Description

CAPITAL AND OPERATING COST ESTIMATING SYSTEM
A MANUAL FOR MINING AND BENEFICIATION OF METALLIC AND NONMETALLIC MINERALS EXCEPT FOSSIL
FUELS IN THE UNITED STATES AND CANADA

Mining relies on anomalies within the surface of the earth for a
base of activity. Mining and evaluation engineering are confronted
repeatedly with problems of determining how and at what rate a
particular deposit can be mined, how to get the equipment, personnel,
and money for mining and processing, and how to set up the related
infrastructure. When these problems are resolved, the engineer
becomes involved in financial considerations. For example, what is
the ratio of equity capital to borrowings, and what is the rate of
return that may be achieved before a recommendation for the approval
or rejection of the property can be made to management?

Articles on cost for site-specific operations appear frequently in
the technical literature. They may be useful if an engineer is
considering a similar property, but this is seldom the case. Often
the engineer is required to consider specially designed extraction
and treatment methods applicable to unique or nearly unique deposits.
In addition, the engineer is plagued by rapid changes in capital and
operating costs.

Recognizing this situation, the Bureau of Mines undertook the development
of a methodology or cost system, usable by a mine evaluation
engineer in generating capital and operating costs applicable to a
feasibility study of a particular property or operation. This handbook,
the product of this undertaking, is not intended to be the
final solution to the problem of cost determination; it is also not
a "black box" usable by the unskilled. It will, hopefully, be a
useful adjunct to the "tool kit" of mining engineers responsible for
property evaluation. Periodic updating and refining of the important
data on which the handbook is based will improve its usefulness in
the future.