1. Week 3 Sr. Design

2. Important Things we Know You will be doing heavy haulage by Barge on the Yukon River for $5 per tonne to Nennana – There will be no road connection and travel by air will be the only way in and out most of the year (ok you can use dog sleds on the Idickerod trail) – You will need significant supply and concentrate storage because the river is only open 4 or 5 months per year From Nennana you will use the Alaska Railroad – You will bring in diesel fuel from North Pole this way – You will send copper concentrates to Ancourage this way – You might send gold concentrate to Fairbanks this way (though flying is an option) Copper concentrates will go to Japan for smelting

3. Who is Making Use The Power Group (8) is going to add the cost of diesel shipping into the power cost The Price Adjustment group (1) is going to add the cost shipping concentrates into the deduction from the price of copper The Blasting group (7) will be considering the impact of shipping costs on the explosives needed at the mine.

4. Other Key Results We will fly people in for one week on one week off schedules – Need look at the 277 day work schedule with 3 shifts and block this into a schedule for a mine worker – If adaptions are needed you need to make them This reduces but does not eliminate Ruby infra-structure – You have some estimated per square foot costs for housing and grocery warehouses

5. Another Puzzle Piece You have a cost table for each worker your mine might need – Both wages and benefits – (group 1 will be using this for some adjustments to mining costs)

6. Where Are We Going This Week We are trying to get our mining costs adapted for our locality – Group 1 is adapting basic costs for our cost of labor – Group 4 is getting us the length of our roads – Group 5 and 6 are working up our loading and hauling costs They are considering different truck sizes and different target mining rates They will be able to tell us how much our mining costs go up each time we go down a bench – Group 7 is costing out our blasting – (labor, blasting, and haulage are most of our direct mining costs)

7. Other Things we are Preparing to Do With Our Mine Groups 5 and 6 are telling us how big working benches need to be. – This will give us the push-back size we will need when we do our stage pits.

8. What Other Big Things are Going? We are getting our mineral processing costs – We will have a gravity circuit for free milling precious metals (group 2) – Something for oxides and carbonates copper (group 2) – More exact comminution cost (group 3) – Flotation for Sulfides (group 3) – A roasting and leaching process for our encapsulated gold (group 1) This will give us the circuit, the recovery, and the processing costs for our ore in MSOPIT

9. Infrastructure happenings Group 8 will getting power costs with amortized capital for – Grid Power – Diesel Power – Wind Power – (last alternative may be gas turbines or coal)

10. Presentation Comments Don’t stand in front of your slides Don’t rock and lunge at the screen Don’t hand wring and keep them out of your pocket (gestures were good) Eye contact was generally poor – eyes glued to slides Watch the size of tables – if you can’t read them 10 feet away on a small monitor no one else can read them

11. How to Amortize Idea is that money now and money in the future is not the same thing – We want money to grow with time – The market sets competitive rates and expectations Suppose we have a 15% interest rate and don’t get our money for year – P/F(1,15%) = 0.8696 – $1*0.8696 = 86.96 cents

12. Suppose We Have a Big Capital Cost We may want to pay for it over time – You may have done this with a car – We need a series of equal payments that “discount” back to the time of borrowing for an equal amount – Magic number that does this is called A/P

13. Calculate with Class Assistant Enter the interest rate Enter the number of Payments per year (yes I know you make 12 car payments a Year) Enter the number Of payments Read A/P 0.07095

14. Suppose I Bought a Wind Mill for $2,000,000 If I will pay for it in 25 annual payments at 5% interest – $2,000,000 * 0.07095 = $141,905

15. So How Should We Amortize? About 7% for slightly riskier would be a good after 1990 number

16. The Inflation Issue Of course money needs to grow faster than inflation Around 2.5%

17. Real vs. Nominal Dollars Nominal Dollars are based on actual price – but the dollars being spent are changing in value We are using real 2014 dollars – pricing everything in dollars with 2014 buying power throughout the mine life – We need to take out inflation – 0.07/0.025 = 4.39%

18. So How Long a Life? We need to pay within the mine life We need to pay over a conventional term for a loan – 20 years is realistic – (some circumstances may warrant more or less)