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Y © CLIMAX MOLYBDENUM COMPANY "~ <br />A SubsiCiery of Pbelpc OoEpa Corporation <br />~~s/ <br />Henderson Operations <br />P.O. Box 68 <br />Empire, Coloratlo 80436 <br />(303]569-3221 <br />Fax [303) 569-2830 <br />s- o~ ,/ <br />September 19, 2002 <br />Mr. Bruce Humphries <br />Minerals Program Manager <br />Division of Minerals and Geology/ <br />1313 Sherman Street <br />Room 215 <br />Denver, CO 80203 <br />RECEIVEp <br />SEP p p 20D2 ~- <br />Division afMinerals acrd GEOfagy <br />RE: Climax Molybdenum Co. <br />Henderson Mine and Mill i <br /> <br />Permit No. M-1977-342 ~ / <br />av~- f/c,.~~~Financial Warranty Increase. BplL~ra,.~' °"~~ ~~D~ Ge~-Era ~ C ~ ~'~'•~Q~' °"`S _ <br />Dear Mr. Humphries: <br />On July 11, Climax Molybdenum Co. received notice of an increase in the financial <br />warranty for the Henderson Mine and Mill from $10,133,000 to $54,695,000. Attached is a <br />comprehensive response to the financial warranty increase, addressing items that were not <br />included in TR-12. This clarification report identifies some cost estimates by the Division that <br />Climax Molybdenum Co. believes are excessive, attempts to clarify inaccuracies and <br />ambiguities in the Division's cost calculations, and suggests several cost additions for the final <br />financial warranty. <br />The changes proposed in the clarification report and in TR-12 result in a financial <br />warranty, including both direct and indirect costs, of $22,989,782. This represents an increase <br />of $12, 856, 782 from Henderson's current fmancial warranty. <br />Climax Molybdenum Co. requests that the Division allow the financial warranty to be <br />posted in an amount equal to the present worth cost (or net present value) of the total project. <br />The present worth cost is a calculation that converts the cost of a project over time into present <br />day dollars and represents the dollars required at the beginning of a project to have enough <br />money to see the project through. Tt assumes that the excess dollars that are not spent at the <br />beginning of the project are invested at an interest rate equal to the discount rate. A <br />reclamation project costing $23 million would require funding of $19.6 million. Climax <br />Molybdenum Co. proposes a financial warranty of $19.6 for the Henderson Mine and Mill. <br />~wa.:;• <br />