Adjusting a Mine Cost Service Model

A Note About MSOPIT Compatibility Mine Cost Service Expressed Mining Costs as Costs Per tonne of Ore Mined MSOPIT asks for Mining Costs per tonne of what ever material you are in the cell for – Can require some interesting twists – Example difference between 1:1 SR mining a 2:1 SR mining is the cost of waste mining Not exactly true but for a rough shot with the generic cost model we have used it.

An Example Model This is a 2001 edition for 20,000 tonnes per day of ore at a 1:1 stripping ratio

So Where Did it Come From? This is their assumed salaried staff This is their cost table with benefits Multiply number of people by their salary and divide by tonnage and you have it.

So I Want to Adapt It – How? Start by working up your personnel table I’m going to assume the manager And Superintendent are in Ruby (1 of each) I’m going to assume my Engineers, Geologists, their technicians and Personnel managers, And accountants can do a lot of Work out of Fairbanks and fly in when Needed (I’ll keep their staffing) Foremen, Supervisors, Clerks, Secretaries I Assume will be 2 weeks on 2 weeks off so I Need 2 sets. Security – this is a gold mine! I want at least 5 With 2 weeks off 2 weeks on 10.

I’ll Go to My Handy Dandy Spreadsheet $1.12 per tonne (up a notch from MCS at $0.31)

Where Did You Get Those Salaries and Benefits? Mine Manager Superintendent Foreman Engineer Geologist Supervisor Technician Accountant Clerk Personnel Manager Secretary Purchasing Agent DirectTotal PayFringeBurdenAnnual Cost % $ 254, $73, $ 327, $ 137, $57, $ 195, $ 108, $52, $ 161, $ 129, $56, $ 185, $ 113, $53, $ 167, $ 93, $49, $ 143, $ 76, $46, $ 122, $ 100, $51, $ 151, $ 54, $41, $ 96, $ 147, $58, $ 206, $ 55, $41, $ 97, $ 99, $50, $ 150, From my wages and benefits spreadsheet

Now What About MSOPIT Compatibility Notice that I charged all salaried costs to the ore. – That means waste mining would incur none of these costs. REALLY!!!? When a cost is not directly linked to something you can get lots of accounting arguments – I could go the easy way and charge all tonnes equally – I could argue that I will likely be a lot more fussy with geology and engineering around the ore grade control – You may have to decide My rationale – since I mine ore and waste at the same time delineating differences and handling of one is vital to the other I’m going equal division – 56 cents per tonne toward both ore and waste mining cost

You Can Well Imagine I’m Going to Do Similar to Get My Labor Cost Rotary drills – 5 operators And 5 machines (obviously One shift for drilling) Shovel Operators 6 With 2 shovels – obviously They are doing 3 shifts Trucks 8 with 21 drivers (obviously assuming 1 down And 3 shifts) 12 equipment items and 16 Operators. Most on 1 shift bit On 2nd

Sizing Up My Crew Suppose I need 3 sets of 13 trucks and 1 loader – 2 shifts 26 drivers – But 2 weeks on 2 weeks off 52 drivers – 12 Shovel operators by same logic Suppose I need 6 drillers and 3 helpers on one shift – 2 sets implies 12 drillers and 6 helpers.

Some General Scaling Equipment does things like maintain roads and deliver supplies – I won’t always need water trucks but probably snow plows instead – Since my haul distances are over twice as big I need twice the people 16 leads to 32 for my case 2 weeks off 2 on means 2 crews 64 operators Utility Operators – I’ll need a big light network because of all the dark hours – Double their crew 3 leads to 6 – 2 weeks on means 2 crews 12 people

More Scaling My equipment fleet is about double theirs – Double mechanics 17 leads to 34 – 2 crews leads to 68 I won’t quite double the laborer support – Go with 100

Spreadsheet My Manning Table Came out to a whopping $4.59/tonne (quite a switch up from $0.88/tonne)

Now I’m Back to Compatibility I just charged everything to ore. If all costs for mining ore and waste are the same I could divide by 2 – just like I did with indirect costs. – But what if costs are different?

Suppose My cost to haul to the gyratory crusher by the mill and dump in is $2.45/tonne (and $0.31 to load) – your FPC truck study should be able to deliver numbers My distance to the dump is greater and a trip costs $2.95/tonne (and $0.31 to load) – Also at the dump I have to employ 2 dozers to level and spread material (0.27/tonne) Of course these costs involve both labor, equipment operation and fuel – One approach is to pull out the part of the labor associated with trucking and two dozers – Some may want to try to split road maintenance crews too (since it is an indirect cost one could fight – I’ll split even)

Adjustments Pull out my truck operators $4,170,000 Pull out $370,000 for 4 dozer operators Pull out the Shovel Operators $1,191,000 Leaves $24,451,000 in wages and benefits – Divided by ore and waste tonnage $1.86/tonne Warning – The labor cost per hour for a truck driver in FPC needs to be the same as the cost of the labor I removed. – Ie a driver cost $81,000 per year in the wage and benefit spreadsheet and works 1,610 hours the cost per hour in FPC should be $50.31/hr You might be talking to Gage and Nick about this. – The Cable Shovel Costs used in FPC need to be right for the operator and the cost of electricity

So Where Am I At So Far? Ore – Salaried $0.56/tonne – Labor (part) $1.86/tonne – Trucking $2.45/tonne (there will be a cost to recover ore for processing but that will be a processing charge) – $0.31/tonne loading – $5.18/tonne Waste – Salaried $0.56/tonne – Labor (part) $1.86/tonne – Trucking $2.95/tonne – Loading $0.31/tonne – Leveling and Spreading $0.27/tonne – $5.95/tonne

Now for Supply Most of this stuff is right off of Kyles blasting supplies cost – Kyle said his non-labor blasting Cost was $2.23/tonne. That leaves Diesel Fuel and Electricity Obviously I won’t do diesel fuel for trucks Dylan knows the cost/kwh for electricity I have electricity for my shops, warehouses and offices I also have an extensive light system in my mine

I may need to do some research I could get the cable shovel electric from the rule of thumb – 0.6 kwh/cubic yard of loose material – Given I know my loose volume of rock that will be easy Pit Lights and Warehouses will require me to do a side plan and estimate – Don’t you hate it when extra work shows up – I’ll probably want to add 10% to my electric use for little things I missed

Diesel Fuel Some rules of thumb – a big road grader can maintain about 4 to 6 miles of haul roads during a 40 hour work week You could try itemizing dozers, trucks etc or you could take MCS numbers For blasting agent trucks you could talk to Kyle For water trucks you could probably assume that water trucks and snow-plows are alternates and needed in the same amount as the road graders You can usually get fuel consumption from the manufacturer

Sundries I may want to just scale from the $0.22/tonne in the MCS model – Suppose the ratio for everything else was 3 times higher than the old cost model – I just make the sundries $0.66/tonne

Observations Some parts of the cost estimate are clearly better than others If there is an area where your numbers are rather flakey – How big a percentage of the cost does it appear to be? (1% maybe don’t mess with it) – 30% maybe you need to inform the instructor of the need to more closely study something out.