SECTION 14.0 CAPITAL COST ESTIMATES

Transcription

1 SECTION 14.0 CAPITAL COST ESTIMATES Capital Cost Estimates

2 CONTENTS 14.0 CAPITAL COST ESTIMATES Introduction Overall Summary Mining Capital Cost Estimate Pre-Production Mining Capital Cost Estimate Post Production Mining Capital Cost Estimate (Sustaining Capital) Processing Plant Capital Cost Estimate Introduction Summary of Processing Plant Capital Cost Estimates Basis of Estimate Exchange Rates EPCM Costs Mechanical Equipment Piping Painting and Insulation Electrical and Instrumentation Civils, Structural and Buildings Other Direct Costs General Exclusions Summary of Key Quantities Contingency MTO Allowance Design Development Estimating Contingency Processing Plant Capital Expenditure Profiles Water Management Facility Capital Cost Estimate Owners Costs Including Infrastructure Items Overall Capital Cost Expenditure Profile Rehabilitation and Closure Cost Estimates Progressive Rehabilitation Costs Closure Rehabilitation Costs Reference List Capital Cost Estimates

3 TABLES Table 14.1 Contributors to the Capex Table 14.2 Overall Capital Cost Estimate Table 14.3 Summarised Total Capitalised Pre-production Mining Costs Table 14.4 Capital Expenditure Profile Pre-production Mining Costs Table 14.5 Summarised Total Capitalised Post Production Mining Costs (Sustaining Capital) Table 14.6 Summarised Total Capital Costs Table 14.7 Process Plant Work Areas Table 14.8 Estimated EPCM Manhours Table 14.9 Basis of Other Direct Costs Table Summary of Main Quantities Table Contingency Evaluation Table Cash Expenditure Profile Process Plant Table Total Water Management Capital Costs Table Summarised Total Capitalised Pre-production Water Management Costs Table Summarised Owner s Capital Costs Table Capital Expenditure Profile Pre-production Owner s Costs Table Capital Expenditure Profile Overall Pre-production Costs Table Progressive Rehabilitation Cost Estimate Table Closure and Post Closure Rehabilitation Costs FIGURES Figure 14.1 Capital Expenditure Profile Overall Pre-production Costs Figure 14.2 Capital Expenditure Profile Overall Pre-production Costs Capital Cost Estimates

4 14.0 CAPITAL COST ESTIMATES 14.1 Introduction This section of the report describes how the Capital Cost Estimate (Capex) has been derived for the Barruecopardo Tungsten Project. The Capex has been compiled by Jacobs with information provided from various sources as highlighted as illustrated in Table Mining Process Plant Infrastructure Owners Costs Contingency Water Management Environmental and Closure Costs CSA Global Jacobs Jacobs Ormonde Mining/Saloro SLU Ormonde Mining/Saloro SLU ATC Williams IMC/ Ormonde Mining Table 14.1 Contributors to the Capex The purpose of developing the capital cost estimate for the project is fundamentally twofold: i). ii). for use by Saloro SLU in the financial model to assess the financial viability of the project. for use as a base for the initial project budget for the engineering, procurement and construction phase of the project development. The estimate has been prepared based on a typical Engineering, Procurement, Construction and Management (EPCM) contract basis with the selected EPCM contractor providing and awarding sub-contracts for and on behalf of Saloro SLU Overall Summary For the scope of the Project, as defined elsewhere in this report, the overall preoperational capital cost estimate is summarised in Table 14.2 below. Project Component Cost Estimate ( M) Owners Costs 5.2 Mining 3.9 Water Management Facilities 8.2 Process Plant 26.8 Contingency 4.4 Total Project Capital Costs (pre-operation) 48.5 Table 14.2 Overall Capital Cost Estimate Capital Cost Estimates

5 The above summarised capital costs are presented with a Base Date of Q1 2012, on an un-escalated and un-financed basis Mining Capital Cost Estimate This section of the report outlines the pre-production mining Capex estimate for the open pit mine facilities associated with the project prior to actual production mining. It is planned that the mining will be undertaken on a contract mining basis with the selected mining contractor appointed prior to mine operations commencing to enable set up and pre-stripping operations. Thus, the mining contractor s scope will be the establishment of his own offices, workshops and explosive facilities to support the mining operations Pre-Production Mining Capital Cost Estimate The pre-operational mining costs have been determined for the following two main cost components: - Pre-production Capex including the mine contractors facilities, mobilisation and establishment - Waste Rock Mining Capex to produce construction materials Thus the pre-operational costs associated with the mining contractors establishment and waste pre-stripping in the pit being developed in the project presented in this report prior to the commencement of significant ore mining from that pit has been capitalised. The estimated capitalised costs for each of the above identified cost components for the open pit mines are illustrated in Table Mine Pre-Production Set Up Mobilisation Site Preparation Site Establishment Supervision and Overheads Capex ( X10 3 ) Preproduction Sub-Total Set Up 1,588 Pre-Production pre-stripping of Waste Rock 2,306 Total Mining Pre-production 3,894 Table 14.3 Summarised Total Capitalised Pre-production Mining Costs A capital expenditure profile for the pre-production capitalised mining costs during the 19 month Project Implementation Period (Section ) is presented in Table Capital Cost Estimates

6 Project Month Forecast Expenditure Capex Forecast Expenditure as % of Total , , , , , , ,026, , , TOTAL 3,893, % Table 14.4 Capital Expenditure Profile Pre-production Mining Costs Post Production Mining Capital Cost Estimate (Sustaining Capital) After the mine begins operations there will be a number of ongoing mining activities to sustain the operation and these are capitalised to sustain the mining operation. The activities and estimated costs are presented in Table 14.5 and included in the financial model Capital Cost Estimates

7 Mine Demobilisation Site Clean Up Maintenance Total Mining Post Production (Sustaining Capital) Capex ( M) post production Table 14.5 Summarised Total Capitalised Post Production Mining Costs (Sustaining Capital) 14.4 Processing Plant Capital Cost Estimate Introduction This section presents the capital cost estimate that has been developed during this Feasibility Study for the Barruecopardo Tungsten Processing Plant and Supporting Infrastructure. Based upon the level of engineering, costing and planning undertaken during the course of the study the level of accuracy of this estimate is of the order of +15%/-15% which is in line with international standards for a project at the stage of development. The capital costs are presented in this section of the report while the supporting documentation is presented in Appendix 3 of the Cost and Definition study report, Feb prepared by Jacobs E&C Ltd. The capital cost estimate has been prepared for the Barruecopardo Tungsten Process Plant and Infrastructure based on the currently developed scope of the project and implementation of the project on an EPCM contract basis with the contractor providing and awarding purchase orders and sub-contracts on and behalf of Saloro. For all of the elements of the capital cost estimates, Jacobs have utilised standard estimating practise. Costs are based on vendor quotes obtained for some mechanical items of equipment and data available from the Jacobs estimating data bank for metallurgical processing facilities. The total installed constructed capital cost estimated excluding contingency for the Process Plant and Supporting Infrastructure is: Euros 26,815,581 Due to the stage of development of the project, Jacobs have recommended a contingency allowance is considered. The allowance has been developed utilising a Jacobs in-house statistical analysis tool and bench marked against other metallurgical projects and has been evaluated at Euros 2,786,139 for the process plant. Excluded from this contingency allowance recommendation is any project risk associated with escalation, exchange rates, country etc., which is normal practice for the Owner to assess and include in the financial evaluation of the project Capital Cost Estimates

8 For the purposes of economic analysis of the Project (Section 16) Saloro have utilised a contingency of 10% on all project investment capital components. The capital costs are presented in Euros on an un-financed, un-escalated basis with a base date of the 1 st Quarter Summary of Processing Plant Capital Cost Estimates The summarised capital costs excluding contingency for the process plant and supporting infrastructure are presented in Table Item Capex Capex Processing Plant 13,976,987 Supporting Infrastructure (General, Utilities, Infrastructure) 8,872,853 Water Treatment 835,885 EPCM 3,129,856 TOTAL 26,815,581 Table 14.6 Summarised Total Capital Costs Basis of Estimate The capital cost estimate is based on the scope of work developed for the Barruecopardo Tungsten Process Plant and Infrastructure presented in this report. The engineering design and scope of works has been developed based on test work provided by Saloro as reported in Section 6 of this report. The processing plant areas and supporting infrastructure, as illustrated in Table 14.7, are self descriptive and are inclusive of all costs by discipline and associated support and enabling cost elements Capital Cost Estimates

9 Processing Plant Area Number Description 00 General 20 Crushing 21 Pre-Concentration 22 Upgrading 23 Reagents 25 Water Treatment Plant 40 Utilities 50 Infrastructure Table 14.7 Process Plant Work Areas Wherever possible, equipment identification numbers are allocated to all items included in the capital cost estimate. The equipment numbering system used is based on an alpha-numeric arrangement; the alpha designator describes the plant item and a sequential number provides a unique identifier. The estimate has been generated using established methods. Detailed material take-offs have been prepared for all engineering disciplines upon which the estimating group have applied equipment / material prices, construction norms and local rates as obtained from Spain Exchange Rates The exchange rates utilised within the estimate are: 1.00 GBP : Euro 1.00 USD : Euro 1.00 RAND : Euro EPCM Costs EPCM costs have been developed based on the implementation strategy and programme outlined in Section 5. An engineering, procurement, construction management and commissioning resource schedule has been produced which has been costed and included in the capital cost estimate. An allowance for expenses associated with the EPCM services has also been assessed and included in the estimated costs. The estimated manhours for the EPCM services are outlined in Table 14.8 below with the costs assessed at Euros 3,129, Capital Cost Estimates

10 Cost breakdown of the above is as follows: EPCM manhour costs Euros 2,757,538 Expenses costs Euros 372,318 Services Manhours Management 6,042 Engineering 11,875 Procurement 2,023 Construction Management (including local hire) 13,923 Commissioning 1,560 TOTAL 35,423 Table 14.8 Estimated EPCM Manhours EPCM costs are thus 11.7% of the Process Plant Total Installed Costs. These have been satisfactorily benchmarked against other minerals and metals projects. To establish the resource loading it has been assumed that the selected and appointed EPCM contractor will have a proven track record in the design of process plants and have a direct knowledge of the Barruecopardo Tungsten Project. In order to maximise construction management efficiency it is assumed a number of site based personnel will be local hire Mechanical Equipment A detailed equipment list has been compiled by Jacobs for all the defined work areas of the plant. Equipment quotations have been sourced for all major and specialist items of equipment using and fax enquiries. The balance of the equipment, being minor in nature, has been priced using either inhouse data or from similar projects. The detailed equipment list presented in Appendix 2 of the Cost and Definition study report Feb is the driver for the equipment section of the cost estimate which directly follows its content. Quoted costs amounted to Euros 6,595,332 and represents approximately 74% of the overall equipment costs by value. The balance of the equipment costs has been estimated in-house and primarily centres on miscellaneous fabrications where weights have been developed and an appropriate rate for supply and manufacture applied. These shop fabrication items including small storage tanks, chutes, hoppers, pump boxes etc have been priced using a rate of Euros 2,850 tonne; this rate has been obtained from Spanish Contractors Capital Cost Estimates

11 For site built tanks these have been priced using a rate of Euros 4,230 per tonne; this rate has also been obtained from Spanish Contractors. While attempts have been made to secure quotations from three suppliers the response from the market has been poor in many instances and limited responses received for several items. The quotations that have been received have been technically and commercially appraised prior to inclusion within the estimate. In all instances the most competitive quote has been used provided the quotation compliances with the stated requirements. The installation costs for items of equipment has been assessed individually, using construction manhour norms and then applying a local all in rate to the manhours. This rate has been built up using cost data received from Spain. Costs attributable for laboratory equipment and workshops have been estimated and are clearly identifiable in the estimate Piping A line list and material take-off has been developed by the Jacobs Engineering Department for the pipework. The material take-off details pipework by specification and nominal bore. A valve schedule has also prepared detailing valves by type, nominal size and material. Materials have been priced by applying the appropriate material unit rates to the developed material take-off. Spanish rates have been used where available and in particular for all HDPE Pipework. The rates have been benchmarked and this has indicated that HDPE Pipework is considerably cheaper in Spain than the UK. Carbon Steel Pipework is of a comparable price between Spain and the UK. A Pipework Fabrication & Installation estimate has been carried out using Spanish Fabrication and Installation rates for HDPE Pipework and manhour norms then applying a local all in rate to the manhours for Carbon Steel Pipework. This rate has been built up using cost data received from Spain. An allowance for Pipe Supports has been included within the estimate. A cost has been allowed for non-destructive testing of pipework. A fully detailed piping breakdown is included within the body of the cost estimate and presented in Appendix 3 of the Cost and Definition study report Feb Painting and Insulation Painting and Insulation has been priced by applying the appropriate unit rates to the developed material take off; UK rates have been used. A fully detailed Painting and Insulation breakdown is included within the body of the cost estimate and presented in Appendix 3 of the Cost and Definition study report Feb Capital Cost Estimates

12 Electrical and Instrumentation Detailed material take-offs have been developed by the Jacobs Engineering Department detailing all major equipment and bulk quantities. Quotations have been sourced and utilised for the provision of all major electrical equipment. These quotations have been technically appraised and a recommendation put forward to estimating prior to input into the estimate. Costs for tagged instruments including control valves are based on recently obtained quotations for similar items. All other costs for bulk materials are based upon vendor provided price lists and inhouse data. An Electrical & Instrumentation Installation estimate has been assessed using ` construction manhour norms then applying a local all in rate to the manhours and this rate has been built up using cost data received from Spain. A fully detailed Electrical and Instrumentation breakdown is included within the body of the cost estimate and presented in Appendix 3 of the Cost and Definition study report Feb Civils, Structural and Buildings A detailed bill of quantities has been generated by the Jacobs Engineering Department. A fully detailed priced Civils, Structural and Buildings breakdown is included within the body of the cost estimate and presented in Appendix 3 of the Cost and Definition study report Feb Spanish subcontractor rates have been obtained and applied to the detailed quantities in order to ascertain an overall cost. Various rate comparisons have been carried out to ensure that the most appropriate rates have been used in the estimate build up Capital Cost Estimates

13 Other Direct Costs Allowances have been made within the cost estimate for other costs and the basis of these is presented in Table An allowance from 24 months operating spares included. Operating Spares This is based on 2.0% of the mechanical equipment supply cost. An allowance for commissioning spares has been included. Commissioning Spares This is based on 0.5% of the mechanical equipment supply cost. First Fill Consumables Transport / Shipping Escalation Establishment for EPCM Services Only An allowance of 10,000 has been included. An allowance of 2.5% of the material supply cost has been included. Excluded Determined from the construction programme and includes for site cabins, IT link, toilet facilities etc. Scaffolding has been determined by utilising a historic factor of 10% of the Mechanical Equipment Installation, Scaffold and Heavy Lift Pipework Installation and Electrical Installation costs. Main craneage has been determined by utilising a historic factor of 3% of the Mechanical Equipment Installation, Pipework Installation and Electrical Installation costs. Vendor Representatives Consultants Translation of Maintenance and Operating Manuals An allowance has been made within the estimate for all supervision during both construction and commissioning. No allowance has been made for any Consultancy costs No allowance has been made for any Translation costs. An allowance has been made for Expenses associated with Expenses the EPCM element of the estimate, this allowance has been factored at 10% of the EPCM costs. Table 14.9 Basis of Other Direct Costs General Exclusions No allowances have been included within the estimate for the following items: Sunk Costs Test Work Planning Permission Capital Cost Estimates

14 Land Purchase Way-leave costs Spanish Government Costs All Taxes and Duties Financial charges of any description Bonds, Guarantees etc Insurances Mobile Equipment costs Summary of Key Quantities Table below listed the main quantities generated and priced for inclusion in the capital cost estimate. Item Description No. of items of mechanical equipment Piping metres Quantities 305 No. 5,482 m Earthworks cubic metres 12,065 m 3 Concrete cubic metres 5,597 m 3 Electrical cabling metres Building structural steelwork tonnes 105,485 m 284 Te Table Summary of Main Quantities Contingency Allowances for growth in the material take offs and design and development have been included in the base estimate and are excluded in the contingency assessment MTO Allowance A quantitative adjustment to the engineering disciplines take-off to allow for the final installed bulk quantities is included in the estimate (0% of the Mechanical Equipment costs, 5% of the Civils & Structural costs and 2.5% of the balance of the discipline estimates costs) Design Development An allowance to include for anticipated design changes, likely to increase the final value of procured items as compared to quotations obtained at the bid stage, is included in the estimate (0% of the Mechanical Equipment costs, 5% of the balance of the discipline estimates costs). In quantified terms the growth allowance in the base total installed constructed cost estimate is Euros 344, Capital Cost Estimates

15 In addition to the estimated costs for direct and indirect costs for the project, a contingency allowance has been assessed for risk based on an assessment of the present degree of definition for each of the principal cost categories Estimating Contingency A sum to allow for inadequacies and or inaccuracy of cost and quantitative information used in the estimate preparation such as: Price Sources for the supply of materials Accuracy of Engineering Construction Data and impact on sub-contracts Contingency is intended to cover items of work which may have to be performed or elements of cost which may be incurred and which, although considered to be within the scope of the project, are not specifically defined or foreseen at the present time. Contingency is not intended as a replacement for risk and should be considered as an integral part of the capital cost estimate. The applied and quantified evaluation is presented in Table Item Estimated Cost Capex % Supply of Materials 1,442, % Construction Sub-Contracts 918, % Other Direct Costs 98, % EPCM Costs 325, % Miscellaneous Costs (First Fill of Media) 1, % Total 2,786, % Table Contingency Evaluation The contingency allowance detailed above has not been included in the presented capital cost estimate at the request of Saloro as they wished to apply a single contingency factor to apply to the total project capex for all activities. The above table has been prepared from information contained within the detailed contingency calculation sheet. Note the above figures are indicative only and have been presented for guidance only. The assessed contingency is not included in the project total installed cost estimate. For the purposes of economic analysis of the Project (Section 16) Saloro have utilized a contingency of 10% applied to all project investment capital components Capital Cost Estimates

16 Processing Plant Capital Expenditure Profiles A capital expenditure profile for the pre-production capitalised processing plant costs during the 19 month Project Implementation Period (Section ) is presented in Table Project Month Forecast Expenditure Capex Forecast Expenditure as % of Total 1 62, % 2 125, % 3 188, % 4 188, % 5 847, % 6 1,102, % 7 1,370, % 8 1,497, % 9 1,647, % 10 2,352, % 11 2,770, % 12 3,009, % 13 2,572, % 14 2,572, % 15 2,229, % 16 1,442, % 17 1,143, % , % , % TOTAL 26,815, % Table Cash Expenditure Profile Process Plant 14.5 Water Management Facility Capital Cost Estimate This section presents the capital cost estimate for the Water Management Facilities that has been developed for the building of environmentally sound water management facilities at the plant site and to the dewatering of the open pit as per the design and construction method described in Section Capital Cost Estimates

17 The facilities include the following: Water Dams (A to C) Dam Linings Pumps and Distribution Piping Diversion Channels, Spillway, Drains and Sumps Sulphide Lagoons The pre-production and ongoing sustaining capital costs estimated were established to reflect the staged construction of the dams, the dewatering of the pit and the associated water recovery pumping and distributions systems. The capital costs allocated to the initial build are classified as pre-production investment costs and the subsequent development of the facilities classified as sustaining capital with these costs being summarised in Table Water Management Facilities Capex ( M) Pre-Production Stage Earthworks 3.6 Lining 1.1 Equipment and Piping 3.5 Total Pre-Production Costs 8.2 Production Stage (Sustaining Capital) Earthworks 0.5 Lining 0.3 Equipment and Piping 1.6 Total Sustaining Capital Costs 2.4 Total Water Management Facility Costs 10.6 Table Total Water Management Capital Costs Capital Cost Estimates

18 A capital expenditure profile for the pre-production capitalised water management costs during the 19 month Project Implementation Period (Section ) is presented in Table Project Month Forecast Expenditure Capex Forecast Expenditure as % of Total ,022, ,022, ,022, ,022, ,022, ,022, ,022, , , , , TOTAL 8,200, % Table Summarised Total Capitalised Pre-production Water Management Costs 14.6 Owners Costs Including Infrastructure Items The Owner s Costs as estimated by Ormonde/Saloro as capitalized items during the preproduction stage have been estimated with the itemized costs summarised in Table For further details on the items included in the estimated costs refer to Section (Miscellaneous Pre-Production Costs) Capital Cost Estimates

19 Item 2011 Capex ( M) Land Related Costs 2.6 G & A Costs 0.7 Environmental Support Costs 0.4 Power Line Costs 0.8 Administration and Project Team Costs 0.7 Total Owner s Costs 5.2 Table Summarised Owner s Capital Costs The pre-production owners cost estimate includes all costs associated with preproduction environmental activities including Facilities for collection, segregation and temporary storage of general (non mining, non process waste including signs and labelling; Equipment for the continuous or semi continuous monitoring of weather and ambient levels of total particulate matter and PM 10 in air. These may be specific requirements of the environmental permits; A hand held portable noise meter for periodic measurements at the perimeter of the mining area. Compensatory measures including the creation of wetlands, habitats for rabbits and bats and equipment for surveillance of Perdicera Eagle nest sites. A capital expenditure profile for the Owner s pre-production costs during the 19 month Project Implementation Period (Section ) is presented in Table Capital Cost Estimates

20 Project Month Forecast Expenditure Capex Forecast Expenditure as % of Total , , , , , , , , , , , , TOTAL 5,199, % Table Capital Expenditure Profile Pre-production Owner s Costs 14.7 Overall Capital Cost Expenditure Profile An overall capital expenditure profile for the pre-production capital costs during the 19 month Project Implementation Period (Section ) is presented in Table and Figure 14.1 and Figure The profile excludes post production environmental, rehabilitation, closure costs and contingency Capital Cost Estimates

21 Project Month Forecast Expenditure Capex Forecast Expenditure as % of Total TOTAL 62, , , , , ,102, ,370, ,524, ,184, ,889, ,308, ,337, ,901, ,984, ,433, ,365, ,884, ,770, ,641, ,109, % Table Capital Expenditure Profile Overall Pre-production Costs Capital Cost Estimates

22 Barruecopardo Expenditure Profile 50,000,000 Cumulative Expenditure (EUR) 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000, Project Month Figure 14.1 Capital Expenditure Profile Overall Pre-production Costs Barruecopardo Expenditure Profile 50,000,000 Cumulative Expenditure (EUR) 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000, Project Month Figure 14.2 Capital Expenditure Profile Overall Pre-production Costs 14.8 Rehabilitation and Closure Cost Estimates Progressive Rehabilitation Costs The total areas affected by the project and requiring rehabilitation have been estimated, and based on the rehabilitation philosophy outlined in Section 12 of this report the rehabilitation costs for the project have been estimated Capital Cost Estimates

23 The site will be progressively rehabilitated during the life of the mining operation with the estimated rehabilitation costs incurred during the life of the project being presented in Table Capex Production Year 1 487,110 Year 2 476,650 Year 3 309,934 Year 4 565,796 Year 5 523,501 Year 6 463,180 Year 7 472,151 Year 8 631,797 Year 9 86,346 TOTAL 4,016,468 Table Progressive Rehabilitation Cost Estimate Closure Rehabilitation Costs The estimated costs of rehabilitation measures during the closure and post closure phases are summarised in Table The costs involved in the removal of equipment and the demolition and clearance of structures are expected to be covered by the residual sale value of some major equipment items and the scrap value of construction materials Capital Cost Estimates

24 Stage Area Capex Closure Final dump 511,324 North dams 802,052 Plant area 627,710 Sulphide deposit 211,510 Main track 201,935 Inner tip 191,511 General 126,735 Total Closure Capex 2,672,780 Post Closure 234,626 Table Closure and Post Closure Rehabilitation Costs Capital Cost Estimates

25 14.9 Reference List 1. Barruecopardo Feasibility Study: Water Management System ATC Williams, February Barruecopardo Cost & Definition Study Jacobs E&C Ltd Feb Capital Cost Estimates