2020-03-16_PERMIT FILE - M1977342

• Permit No: M1977342
• IBM Index Class Name: Permit File
• Doc Date: 3/16/2020
• Doc Name Note: Response to DRMS Review of Cost Estimate
• Doc Name: Reclamation Cost Estimate
• From: Climax Molybdenum
• To: DRMS
• Email Name: PSH
• Email Name: MAC
• Media Type: D
• Archive: No

COLORADO OPERATIONS
Climax Molybdenum Henderson Mine
A Freeport-McMoRan Company 1746 County Road 202
Empire, CO 80438
Phone[phone]
March 12, 2020
RECEIVED
Via Email and UPS Tracking#: 1Z 804 847 03 7427 9106
MAR 16 2020
Mr. Peter Hays DIVISION OF RECLAMATION
State of Colorado MINING AND SAFETY
Division of Reclamation, Mining and Safety
1313 Sherman St., Rm. 215
Denver, CO 80203
Re: Response to DRMS Review of Henderson Reclamation Cost Estimate Update - Climax
Molybdenum Company, Henderson Operations, Permit No. M-1977-342
Dear Mr. Hays:
Climax Molybdenum Company, Henderson Operations is providing this response to your February 11, 2020
Review of our 2019 Reclamation Cost Estimate Update. The Division's cost estimate was approximately
$180MM,which is a$9.5MM increase from the Henderson cost estimate of$171 MM.The comments below
are provided with the added knowledge we have received from Mr. Zach Trujillo on February 20 and March
6,2020 regarding the approaches taken for the Division's cost estimate.The primary categories for the cost
differences are related to demolition, job superintendents, overhead and profit, and contingency, each of
which are addressed below.
1. Mill Site Demo task (your CIRCES Task A02). We believe the Henderson cost estimate of
$4,854,039, a 46% increase over our approved 2015 estimate, represents a fair valuation for
demolition activities at the Mill. At a minimum, we request that DRMS re-evaluate its addition of a
backhoe with hydraulic hammer and potential use of a push dozer, and its assumption for offsite
disposal (15-mile haul) in accordance with Section 2.11 of the Reclamation Plan narrative, which
accompanied our 2019 reclamation cost estimate. As stated, we propose that demolition material
that is not toxic or hazardous and not retrievable or practicably recycled will be disposed of by direct
burial (and pulverized in place, if less than 3 feet of the ground surface) as part of a mass regrade
and revegetation activity. Additionally, as stated in the cost narrative, and as we have proven at
both of our Colorado molybdenum properties, we will likely receive significant and potentially
profitable results of a structure demolition project through the recycling of steel and other materials,
which is not recognized in the current estimate.
2. Job Superintendent(Indirect task). The basis for the Division's estimate of$2,470,302 implies 5-6
Superintendents over a period of 3 years. Based on our experience conducting similar projects of
this scope at our Colorado operations, this cost is not representative at 1.75% of Direct costs.
Henderson proposes to increase our cost from $519,033 to $1,557,099 to represent a most likely
3-year scenario for 3 Superintendents (1-Mine; 1-Mill; 1-TDA).
3. Engineering/Contract/Bid (Indirect task). We understand that the Division will reduce its factor of
4.25% of Direct, OH&P costs to 2% as agreed to in previous estimates.
4. Contingency (3% of Direct costs). The Division's regulations do not require the inclusion of
contingency. Further, we strongly believe that considering both the added detail brought about by