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4.0 Summary <br />DMG's total demolition cost estimate for Climax Mine (includes "Means site adjustment <br />factor ") amounts to: <br />$10,892,248 M493 -4.WKB <br />+ $ 7,258,393 M493 -5.WKB <br />$18,150,641 Total DMG Cost Estimate <br />Lotus Spreadsheet <br />Lotus Spreadsheet <br />The revised cost estimate (without the "Means site location adjustment factor ") <br />developed by Ellis Environmental Engineering, Inc. for Climax Mine is as follows: <br />$3,541,598 demo - costs- 10 -6 -97 Excel Spreadsheet <br />+ $1,780.339 demo - costs - M493- 5- 11 -11 -97 Excel Spreadsheet <br />$5,321,937 Total Revised Cost Estimate (w /o adjustment factor) <br />Adding in the anticipated "Means site location adjustment factor" (1.05) yields the <br />following: <br />(1.05)x ($5,321,937) = $5,588,034 Total Adjusted Demolition Cost Estimate <br />Expressing the Revised Adjusted Estimate as a Percentage of DMG's Estimate: <br />($5,588,034 / $18,150,641) x 100% = 30.8% <br />By comparing DMG's cost estimates with revised costs developed from real -life mine <br />demolition projects, CMC has demonstrated that DMG has overestimated Climax Mine's <br />current demolition liability by a factor of three. <br />Furthermore, neither DMG's nor CMC's cost estimates consider two very important <br />factors: economies of scale and salvage value. A demolition project of the size and <br />scope of Climax Mine can greatly benefit from economies of scale because the contractor <br />can efficiently utilize equipment onsite, while minimizing down -time and maximizing <br />productivity. Similarly, if equipment and metals salvage is considered in the estimate, <br />significant savings in demolition costs can be realized. It is the experience of Ellis <br />Environmental Engineering, Inc. that metals recovery (mainly steel and copper) from a <br />site as large as Climax Mine will result in a cost offset on the order of magnitude of <br />hundreds of thousands of dollars. Similarly, the demolition of structures at Climax Mine <br />would be a highly competitive job, attracting competitive bids from some of the major <br />demolition contractors in the U.S. Obviously, this would result in much lower costs than <br />estimated by CMC, as reported in this document. <br />8 <br />