Suction Dredge Suction Dredge Economic Analysis Economic Analysis Placer Examination Placer Examination Techniques Techniques
Jan 21, 2016
Suction Dredge Suction Dredge Economic AnalysisEconomic Analysis
Placer Examination Placer Examination TechniquesTechniques
Analysis Based on Dredging Analysis Based on Dredging TimeTime
Gold recovered per hour Gold recovered per hour rather thanrather than goldgold
recovered per cubic yard.recovered per cubic yard. Labor is overriding costs.Labor is overriding costs. Dredging time is precise, hole Dredging time is precise, hole
volume is hard to measure.volume is hard to measure. Production rate is highly variable.Production rate is highly variable.
Working Time and Dredging Working Time and Dredging TimeTime
Working time is greater than dredging Working time is greater than dredging timetime
Ratio of work time to dredge time is Ratio of work time to dredge time is ~1.6:1~1.6:1
40 hr. work week includes 25 hrs. of 40 hr. work week includes 25 hrs. of dredgingdredging
Revenues based on dredging timeRevenues based on dredging time Labor costs based on working timeLabor costs based on working time
Dredging TimeDredging Time
Gold is only produced during Gold is only produced during dredging timedredging time
Working Time IncludesWorking Time Includes
In addition to dredging time includesIn addition to dredging time includes Transporting supplies to dredging siteTransporting supplies to dredging site Moving equipmentMoving equipment Dredge site preparationDredge site preparation Cleanup sluiceCleanup sluice Panning, sluicing, classifying or processing Panning, sluicing, classifying or processing
concentratesconcentrates Work breaksWork breaks PlugsPlugs Repair and maintain equipmentRepair and maintain equipment
Adjustments to Dredge & Adjustments to Dredge & Work Time RatioWork Time Ratio
Observations of dredge operatorObservations of dredge operator High boulder factorHigh boulder factor Clay - decreases visibility or needs breaking Clay - decreases visibility or needs breaking
upup Deep or fast moving waterDeep or fast moving water Very cold water-more breaks or dry suitVery cold water-more breaks or dry suit Murky water-decreases visibility & efficiencyMurky water-decreases visibility & efficiency Difficult access-addressed as 1-time cost for Difficult access-addressed as 1-time cost for
seasonseason
Number of WorkersNumber of Workers
Number generally varies from 1 to 3 Number generally varies from 1 to 3 workersworkers
2 people are generally more efficient and 2 people are generally more efficient and safersafer
1 person has lower labor cost but less 1 person has lower labor cost but less efficient and less safeefficient and less safe
1 person is ~60% as efficient as 2 people1 person is ~60% as efficient as 2 people Need to look at site specific situationNeed to look at site specific situation
Role of Second PersonRole of Second Person
Moving bouldersMoving boulders Clearing clogs in hose, jet or boxClearing clogs in hose, jet or box Dispersing tailsDispersing tails Repositioning the dredgeRepositioning the dredge Clearing the sluiceClearing the sluice Alternate on intake nozzleAlternate on intake nozzle Less fatigueLess fatigue SafetySafety
Safety Hazards Where 2Safety Hazards Where 2ndnd Person Provides AssistancePerson Provides Assistance
Unstable highwalls or working facesUnstable highwalls or working faces Unstable bouldersUnstable boulders Cold and fast moving waterCold and fast moving water Diving with supplied airDiving with supplied air Walking and carrying equipment in Walking and carrying equipment in
streams and wet, slippery rocks, deep streams and wet, slippery rocks, deep waterwater
Provide first aid or go for helpProvide first aid or go for help
Wage Rates & Job Wage Rates & Job RequirementsRequirements
Suction dredging is strenuous workSuction dredging is strenuous work Expertise from experienceExpertise from experience Knowledge of gold deposition in stream Knowledge of gold deposition in stream
depositsdeposits Small engine repairSmall engine repair Diving in deep, cold or fast moving waterDiving in deep, cold or fast moving water Hazardous conditions-unstable banks or Hazardous conditions-unstable banks or
bouldersboulders
Wage RateWage Rate
Not reasonable to work for minimum wageNot reasonable to work for minimum wage Use wage rate between minimum wage Use wage rate between minimum wage
and equipment operator wageand equipment operator wage No charge for cost to employer for No charge for cost to employer for
owner/operator, which is most suction owner/operator, which is most suction dredge operationsdredge operations
Wage rate for job requiring strenuous Wage rate for job requiring strenuous physical labor outdoors is generally physical labor outdoors is generally reasonablereasonable
Gold PricesGold Prices
Gold Futures – Federal Register Gold Futures – Federal Register GuidanceGuidance
Spot Price vs. What Local Buyers PaySpot Price vs. What Local Buyers Pay Consider jewelry or specimen value if Consider jewelry or specimen value if
samples warrantsamples warrant Survey local or regional gold buyers to Survey local or regional gold buyers to
find criteria for specimen valuefind criteria for specimen value
Dredge Production RateDredge Production Rate
Volume of material dredged is Volume of material dredged is difficult to estimate due to difficult to estimate due to irregularity of the size and shape of irregularity of the size and shape of the holethe hole
No accurate way to measure dredge No accurate way to measure dredge throughput material off of tail sluicethroughput material off of tail sluice
Holes slough and may contain Holes slough and may contain boulders or tailsboulders or tails
Rated Capacity v. Production Rated Capacity v. Production RateRate
Manufacturer’s capacity do not reflect actual Manufacturer’s capacity do not reflect actual throughputthroughput
Manufacturer’s rated capacity assumes Manufacturer’s rated capacity assumes optimum conditions, which are not optimum conditions, which are not encountered in the field – minimal lift, encountered in the field – minimal lift, unconsolidated material, sand or gravel, unconsolidated material, sand or gravel, steady supplysteady supply
Most gold is recovered where conditions are Most gold is recovered where conditions are not ideal-around boulders, in crevices and not ideal-around boulders, in crevices and joints, weathered bedrockjoints, weathered bedrock
Rated Capacity v. Production Rated Capacity v. Production RateRate
We have estimated 1.5 to 5 cy/hr of We have estimated 1.5 to 5 cy/hr of actual production rate for 4 & 5-inch actual production rate for 4 & 5-inch dredgesdredges
Manufacturer’s rated capacity is 5-10 Manufacturer’s rated capacity is 5-10 cy/hrcy/hr
Actual capacity less due to oversize, Actual capacity less due to oversize, dredging around boulders, crevices, dredging around boulders, crevices, breaking up bedrock, moving dredge, breaking up bedrock, moving dredge, discontinuous gravel bedsdiscontinuous gravel beds
Production Rate EstimateProduction Rate Estimate
Hole Volume/Dredging Time = Hole Volume/Dredging Time = Estimated Production Rate (cy/hr)Estimated Production Rate (cy/hr)
Mine LifeMine Life
Calculate using volume of gravel on Calculate using volume of gravel on claim from mapping & sampling, & claim from mapping & sampling, & average dredge production rateaverage dredge production rate
Exclude portions of stream that cannot Exclude portions of stream that cannot be dredgedbe dredged
Use information from sampling to Use information from sampling to supplement mapping informationsupplement mapping information
Gravel volume/production rate=mine lifeGravel volume/production rate=mine life
Mine LifeMine Life
Use actual number of dredging Use actual number of dredging hours/week, not total work hourshours/week, not total work hours
Dredging season – weeks/yearDredging season – weeks/year Generally 25 hrs of dredging/40 hr Generally 25 hrs of dredging/40 hr
work week using ~1.6 hrs work work week using ~1.6 hrs work time:1.0 hr of dredging timetime:1.0 hr of dredging time
Gold RechargeGold Recharge
Normally gold recharge is not significant Normally gold recharge is not significant over the life of the mineover the life of the mine Previously worked areas do not contain Previously worked areas do not contain
significant deposits of goldsignificant deposits of gold
Significant recharge may occur where Significant recharge may occur where source of gold is very near and is source of gold is very near and is depositing significant amounts of gold depositing significant amounts of gold into drainage on a regular basisinto drainage on a regular basis
Gold RechargeGold Recharge
Evidence is gold with pieces with Evidence is gold with pieces with high-character throughout high-character throughout unconsolidated gravelunconsolidated gravel
Mineral examiner should stop Mineral examiner should stop dredging periodically to check sluice dredging periodically to check sluice box to try to determine where gold is box to try to determine where gold is coming from in the gravelcoming from in the gravel
Sample Analysis for Each Sample Analysis for Each Sample Should IncludeSample Should Include
Total dredging timeTotal dredging time Actual work timeActual work time Volume of gravel processedVolume of gravel processed Production rate –hole volume/dredge Production rate –hole volume/dredge
timetime Gold recoveredGold recovered Gold production rate (mg Au/hr)Gold production rate (mg Au/hr) Grade (mg Au/cy)Grade (mg Au/cy)
Sample Summary for ClaimSample Summary for Claim
Sample No.Sample No. Dredging HoursDredging Hours VolumeVolume Gold Recovered (mg)Gold Recovered (mg) Gold Production Rate (mg/hr)Gold Production Rate (mg/hr) Grade (mg/cy)Grade (mg/cy)
Gold Production ValueGold Production Value
Sample No.Sample No. Recovery (mg)Recovery (mg) Time (hrs)Time (hrs) Recovery/Hour (mg/hr)Recovery/Hour (mg/hr) Au value/hour ($/hr)Au value/hour ($/hr)
Mining ScenarioMining Scenario
Either use operator’s or develop scenarioEither use operator’s or develop scenario Base on weekly cost estimateBase on weekly cost estimate 40 hrs work & 25 hrs dredging40 hrs work & 25 hrs dredging Weekly revenue based on 25 hrs dredgingWeekly revenue based on 25 hrs dredging Weekly labor based on 40 hrs work/personWeekly labor based on 40 hrs work/person Include operating & capital costsInclude operating & capital costs Mobilization & demobilizationMobilization & demobilization
Cost Analysis – Operating Cost Analysis – Operating CostsCosts
HOURLY COST BASED ON DREDGING HOURLY COST BASED ON DREDGING HOURS – (i.e. 25 hrs/week)HOURS – (i.e. 25 hrs/week)
Fuel-local ratesFuel-local rates Repair & maintenance for dredge (Cost Repair & maintenance for dredge (Cost
Reference Guide Bluebook)Reference Guide Bluebook) Use hourly cost for parts, supplies & Use hourly cost for parts, supplies &
lubrication for gasoline powered pumplubrication for gasoline powered pump
LABOR BASED ON 40 hrs/weekLABOR BASED ON 40 hrs/week
Cost Analysis – Capital CostsCost Analysis – Capital Costs
HOURLY COSTS BASED ON DREDGING HOURLY COSTS BASED ON DREDGING HOURS – (e.g. 25 hrs/week)HOURS – (e.g. 25 hrs/week)
DredgeDredge Wetsuits, hoses, airlines, regulators, Wetsuits, hoses, airlines, regulators,
weight belts, ropes, pans, screens, weight belts, ropes, pans, screens, buckets, shovels, tools, pry bars, winchesbuckets, shovels, tools, pry bars, winches
Only engine, pump & wetsuit wear out Only engine, pump & wetsuit wear out over timeover time
Engine & pump depreciate based on hours Engine & pump depreciate based on hours of useof use
Cost AnalysisCost Analysis
Claims with difficult access from roads, Claims with difficult access from roads, or along the river may require extra or along the river may require extra time for mobilization & demobilization time for mobilization & demobilization at beginning and end of seasonat beginning and end of season
Reclamation – disperse tailing & knock Reclamation – disperse tailing & knock down boulder piles, accounted for in down boulder piles, accounted for in non-dredging work timenon-dredging work time
Cleanup camp & ancillary facilitiesCleanup camp & ancillary facilities
Cost AnalysisCost Analysis
Must be very careful to distinguish Must be very careful to distinguish between dredging hours & actual between dredging hours & actual work hours in the report, & specify work hours in the report, & specify which type of hours are being which type of hours are being referred to in the reportreferred to in the report
Remainder of economic analysis is Remainder of economic analysis is similar to other placer examinationssimilar to other placer examinations