Simplified cost models for prefeasibility

mineral evaluations
T.W. Camm
Abstract - In this US Bureau of Mines r e p o r t , mine
and mill cost models a r e presented to make estimates of
the cost t o d e v e l o p mineral deposits in the desert region
of the southwest United States. Regression analysis
w a s used t o generate capital and operating cost equations for each model based or1 d a i l y production c a p a c ity. These models a r e used for Potential Supply Analysis ( P S A ) studies b y the Bureau, which analyzes the
economic benefits of minerals in a region.
Introduction
The US Bureau of Mines conducts studies of the economic
impacts of regulations on federal lands. These studies are
part of the Bureau Potential Supply Analysis (PSA) program.
To meet the needs of these studies, a methodology was
developed to estimate operating and capital costs for a mineral deposit given its tonnage, grade and depth.
The format for the cost models in this study was developed
at the Bureau's Western Field Operations Center (WFOC),
Spokane, WA, for studies of known and undiscovered resources on Federal lands. These cost models are described in
a Bureau publication by Camm (1991).

Description
To provide engineering analysis for PSA studies. mine
and mill cost models were produced to make estimates of the
cost to develop mineral deposits in the desert region of the
southwest United States. Regression analysis was used to
generate capital and operating cost equations for each model
based on daily production capacity (Camm, 1992). These
models are used for PSA studies by the Bureau to analyze the
economic benefits of minerals in a region. An example of
using cost models for PSA studies is a recent report by the
Bureau demonstrating the economic impacts of minerals in
an area in southern California by Wetzel et al., (1992).
Typically, deposit models for regional studies provide
tonnage, grade and depth variables. A new approach to cost
modeling was developed to provide useful input to the
economic evaluation of study areas based on these parameters (Camm and Smith, 1991). The modeling approach used
in this simplified methodology is particularly suited for
making quick cost estimates where specific design parameters are unavailable. Users in the Bureau's Resource Evaluation and Policy Analysis divisions, professionals outside the
Bureau performing similar evaluations, and those who need

MINING ENGINEERING

a quick cost estimate for a mineral deposit will find the

approach of this simplified method particularly useful.
The key benefits of the method are:
that it demands less engineering background of the user,
makes it easier to apply escalation factors,
is versatile in applications to a variety of deposit types,
occupies significantly less space on a computer than
alternative systems and
uses only limited design parameters to develop a cost
estimate.
The cost derived using these models should be considered
a prefeasibility estimate.
Models were developed using a variety of sources to
provide the most accurate representation of costs available.
Costs for several operations at varying tonnages were estimated. Wherever feasible, the capacity scenario was based
on actual operations. Site information available included
flowsheets, kquipment lists and manning charts. This information was augmented by data from cost handbooks and
references and by the Bureau Cost Estimating System (CES)
(US Bureau of Mines, 1987).
Additionally, cost models developed at WFOC for previous studies were adapted for certain cases where feasible.
Cost models were developed for each of the mine and mineral
processing types listed in Table 1. Cost models for access
roads and powerlines were also included.
~ o l l o w i ndetermination
~
of representative daily capacities for each model and gathering of pertinent data, capital
and operating costs were generated for each capacity. These
costs were summarized in the following categories: labor,
equipment, steel, lumber, fuel, lube, explosives, tires, construction materials, reagents and electricity. In addition, a
separate category for sales tax was included. A total cost
equation was also included for each model for users who do
not require a cost breakdown into each of the individual
categories, but only an overall cost estimate. Table 1 lists the
models developed.
Regression analysis was used to generate capital and
T.W. Carnrn, member SME, is a mining engineer with the US Bureau
of Mines Western Field Operations Center, Spokane, WA. SME
Preprint 93-85, SME Annual Meeting, Feb. 15-1 8,1993, Reno, NV.
Manuscript Feb. 19, 1993. Discussion of this peer-reviewed and
approved paper is invited and must be submitted, in duplicate, prior
to September 30, 1994.

JUNE 1994 559

Table 1 - List of cost models

Infrastructure
Access roads
Powerlines
Open Pit Mine Models
Small
Large
Underground Mine Models
Depth factors
Block caving
Cut-and-fill
Room-and-pillar
Shrinkage stope
sublevel longhole
Vertical crater retreat

Table 2 - CIP mill model (capacity range 1-20,000 stpd)

Mill Models
Tailings pond
Autoclave-carbon-in-leach
(CIL)-electrowinning
CIP-electrowinning
CIL-electrowinning
Carbon-in-pulp (CIP)electrowinning
Countercurrent decantation
(CCD)-Merrill Crowe
Float-roast-leach
Flotation, one product
Flotation, two broducts
Flotation, three products
Gravity
Heap leach
Solvent extractionelectrowinning

Capital
cost. $

Category

Operating
cost, $
484(X)-O 641
2 1.6(X)-0.463
0.993(X)OO
11.4(X)-0.463
nla
26.8(X)-O 365
2.75(X)O O
0.409(X)-0.057
105(X)4303

Labor
Equipment
Steel
Lube
Construction material
Electricity
Reagents
Sales tax
Total

Metric ton t = st x 0.907 184;

nla = not applicable
X = capacity of mill in short tons per day mill feed

operating cost equations for each model in the form shown in

Table 2. Equations for each category listed above that were
appropriate for each model were calculated in this form.
Adjustment factors were also developed for variations in
haulage distance for the open pit models and for variations in
depth of mining for the underground models.
Each model includes a brief discussion and a summary table of
cost equations as shown in Table 2. For each underground model,
a schematic is also provided to illustrate the mine method. Figure
1 showsatypicalschematic. Alsoincluded aresimplified flowsheet$
for each mill model, as illustrated in Fig. 2.
Cost curves summarizing the total cost equations for
capital and operating costs for each model were developed.
These are illustrated in Figs. 3-5. The corresponding total
cost equations are summarized in Table 3. Table 4 provides
the total cost equations for depth factors for underground
mine models, access roads, power lines and tailings ponds.
Table 3 - Minelmill total cost equations

Cost model
Open Pit Mine Models
Small open pit
Large open pit

Capital
cost. $

Operating
cost. $

160,000(X)0.515 71 .O(X)-O 414

2,67O(X)O 917
5.14(X)-0.148

Underground Mining Models

Block caving
6 4 , 8 0 o ( X ) O . ~ ~ ~48.4(X)-O 'I7
Cut-and-fill
1,250,000(X)0-461 279.9(X)-0.294
Room-and-pillar
97,6OO(X)O 644
35.5(X)-O.l 71
Shrinkage stope
179,000(X)0 620
74.9(X)-0.160
Sublevel lonahole
1 1 5 , 0 0 O ( X ) ~ . ~41
~ .9(X)-0.181
~
Vertical crater retreat

v
Fig. 1 - Cut-and-fill schematic.
Ore

Mill Models
Autoclave-CIL-EW
CIL-EW
CIP-EW
CCD-MC
Float-roast-leach
Flotation, one product
Flotation, two product
Flotation, three product
Gravity
Heap leach
Solvent extraction
Metric ton t

Grinding

Dvuilar

Thickener
Und.dlm

CIP tanks

Tailings

st x 0.907 184;

nla = not applicable

X = capacity in short tons per day
560 JUNE 1994

Crushing

Fig. 2 - CIP mill flowsheet.

MINING ENGINEERING

rm

1m.m

1o.m

1.m

CAPACIN, rw

UNDERGROUND MINING CAPITAL COSTS

W A C I T Y . .Vd m a d

OPEN PIT CAPITAL COSTS

1m

I.OW

1m.m

1o.m

CAPACITY. Wd
W~ITY.
.w n u l r i l

OPEN PIT OPERATING COSTS

Fig. 3 - O p e n

pit capital a n d operating costs ( a v e r a g e 1 9 8 9 dollars).

Depth factor costs should be added to the cost equations for

the underground mining model being evaluated.

Example
To demonstrate the individual cost models, the CIPelectrowinning model provides an example of how each
model is presented. The discussion describes the design used
for the model, followed by sample calculations using the
equations from Table 2.
This model is designed for evaluating oxide gold deposits.
The CIP-electrowinning process is most often used for processing oxide gold ores with little or no byproducts. The cost
equations are valid for ore tonnage capacities of 907 t/d to 1.8
kt/d (1000 to 20,000 stpd). For this model, a grade of 0.3 g/
t (0.1 oz/st) Au was assumed, with a recovery of 89%.
Mine-run ore is initially crushed with a jaw, then a cone
crusher. Crushed ore is then ground in arodmill and sent through
cyclones. The oversize is sent to a ball mill, while the undersize
is sent to a thickener. The ovefflow from the thickener is sent to
MINING

ENGINEERING

UNDERGROUND MINING OPERATING COSTS

Fig. 4 - U n d e r g r o u n d mining capital a n d operating costs ( a v e r a g e
1 9 8 9 dollars).

a series of carbon adsorptioncolumns, while the underflow goes

through a series of agitated leach tanks.
After leaching, the slurry is fed to the CIP circuit, which
consists of a series of tanks with high efficiency agitators.
Carbon is moved countercurrent to the slurry, which moves
by gravity from the first to the last tank. Barren slurry from
the last tank of the CIP circuit is sent to the tailings pond. The
loaded carbon from the CIP circuit and the carbon columns is
sent to the stripping tanks. Pregnant strip solution is sent to
the electrowinning circuit. Electrowinning cells are used to
plate gold onto steel wool cathodes. Loaded cathodes are
removed, treated with dilute sulfuric acid and sent to the
refining furnace, where a dorC is produced for shipment.
Stripped carbon is regenerated in a kiln and returned to the
circuit.
Figure 2 illustrates a simplified flowsheet for a CIP mill
flowsheet. Costs are summarized in Table 2.
The following calculations use the equations from Table
2 for a CIP mill, using a feed rate of X = 6.7 kt/d (7429 stpd).

JUNE 1994

561

Table 4 - Depth factor, infrastructure and tailings equations

Cost model

C A P A C N , sVd mlll lsed

MILLING CAPITAL COSTS

Cost equation

Underground mining depth factor

Capital cost, $
+371 + 180(D)(X)0.404
Operating cost, $/st
+2,343/(X) + 0.440(D)/(X)
+ 0.001 63(D)
Access road capital cost, $/mi
40 ft wide
76,00O(R)
60 ft wide
1 12,00O(R)
80 ft wide
148,00O(R)
Powerline capital cost, $/mi
20-ft pole height
298,20O(P)
30-ft pole height
304,40O(P)
40-11 pole height
310,40O(P)
Tailings pond capital cost
Tailings pond, $ + $/acre
146,000 + 1,783(A)
Dam, $/linear ft
161(L)
Liner', $/acre
5(L) + 35,79O(A)
Liners are required only in certain states
Meter = ft x 0.3048; m2 = acre x 4046.856: km = mi x 1.609
344; metric ton = st x 0.907 184.
X = Capacity of mine, st/d;
D = depth of shaft to bottom of ore body, ft.
R = Length of road to construct, mi
P = Length of powerline to construct, mi
A = Area of tailings pond, acres
L = Length of impoundment dam to construct around tailings
pond, ft
E q u i p m e n t = 2 1 .6(7,429)-0.463 = 0 . 3 5
S t e e l = 0.993(7,429)0.0 = 0.99
L u b e = 1 1 .4(7,429)-0.463 = 0.1 8
Electricity = 26.8(7,429)-0.365 = 1 . 0 4
R e a g e n t s = 2.75(7,429)O.O = 2.75
S a l e s t a x = 0.409(7,429)-0.057 = 0.25
Total f r o m a b o v e categories = $7.1 6lst o r e (mill feed)
Using the total cost equation only:
T o t a l = 105(7,429)-0.303 = $7.05/st o r e (mill feed)

CAPACITY,rVd mill bed

MILLING OPERATING COSTS

Fig. 5 - Milling capital and operating costs (average 1989 dollars).

Capital cost estimate

L a b o r = 1 1 4,800(7,429)0.527 = 12,586,999
E q u i p m e n t = 1 4 5 , 6 0 0 ( 7 , 4 2 9 ) 0 . ~=~ 19,596,255
~
S t e e l = 4 2 , 6 0 0 ( 7 , 4 2 9 ) ~ . =~ ~4,712,603
~
Construction material = 5 5 , 8 0 0 ( 7 , 4 2 9 ) ~ .=~ ~ ~
7,055,851
S a l e s t a x = 1 4,600(7,429)0,545 = 1,879,360
T o t a l f r o m a b o v e categories = 45,831,066
If an evaluator does not require the cost breakdown
provided using the above equations, the total cost can be
calculated using the total cost equation:

T o t a l = 3 7 2 , 0 0 0 ( 7 , 4 2 9 ) ~ .=~ 45,797,876
~~
(Comparing totals using individual cost categories vs.
total cost equation: 45,831,066145,797,876 = 1.001, 0.1 %
difference due to rounding in regression equations.)

(7.1617.05 = 1.016, 1.6% difference due to rounding in

regression equations.)
Summary
Cost models have been developed for two open pit models. six underground mine models and 1 1 mill models. Additional models are available for estimating costs of access
roads, powerlines and tailings ponds. This report provides an
introduction to cost models developed for Bureau Potential
Supply studies. An expanded discussion and full set of
models are found in Bureau IC 9298 by Carnrn (1991).

References
Camm, T.W and Smith, M.. 1991, "A review of cost estimating methods for prefeasibility
type stud~es."Proceedingsof the Second CanadianConferenceon ComputerApplications
in theMinerallndustry.Vol. 2, R Poulin, R.C.T. Pakalnis. and A.L. Mular, eds., Univ. Brit~sh
Columbia, Vancouver, BC, Sept. 15-18, pp. 563-571
Camm, T.W.. 1991. 8mplifiedCostModels forprefeasibilityMineralEvaluat~ons.
BuMines
lC 9298. 35 pp.

T.W..

1992. "The developmentof cost models using regression analysis,"Preprint

Camm,
no 92-48, SME Annual Meeting. 4 pp.
US Bureau of Mines, 1987, Bureau of Mines Cost EstimatingSystem Handbook, Part 1 Of
2 parts, Surface and UndergroundMining, BuMines IC 9142, 631 pp.

Operating cost estitnate

US Bureau of Mines, 1987, Bureau of Mines Cost Estrmafing System Handbook, Part 2 of
Pparts, Mineral Processing, BuMines lC 9143, 565 pp.

L a b o r = 484(7,429)-0.641 = 1.60

Wetzei. N.. et al..

Economlc Analysis of the Minerals Potential of the East Mojave
Nahonal Scenic Area. California, BuMines OFR 56-92, 79 pp

1992.

MINING ENGINEERING