Metalling Around for Metal Miners

Metalling Around for Metal Miners

Felt Dodge Has Found a Copper Deposit Near Kingman Arizona

Taking a Closer Look

Ok – the Deposit is Really Closer to Oatman

Your Mission Jim – Since You Did Decide to Accept It

• (1)- At what mining rate should the deposit be mined and by what method in order to achieve an economically attractive result?

• (2)- How many of the facilities needed to produce a final product should be located at the mine – ie will you direct ship ore, will you make and ship concentrates, or will you smelt and refine your own product. What should be the size and process rates of those facilities?

• (3)- The deposit is polymetalic. Which of the minerals found in the ore should be recovered?

There Are Associated Questions

• (1)- Where will you get your water and workforce?

• (2)- How will you ship your product?• (3)- What size and type of equipment will you

use and how many units?• The list is by no means exhaustive.

Looking North Across Your Terrane

Your Ore

• Your Highest Grade Metal is Copper– Your ore also contains some Gold and some zinc

• Your Deposit has 3 major mineral zones– An oxide zone on top– A secondary enrichment zone– A primary sulfide zone

The Oxide Zone

• Your copper minerals– 30% of copper in Azurite– 15% in Cuprite– 55% in Chrysacola

• You have a wide range of zinc oxides• Gold is native a free milling coming out of

limonite and geothite

The Secondary Enrichment Zone

• Copper is in– 55% Chalcocite– 40% Covelite– 5% Chalcopyrite

• Zinc is in Sphalerite• Gold is found as inclusions in the pyrite

The Primary Zone

• Copper– 75% is in Chalcopyrite– 25% is in Bornite

• Zinc is in Sphalerite• Gold is inclusions in pyrite

Rock Strength and Strata

• The pit will normally sustain an over-all slope of 55 degrees

• Toe to Crest slopes of 75 degrees are sustainable

• A fracture pattern – a major structure strikes North 30 degrees East– The dip is 60 degrees to the north-west– The angle of internal friction on the fracture planes

is 20 degrees

What to Do The First Week

• Get Your Metal Prices– For the minerals and metals in your deposit

determine the inflation adjusted price history for the past 50 years.• Identify anything that has particularly led to highs or

lows and whether you see things that would bias future prices up or down. • Create a price range for products that you think is

realistic. Be sure you know what product, refined to what degree is getting those prices.

So Where Would I Get This Stuff?

• USGS has price histories for metals going back to about 1900

• London metals exchange has price info for the for present and more recent time periods

Plan For Process

• Determine what process steps are needed to turn your ore minerals into a finished metal product that can get the prices you found

What Processing Facilities Are Already Available in the Area

• This would be things like concentrators or smelters

• A Bonus that’s not really true– At San Manuel Arizona there is a concentrator and

smelter from a largely mined out copper deposit• You could buy and rehabilitate the smelter for about

$100,000,000• You could buy the concentrator for and ready it for

production for $25,000,000

How Would You Get Ore to Process Destinations?

• What are the Roads like?– Assume you would need to build at least 5 miles of road to get to

the existing road to Oatman, Arizona (that does not mean the existing Oatman road is very good)

• Are there any rail-lines– Are there load points on those rail lines– How many railroads will be needed to get product to a destination

• Every time you change rail lines it costs $4/ton

• You may assume that moving a product to a smelter location will connect it to the market

• What will your transportations costs be?

Water Down and Weather

• What is the weather like in your area? Will the weather cause lost operations time?

• Where does water come from in the area? What does that water cost? How would you likely get it to your mine?

Work Force Issues

• Where are the nearest towns that might supply you with a workforce?

• Will that workforce be trained or will you likely have to build a training program for the workforce? If you have to train the workforce, how will you do that? What will it cost to train various types of workers?

• Calculate Your Burden.

OK – What Is Burden?• Burden is the cost of providing benefits for your employees

– It is normally expressed as a % of hourly wages• Example burden is 40%• Wage is $20/hour – 40% burden is $8/hour• Worker’s effective cost the employer is $28/hour

• What makes up Burden– Employers must match employees social security 6.2% of wages– Employers must match employees medicare contributions 1.45%– Employers must contribute to workmans compensation and

unemployment insurance – these are state programs

What Else• Most Employers provide health care benefits – usually paying

well over half the cost– Kiaser Family foundation has lots of info– If you fail to provide health care benefits you will pay a tax to the

Feds under Obamacare• Most employers provide paid vacation and sick leave benefits• Many employers will match retirement savings in a 401K –

3% to 7% of earning limitations are typical• Some employers provide education benefits• In some Union operations you may be required to pay into a

Union pension fund.

Getting to Work

• What are Arizona’s laws on things like workmans comp, unemployment insurance contributions? What are the Federal lawas on employer contributions to social security and medicare? If you are considering providing health benefits to your workers what will that cost you? If you don’t provide health insurance what will your Obamacare penalties likely be? Consider other benefits you may want to supply (example paid vacation or sick leave). What are typical wages paid in the industry and area? What is your likely “burden cost”.

Figure Out Your Work Schedule

• How many hours will you run production?• How many days per week will you schedule?• What is your shift length?• Will you overlap shifts?• Examples 8 hour shifts – 3 of them• 10 hours shifts for production• Will you rotate shifts – 4 on 3 off or will you

give people steady days per week

Design a First Draft Open Pit

• Keep it simple – constant slope• What are you after– Approximate tonnage of ore types and waste– Areas likely to be disturbed by the pit and

therefore off limits for processing facilities and waste dumps

Where Do I Get This Data?

• How about stealing cost info from your 440 project runs

• You just got a collection of metal prices