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Attachment #1 (page 1) <br />Highwall Blasting Costs - Financial Warranty Assumptions <br />Assumptions: Worst Case <br />Maximum exposure of highwall not to final design configuration is approximately 8,100 linear ft which occurs in year 2013 based on current mine production rates. <br />This includes the Deep Cresson portion of Main Cresson, WHEX portion of East Cresson, and Schist Island portion of North Cresson mine areas. <br />The total cost for blasting these highwall at maximum exposure is approximately $631,000. <br />This is calculated at $78 per linear foot (based on current CC&V Mine Operations blasting costs spreadsheet, which is page 2) multiplied by 8,100 linear feet. <br />At this point in year 2013, there would be 2.5 years remaining of production at an ore production rate of 25 million tons/year based on current mine production rates. <br />This amounts to 62.5 million tons of ore that would not be placed on the VLF and would not require chemical detoxification. <br />The savings in chemical detoxification equals $4.6 million and this financial warranty amount would be available to offset blasting of highwall not at final design configuration. <br />Chemical Detox <br />410 million tons 62.5 million tons <br />$2877 million x X <br />X = $4.375 million reduced <br />Detoxification cost is $0.07 per ton <br />2 DRMS Overhead $ 1,013,895 $ 5,721,640 $ 6,735,535 <br />$6.7m total labor and equipment for VLF detoxification costs x 0.235 indirect costs x 0.15 (% reduction of VLF detox) <br />237,427.61 <br />$237,427 indirect costs reduced <br />$4,612,427 total cost reduced <br />Assumptions: 100 days prior to closure <br />Assume a maximum of 90,000 tons of ore per day is going to the VLF and detoxification cost at $0.07 per ton (see calcs above) <br />then a savings of $6,300 per day is achieved by not placing ore on the VLF (90,000 x $0.07 = $6,300 per day reduction in VLF detoxification) . <br />Based on the costs for blasting highwall not to final design configuration at maximum exposure (8,100 ft @ $78 per ft or approximately $631,000), <br />the current financial warranty would offset the highwall blasting until 100 days prior to completion of mining. <br />$6,300 per day savings x 100 days = $630,000 <br />Therefore, worst case highwall blasting liability would be covered by excess bond until approximately 100 days prior to completion of the Cresson Project. <br />CC&V's Engineering Department assures that linaer feet of highwall not to final design configuraton would be significantly reduced during the final year of mining <br />as mining activities would be occuring in only one mining area.