2010-10-07_REVISION - C1981010 (2)

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Trapper's 2010 Mid Term Review Bond Liability Response Trapper's current bond liability is $30,173,724. In the Mid Term Review (MTR), DRMS has estimated Trapper's bond liability to be $31,127,989, resulting in a net increase in bond liability of $954,265. In reviewing DRMS' calculations for this estimate of bond liability, Trapper has no objection to most of the proposed changes. However, with regard to the bond estimate for the K Pit Regrade Truck/Loader operation (Task 025 on the CIRCES Cost Estimate provided by DRMS), Trapper disagrees with the assumptions used in the calculation of this portion of the bond. The selection of a Caterpillar 992G front end loader to load Caterpillar 777D haul trucks is an excellent choice; the 992G provides a good fleet match when paired with the 777D truck. This loader is a better match to 777D trucks than Caterpillar 5090B excavator used in the same calculation in PR-06. Trapper specifically objects to the inclusion of a 1.25 Swell Factor in the Task 025 calculation for the MTR. The 5,644,528 BCY in the initial volume is incorrectly identified as bank cubic yards. The material used to regrade the K Pit in the worst case bond estimate will have been previously moved, and has already experienced swell. It cannot physically swell an additional 25%. The Task 025 calculation for PR- 06 correctly identified this material as 5,644,528 LCY and did not apply a swell factor. The physical properties of the material being replaced do not change based solely on a switch from one loading tool (5090B in PR-06) to another (992G in MTR of PR-06). The loose volume of material to be moved should be 5,644,528 LCY, not the 7,055,660 LCY used in the Division's estimate in the MTR. With the incorrect volume, the total job time is estimated by the Division to be 7,682.77 hours at a fleet cost of $1,183.62, resulting in an estimated total job cost of $9,093,506. When the volume is corrected, the total job time, keeping all other assumptions constant, should be on the order of 6,150 hours, resulting in an estimated total job cost on the order of $7,275,000. Not only is this lower than the Division's current estimate with the MTR, it is lower than the PR-06 estimate of $8,496,612. This would be the expected outcome when switching from a 7.5 LCY capacity loading tool (50906) that loads a 777D in 10 passes to a 15 LCY capacity loading tool (992G) that loads a 777D in five passes. A more efficient loading tool will reduce total fleet hours, offsetting the higher operating cost per fleet hour. The second and final area of disagreement is with the Division's calculation of revegetation costs. The MTR includes a 20% failure rate for vegetation (Tasks 100 -109). This has not been included in previous calculations of Trapper's bond liability, nor has a 20% failure rate been experienced over Trapper's 30+ year history of successful mined land reclamation. The actual failure rate at Trapper has been 0% over the past 30+ years. This rate should be excluded from the Division's calculation of bond liability. In conclusion, Trapper respectfully requests that the bond liability for the K Pit Regrade be recalculated based upon the correct volume of 5,644,528 LCY. Also, revegetation costs should be recalculated without the inclusion of an arbitrary failure rate. This should result in a net decrease in Trapper's bond liability, as opposed to the net increase shown in the Division's initial calculation of bond liability for the MTR. Trapper would expect the MTR bond liability to be on the order of $29,051,000.