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• <br />• <br />• <br />EXECUTIVE SUMMARY <br />The Colorado Division of Minerals and Geology (DMG) estimated Climax Mine's <br />structural demolition costs at $18.15 million, whereas Climax Molybdenum Company <br />(CMC) contends the structural demolition costs are on the order of $5.58 million. This <br />report analyzes DMG's cost estimates which are based on the Means Heavy Equipment <br />Construction Cost Data Guidebook. By comparing DMG's cost estimates with revised <br />costs developed from real -life mine demolition projects, CMC has demonstrated that <br />DMG has overestimated Climax Mine's current demolition liability by a factor of three. <br />Important to note is the fact that neither DMG's nor CMC's cost estimates consider two <br />very important factors: economies of scale and salvage value. A demolition project of <br />the size and scope of Climax Mine can greatly benefit from economies of scale because <br />the contractor can efficiently utilize equipment at a large site where multiple activities are <br />taking place, while minimizing down -time and maximizing productivity. Similarly, if <br />equipment and metals salvage is considered in the estimate, significant savings in <br />demolition costs can be realized. <br />