 =$1.

(1+ 0.1)4 = $0.683

Year 5 : PV5 =$1.

(1+

0.1)

5 = $0.621

!

The present value of these 5years payments

! In general,

PV = $3.79

PV Ck 1 i k

k 1

n

if Ck C #k, PV C (1 i)

n 1

i(1 i)n

$

%

&

'

(

)


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Economic ConceptsPayback period

•

The period of time required to regain the funds invested, or to reach

the break-even point.• Example: Assume $5 borrowed today to purchase a piece of

equipment and that an interest rate of 10% applies. It is intended torepay the loan in equal yearly payments of $1.

The loan is repaid when the net present value is zero:

! n ~ 7.25 years Slide 18

PV(loan) $5

PV(payments) $1 (1

0.1)n 1

0.1(1 0.1)n

#

$

%

&

'

Net Pr esent Value (NPV)

PV(loan)

PV(payments)

0

NPV $5 $1 (1 0.1)n 1

0.1(1

0.1)n

#

$

%

&

'

0


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Project ValueCash flow•

Net inflow (positive) and outflow (negative) of money, during a specificperiod of time

• Example (calculate the Cash flow)

Slide 21

Gross revenue

- Operating expense = Gross Profit (taxable income)

- Tax = Net Profit

- Capital Costs = Cash flow

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Revenue 170 200 230 260 290

- Op costs -40 -50 -60 -70 -80- Cap costs -200 -100

- Tax costs -30 -40 -50 -60 -70

Cash flow -200 -100 100 110 120 130 140


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Project ValueDepreciation

•

Decrease in value of an asset, e.g.:

•

It can be accounted for as follows:

•

Example: Consider a $100 investment in a 5 years lifetime project. Thesalvage value of the investment is zero. The project dollar income andcapital expenses are estimated to be $(80,30) in year 1, $(84,32) in

year 2, $(88,34) in year 3, $(92,36) in year 4, and $(96,38) in year 5.The effective income tax is 32%.

Calculate the cash flows and the Net Present Value (consider an interestrate of 15%).

Slide 23

Investment ($)

Life (number of year)

Gross revenue

- Operating expense - Depreciation = Gross Profit (taxable income)

- Tax = Net Profit- Capital Costs + Depreciation = Cash flow


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Project ValueDepreciation

•

Solution :

Slide 24

!"#$ & ' ( ) * + ,-.-/#01"!"#"$%" '( ') '' *+ *, ))(

-./"0 12343 -5( -5+ -5) -5, -5' -67(

-8"/0"9:92$ -+( -+( -+( -+( -+( -6((

;4:" 5( 5+ 5) 5, 5' 67(

-?:< @ 5+ A -*B, -6(B+) -6(B'' -66BC+ -6+B6, -C)B)

;D"4 E$12F" +(B) +6B7, +5B6+ +)B)' +CB') 66CB,G 8"/0"1E:92$ +( +( +( +( +( 6((

-H:/E4:> 12343 -6(( -6((

H:3I J2K3 -6(( )(B) )6B7, )5B6+ ))B)' )CB') 66CB,

8E312%4"L HM -6((B(( 5CB65 56BC' +'B5C +CB)5 ++B7* )5B+'

Remark: Depletion, which is a tax consideration given the the owner of amineral deposit, can be considered the same way as Depreciation

E i i f h i l


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Estimation of the potentialproduction rate

To estimate the Mine Life and production rate Taylor (1977)

proposed the following empirical formulae:Life (years) = 0.2 Tonnage4

Production (tonnes/day)=Tonnage

Life OperatingDays

0.0143 Tonnage0.75

. For a mine operating 350 days/yr

Example: using Taylor’s model estimate the lifetime and dailyproduction of mine knowing that the 9.15 million tonnes are tobe removed. Assume the mine operates 350 days/year.

Solution:

Life (years) = 0.2 9e64 = 11 years

Production (tonnes/day)=

0.0143 (9.15e6 )0.75

2349.73 tonnes/day

E ti ti f th t ti l


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Estimation of the potentialproduction rate

does not work well for v. large (>200Mt) deposits, deep, ftatorebodies, steeply dipping tabular orebodies etc.

For open pit mines, the production in mt/yr can be expressed

as

0.416

Tonnage0.5874

. (based on 41 Gold-silver mines (Singer et al. 1998))

0.0236

Tonnage0.74. (based on 45 Copper mines (Singer and Long 2001))

0.123

Tonnage

0.649

. (based on 342 Other mines (Long 2009))


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Taxation and royalties

Taxation regimes differ from a country (or state) to another and oftendepend on commodities.

There are number of means by which governments gain direct benefitsfrom a project by:

•

Royalties.

•

Lease paymentsfor land andmineral rights,

• etc.

Source: Australia’s Future Tax System: Report to the Treasurer p. 47 (Henry Tax Review)


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Influence of risk on NPV

Investors prefer relatively certain profits (“a loaf is better than two in the bush”)

The discount rate, i, used to discount NPV depends on the Weightedaverage cost of capital (WACC) and the level of risk of a project.

It is calculated as a function of three components:

•

i1: WACC (2.5% ~ 5%) .

•

i2: associated to the risk of the project (3% ~ 16%). Depends onthe development level (scoping, pre-feasibility, feasibility etc.)

•

i3: associated with the country (geopolitics) (0% ~ 14%)

•

i = 5.5 ~ 25%


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I fl f i k


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Influence of risk onNPV

i3 associated with thelevel of risk of acountry

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html


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Influence of risk on NPV

A company intends to invest in a Copper mine in Indonesia.

The estimated tonnage is 12Mt. Estimate the life time of themine and the discount rate, knowing that the WACC is 5%.

Pr oduction (tonnes/day)

0.0236 Tonnage0.74

Pr oduction (tonnes/day)=Tonnage

Life OperatingDays

Life=Tonnage

Pr oduction (tonnes/day) OperatingDays

Tonnage0.26

0.0236 OperatingDays

8.39 years

i1 = 5%, i2 = 12% (assume a feasibility study), and i3 = 9%for Indonesia! i = 26%


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Estimating RevenuesCurrent prices•

Current prices can be found in several publications such as:

–

Metals Week – Mining Magazine

–

Metal Bulletins

– Industrial Minerals

•

For many minerals, the “ton” is the unit of sale:

1 short ton (st) = 2000 lbs = 0.9072 metric tons

1 long ton (lt) = 2240 lbs = 1.01605 metric tons

1 metric tons = 2204.61 lbs = 1000 kilograms

•

Precious metals (gold, silver, platinum, palladium, rhodium), are

generally sold by troy ounce.

1 troz = 31.1035 grams

1 oz = 28.3495 grams (U.S. standard ounce)

1 carat = 0.2 grams

Slide 33


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Estimating RevenuesMarkets

Principal markets of metals:

• London Metal Exchange (LME), UK: www.lme.com .

• New York Mercantile Exchange (NYME), New York, USA: www.nyme.com .

• KITCO Precious Metals: www.kitco.com

Slide 34


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Slide 35

Estimating RevenuesHistorical price data

Precious metals


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Slide 36


Base Metals


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Slide 37


Steel raw materials


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Slide 38

Estimating RevenuesTrend Analysis

•

Idea: replace the actual price-time history with a mathematicalrepresentation which can be used for extrapolation

– A function of the form can be useful. For a

data of size N (N pairs of x and y), the maximum power of such polynomialis m=N-1.

– This is a good procedure for interpolation, but cannot be used forextrapolation (the higher orders fluctuate a lot)

– The simplest representation is

–

From the previous curves, it can be noticed that the behavior is non-linear.The following trend could also be tested

– Which can be transformed into an equation of the form (1) such that

y = a0 + a1x+ a2x2+...+ amx

m

y = a 0 + a1x (1)

y = a exp(bx) (2)

y

!

=

a

!

+

a1x such that (.)

!

=

Ln(.)


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Slide 39

Estimating RevenuesTrend Analysis

•

The least square approach shows that:

• The correlation factor can be calculated using:

where

The correlation coefficient is unitless and between +1 and -1. In general,the closer the correlation coefficient is to +1 or -1 the better theassociation between the two variables.

b =xi ln yi! "

1

nxi! lnyi!

xi2! " 1

nxi!( )

2a = exp

1

nlnyi! "

b

nxi!

#

$%

&

'(

r =Sxy

SxxSyy

Sxx = n xi2! " x i!( )

2

Syy = n ln yi( )2

! " ln yi!( )2

Sxy = n xi ln yi! " x i! ln yi!


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Slide 40

Estimating Revenues

N":0

O14%:> /0E1"

2P /"0 %$E4 2P

12FF2LE4Q

6*C5 6' +'B7*'

6*C) 6* +*B,*)

6*CC +( 57B)*6

6*C, +6 )6B'6'

6*C7 ++ +*BC7,

6*C' +5 +CB7,)

6*C* +) 56B6'+

6*,( +C 5+B(C5

6*,6 +, +*B*+6

6*,+ +7 5(B,

6*,5 +' 5(B,

6*,) +* 56B*,

6*,C 5( 5CB(67

6*,, 56 5,B67

6*,7 5+ 5'B++,

6*,' 55 )6B')76*,* 5) )7BC5)

6*7( 5C C7B7

6*76 5, C6B)55

6*7+ 57 C(B,67

6*75 5' C'B'C+

6*7) 5* 7,B,)*

6*7C )( ,5BC5C

6*7, )6 ,'B'+)

Predict the price from 1977to 1988 basedon data from 1955 to 1976


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Estimating Revenues

b xi ln yi

1

n

xi lnyi

xi2

1

nxi

2

a

exp 1

nlnyi

b

nxi

$

&

'

6*77 ++ ,CB'6 ,CB)+6'C5)C

6*7' +5 ,CBC ,'B65+*5'+)

6*7* +) *+B55 7(B*C,57(C+

6*'( +C 6(6B)+ 75B'*,'(C*,

6*'6 +, '5B7) 7,B*C*(*5+

6*'+ +7 7+B*6 '(B6)'+'677

6*'5 +' 77B', '5B),*,5()7

6*') +* ,,B7, ',B*+',6,(+

6*'C 5( ,CBC7 *(BC5(*)+6

6*', 56 ,,B6 *)B+'+C)'7C

6*'7 5+ '+BC *'B6'*,++6,

$ ++

: +,B775

= (B()(),

Slide 41


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Slide 42

Estimating Revenues

Sxx = n x i2! " x i!( )

2

Syy = n ln yi( )2

! " ln yi!( )2

Sxy = n x i ln yi! " xi! ln yi!

r = Sxy

SxxSyy

233 '4*5'

266 *+7)+

236 84'7&'

$9:36;

:> &75*'

• Calculate the correlation coefficient

•

Comment on the accuracy of the proposed method


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Slide 43

Estimating Revenues

•

The average price of a metallic commodity is around 1.5its production cost.

• Prices are imposed by the market rather than controlledby mining companies

• The prices are usually cyclic, in terms of discounteddollars.

Mining


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MiningStudies

Chapters 9, 10

Chapters 6-7, 8

Chapter 5


Grade/Potential

Grade


Concentrates

Reserves/

ResourcesPotentialTonnage


Capacity

OperatingCosts

InvestmentCosts

Chapter 11Payback Period, Net Present Value ,

Internal Rate of Return


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Slide 45

Estimating RevenuesNet Smelter Return

• For base metals (eg. copper, lead, zinc), prices are not quoted for

concentrates. Prices are given for refined metals.•

Net Smelter Return: the payment received by the company from thesmelter for their concentrates.

•

A mill produces a copper concentrate containing G % of metal. Thecontained copper in one ton of concentrate is:

CM = G x 2000 / 100 (lbs of metal /ton of concetrate)

– G: concentrate Grade (% metal)

– 2000: lbs/ton

•

The contained copper value is:

CV = G x 2000 x P / 100 ($/ton)

– P: current market price ($/lb)


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Slide 46


• It is not possible for smelting and refining to recover 100% of the

contained metal. Some of it is lost in the slag. •

To account for this, the smelter pays only for a portion of the metalcontent in the concentrate.

•

The deductions may take one of the following forms:

–

Percentage deduction: the smelter pays only for a concentration C of thecontained metal

– Unit deduction: the concentrate grade is reduced by a certain fixed amountcalled unit reduction

– A combination of the above.


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Slide 47


• Therefore, the effective concentrate grade is:

(%)

–

u: fixed unit deduction (%)

– C: Credited percentage of the metal content (%)

•

The payable (accountable) metal content in one ton of concentrate is:

(lbs/ton)

•

Smelters often pay only a certain proportion of the current market price.The relation between the actual price to the market price is the “pricefactor”, f.

•

The gross value of one ton of concentrates is:

($/ton of concentrate)

Ge = C

100G!u( )

Me =

C

100

G!u( )

1002000

GV=MePf


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Slide 48


• The basic smelter return (BSR) can be obtained by taking into account

the charges incurred during treatment, refining, and selling:($/ ton of concentrate)

– r: refining and selling cost ($/ (lb of payable metal))

– T: treatment charge ($/ton of concentrate)

•

The net smelter return (NSR) accounts for the presence of other metalswhether it is advantageous (resulting in a by-product credit Y) ordisadvantageous (resulting in a penalty charge X):

($/ ton of concentrate)

•

Pe=Pf-r is also known as the effective metal price.

•

The At Mine Revenue (AMR): net value of the concentrate to the mineis expressed as: ($/ ton of concentrate)

–

R :is the realisation cost (e.g. Freight, Insurance, sales items commission)

BSR =Me Pf ! r ( )!T

NSR =Me Pf ! r ( )!T !X+Y

AMR =NSR!R


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Slide 49


• According to O’Hara (1980), Freight cost F in Canadian $ (1979) per

ton of concentrate can be expressed as:($/ ton of concentrate)

– Tm: miles per road (truck)

– Rm: miles per railroad

– D0: days of loading, ocean travel and unloading on a 15000-ton freighter

• The percent payment (PP) is expressed as:

–

CV: value of the metal contained in the concentrate

F = 0.17Tm

0.9+ 0.26R

m

0.7+ 0.8D

0

PP =AMR

CV


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Slide 50


• According to O’Hara (1980), Freight cost F in Canadian $ (1979) per

ton of concentrate can be expressed as:($/ ton of concentrate)

– Tm: miles per road (truck)

– Rm: miles per railroad

– D0: days of loading, ocean travel and unloading on a 15000-ton freighter

• The percent payment (PP) is expressed as:

–

CV: value of the metal contained in the concentrate

F = 0.17Tm

0.9+ 0.26R

m

0.7+ 0.8D

0

PP =AMR

CV


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Slide 51


Gangue

M inera l Metal


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Slide 52


Gangue

M inera l Metal


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E ti ti R


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Slide 54


• Solution: For copper, the Basic Smelter Return is:

–

The by-product credit for silver is

– The penalty for the excess of lead is:

X = (units present – units allowable) x charge per ton of concentrate == (2-1)$10. = $10 /ton of concentrate

BSR

Me Pf r T C

100

G u

100 2000 (Pf r) T

98

100

30 1

100 2000 ($1 1 $0.1) 75

$436.56 / ton of concentrate

Y

C

100(G u) (Pf r)

95

10030 1

($6 1 $0.35)


E ti ti R


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Slide 55


• Solution: the Net Smelter Return is:

•

Assume that concentrates are shipped 500 miles by rail to the smelterand that $1 (CAN, 1979) = $3.6 (AU, current). The transport cost is:

F = 3.6 x 0.26 x Rm0.7 = 0.936 (500)0.7= $72.53

•

The at-mine-revenue is: AMR = NSR-R = 582.22 – 72.53 = $509.7

• The contained Value in one tonne of concentrates is:

•

The percent payment is

PP = AMR/CV = 509.7/800= 63%

NSR

$436.56

$10.

$155.66


CV 30

100

2000

$1

copper

! "## $##

30

$6silver

!"$

2

100

2000

$0.5

lead

! "### $###

$800

Outline


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Outline

• Introduction

•




–

Types of costs – Approach I (order 0 experience)

" Fleet requirement

"

Mining cost

– Approach II (empirical - statistics)

Slide 56

E ti ti C t


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Slide 57

Estimating CostsTypes of costs

• Cost categories may be:

–

Capital cost (Capex)

–

Operating cost (Opex)

– General and administration cost (G&A).

•

The capital is the investment required to bring a project to acommercially operable status.

• The operating costs are used by an organization just to maintain itsexistence. They would reflect labour, drilling, blasting, loading, hauling,dozing, maintenance (some companies include maintenance in G&A),etc.

•

The G&A expenses include all of the costs of operating the businessother than the costs of preparing the product for sale,

(e.g. managerial salaries, area supervision, mine/head office expense,mine surveying, state/local taxes, insurance.)

E ti ti C t


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Slide 58

Estimating CostsEscalation of older costs

• Is there a simple way to

update costs to makeestimation today?

– This can be achieved byescalating costs through theapplication of various

published indexes

–

e.g. construction cost, buildingcost, skilled labour, commonlabour, materials.

• Question: Assume that the costof the mine maintenance

building was $100000 in 1978,estimate its cost in 2011.

•

Answer:

$100k x 5058/1664 = $303.96k

Outline


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Outline

• Introduction

•




–

Types of costs – Approach I (order 0 experience)

" Capital cost

"

Mining cost

–

Approach II (empirical - statistics)

Slide 59


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61/77

Capital costs

•

Once equipment replacement and purchase has been determined, it is asimple process to determine the capital costs of the equipment

•

Need to know all up cost!

– Freight

–

Tyres –

Insurance – Buckets/Ground Engaging Tools (GET) – Additional extras

• Capital cost per unit (rules of thumb)

– Drills = $47,000 x Weight (t) – Shovel = $21,000 x Weight (t) – Truck = $37,000 x Weight (t)

–

Water cart = $37,000 x Weight (t) – Wheel loader = $37,000 x Weight (t) – Track dozer = $28,000 x Weight (t) – Wheel dozer = $32,000 x Weight (t) – Grader = $51,000 x Weight (t)

61

Source: T. Elkington , MINE4161o

Mining cost estimate


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Mining cost estimate

62

Mining cost estimate (cont )


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Mining cost estimate (cont.)

63


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Hourly costs of equipment (trucks/loaders/

drills)• Fuel

–

Fuel burn (L/hr) x Fuel cost ($/L) –

Fuel burn rule of thumb – (L/hr = Z x Diesel power in kW)• Where Z = 0.19 for loaders and drills, varies for trucks

•

Salary cost ($/year) / Hours worked (exc leave) x manning ratio –

Salary cost includes direct pay, other benefits (social security), payroll tax,accommodation, meals, training etc.

–

Manning ratio rule of thumb – 2.8 per machine (including maintenance labour)

• Maintenance (includes GET, tyres, parts, oil, accidental damage)

–

Rule of thumb $/hr = Y x Weight of equipment in t

•

Where Y = 2.12 for drills, 1.05 for loaders, 1.06 for trucks• Lease cost (spreads capital cost across equipment life)

–

Rule of thumb $/hr = K x Weight of equipment in t• Where K = 0.68 for loaders, 1.19 for trucks, 1.52 for drills

64


H l f i


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•

Fuel burn – Calculated in segments (as per time) – Fuel burn (L/hr)

– Where EngineLoading

•

Uphill or level

• Downhill/Idle = 0

– Fuel burn

65

Hourly costs of equipment


Hourly fuel burn = 0.233 engine power 0.96 Engine loading +0.04

H l t f i t (t k /l d /


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•

Fuel burn – Calculated in segments (as per time) – Fuel burn (L/hr) = 0.233 x GrossEnginePower x

(EngineLoading*0.96+0.04)

–

Where EngineLoading•

Uphill or level = UpRampTruckSpeed x TotalTruckWeight x9.81 x (RampGrade+RollingResistance)/(3.6 xGrossEnginePower x TransmissionEfficiency x(1+RampGrade^2)^0.5)

•

Downhill/Idle = 0

66

Hourly costs of equipment (trucks/loaders/drills)



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Other costs

• Blasting

–

Powder factor ~ 0.6 kg/m3 is common – Explosive costs ~ $1,000/t for Emulsion and $800/t for ANFO

• Ancillary

–

Rule of thumb – 25% of combined loading and truck cost ($/t)

•

Management on-cost/contractor margin – Rule of thumb – 20% of all total cost

• Admin & dayworks

–

Rule of thumb – 10% of total cost67


cost($/t) PF explosive cost

Rock density Labour adjust. (1.3) consumable adjust. (1.1)


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Some equipment data

68



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Estimating Costs


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Slide 70

Estimating CostsO’Hara (1980) cost estimator - CAPEX

• Daily tonnage:

–

T = tons of ore milled/day – T0 = tons of ore mined/day

– Tw = tons of waste mined/day

– Tc = tons of passing the primary crasher/day

– Tp = Tc+Tw =total material minded/day

Assume the mill operates three 8-hour shifts, 5 days/week. Many open pit mines 7 days/week others operate 5 days/week. In the second case, T = 5 T0/7.

•

The combined mine/mill capital cost is

– Assume that $1 (CAN, 1979) = $3.6 (AUD, today)

C $400,000T0.6

C $1, 440, 000T0.6

Estimating Costs


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Slide 71


• Personnel numbers

–

Number of personnel required in open pit (trucks and shovels)

– Number of personnel required to operate mills treating T tons of low grade ore:

–

Number of service personnel:

– Number of administrative and technical personnel:

Nop =0.034Tp

0.8 for hard rock

0.024Tp0.8 for competent soft rock

!"#

$#

Nml =

5.9T0.3 for cyanidation of precious metal ores

5.7T0.3 for flotation of low-grade base metal ores

7.2T0.3 for gravity concentration of iron ores

!

"#

$#

Nsv = 25% of (Nop + Nml )

Nat =11% of (Nop + Nml + Nsv )

Estimating Costs


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Slide 72


• Mine site clearing

–

For the pit, the required area in acre is:

–

The clearing cost depends upon the topography, type of cover and area:

•

Pre-production waste stripping

where Ts: tons of soil and Tws: tons of waste

Total clearing cost =

$300Ap0.9 for flat land with no shrubs and no trees

$1600Ap0.9 for 20% slopes with light tree growth

$2000Ap0.9 for 30% slopes with heavy trees

!

"##

$##

Ap = 0.0173Tp0.9

soil stripping costs= $3.2Ts0.8 for soil not more than 20 ft deep

waste stripping costs= $340Tws0.6 for rock requiring blasting loading and haulage

Estimating Costs


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Slide 73


• Drilling: number of drills Nd should be

–

The cost of drilling equipment can be estimated by , where d

is the hole diameter.• Shovels: the optimum size is estimated by (dipper size yd3)

– The number of shovels can be estimated by

–

The cost of the fleet of shovel (and auxiliaries) will be

• Trucks: the optimum truck size is matched to the size of the shovel’s

bucket size: truck size t (tons) = 9.0 S1.1

–

The number of trucks required:

– Haulage equipment costs:

Nd =2 if tonnage ! 25000tpd3 if 25000tpd < tonnage ! 60000tpd

4 if tonnage > 60000tpd

"#$

%$

$20000Ndd1.8

S= 0.145!Tp0.5

NS =

0.011!Tp0.8 / S

$510000!Ns!S

0.8

N t 0.25 Tp0.8

/ t

$20000!Nt ! t

0.9

Estimating Costs


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Slide 74


•

Mill associated costs

cost of concentrator building =$27,000T0.6

cost of gyratory crusher = $63 Tc

0.9

cost of primary crushing plant = $15,000 Tc0.7

cost of fine crushing plant = $18,000 T0.7

cost of grinding

$18, 700T0.7for hard ore ground to 70% passing 200 mesh

$12, 700T0.7for soft ore ground to 55% passing 200 mesh

$22, 500T0.7for hard ore ground to 85% passing 200 mesh

!

"#

$#

Estimating Costs


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Slide 75

Estimating CostsO’Hara (1980) cost estimator - OPEX

• Pit operating costs

•

Processing costs

gold ores :$40, 000 to 105,000 T0.5

base metal ores: $13,700 to 20,000 T0.6

uranium ores ! $150,000 to 200,000 T0.5

drilling cost per day = $1.9Tp0.7; blasting cost per day = $3.17Tp

0.7

loading cost per day = $2.67Tp0.7; haulage cost per day = $18.07Tp

0.7

general services cost per day = $6.65Tp0.7

Estimating Costs


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Slide 76

Estimating CostsO’Hara (1980) cost estimator - OPEX

• Concentrator operating costs

crushing cost per day =$7.9T0.6

fine crushing cost per day = $12.6 T0.6

grinding cost per day = $4.9 T0.8

processing cost per day

$65T0.6 for cyanidation of glod/silver ores

$54T0.6 for flotation of simple base metal ores

$34 to $41T0.7 for complex base metal ores

$65T0.7 for Uranium ores by leaching

$45T0.7 for nonfloatable nonsulfide ores responding

to gravity separation

!

"

####

$

###

#

Tailings costs per day = $0.92 T0.8

Assaying costs per day = $1.27 T0.8

Supervision, maintenance and general costs per day = $40.80 T0.8

Estimating Costs


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Estimating CostsO’Hara (1980) cost estimator (G&A)

•

Mine project overhead costs (D: direct costs)

engineering costs =$2.3D0.8;

general site costs =$0.31D0.9

project supervision costs =$1.8D0.9;

administration costs = $1.5D0.8

Documents

3 - Mining Revenues and Costs