Professional Documents
Culture Documents
A.D. Akbari
Department of Mining Engineering, Azad University, Tehran, Iran
M. Osanloo
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ABSTRACT: The original O’Hara cost estimator was published in 1980. It was developed based on the data
gathered in Canada, USA, Mexico, Australia, Peru, Bolivia, Ireland, France, Morocco and Iran. It was updated in
1988 by its author and published by SME in Handbook of Mining Engineering in 1992. In this study based on infor-
mation gathered from Iranian mines and world cost condition, O’Hara cost estimating equations were modified
and updated. These equations were picked out of the original model (1978) and the updated one (1988) in a manner
that the advantages of both models can be used. Beside modification and updating, two equations were presented
as crude guides for estimating the cost of reclamation. This was done by curve fitting to the actual reclamation cost
data as O’Hara had prepared his equations before. The obtained equations in such a way could be enclosures to
both updated and modified cost estimating models. These two models -side by side- could be used for preliminary
feasibility study of mining projects in general while facilitating comparability with the projects in Iran.
2 EQUATION SELECTION
Table 1. O’Hara combined equipment selection and cost estimation model (fiscal equations are in USD for third quarter
of 1978).
55 For high grade gold ores with base metal sulfides; cyanide leaching, secondary updated
flotation, carbon adsorption by CIP or CIL, filtering, thickening,
drying, and refining
Processing and Related Capital Costs = $60705.8824T 0.5
56 For simple low grade base metal ores of copper with minor content of gold which updated
can be recovered as smelter credits. Flotation, thickening, filtering, and drying
Processing and Related Capital Costs = $8058.8235T 0.6
57 For pyretic gold/silver where precious metals are locked in the pyretic minerals. updated
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Indirect Costs 89 Cost of feasibility studies, environmental studies, design engineering, equipment updated
specification and procurement, and specialized consulting services = $2.3D0.8
90 Cost of construction camp, specialized construction equipment, and general updated
construction site costs = 0.31D0.9
91 Cost of project supervision, scheduling and budgeting, and construction updated
management = 1.8D0.8
92 Cost of local office administration by owner’s representative, accounting and payment updated
of general contractors, preproduction employment of key
operating staff, and legal costs = 1.5D0.8
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Operating 93 Cost of provision of working capital = All operating costs and spares inventory updated
Costs for 10 weeks
94 Mining Labor Costs per ton = $51.33TP−0.5 + $3.15TP−0.3 original
95 Mining Supplies Costs per ton = $11.74Tp−0.5 + $1.09TP−0.3 + $0.79TP−0.2 original
96 For simple base metal ores original
Milling Labor Costs per ton = $78.88T −0.5
97 For simple base metal ores original
Milling Supplies Costs per ton = $16.48T −0.3
98 For complex base metal ores original
Milling Labor Costs per ton = $81.51T −0.5
99 For complex base metal ores original
Milling Supplies Costs per ton = $18.85T −0.3
100 For precious metal ores original
Milling Labor Costs per ton = $85.02T −0.5
101 For precious metal ores original
Milling Supplies Costs per ton = $13.35T −0.3
102 Electrical services wages costs per day = $59.6 (0.03 to 0.05 Nm ) + 35% original
Fringe Benefits
103 General plant service wages costs per day = $46.45 (0.04Nm ) + 35% Fringe Benefits original
104 General plant services supplies costs per day = $5.26T 0.5 original
105 General administration salaries costs per day = $74.55 (0.07 Nm ) + 35% original
Fringe Benefits
106 Cost of general administration expences including office and wearhouse supplies, original
telephone and travel expences, property t taxes, insurance and legal expenses,
auditing and consolting fees per day = $3.5Nm
107 Townsite employees costs per day = $43.82 (0.00 to 0.05 Nm ) + 35% Fringe Benefits original
108 For bunk house townsite original
Townsite operating costs per day = $11.39(Nm )
109 For family townsite original
Townsite operating costs per day = $4.38(Nm )
110 Cost of electric power per day = $85.29T 0.56 updated
equation must present the labor costs and the sup- or quantity and T represents the tonnage rate or other
ply costs separately in order to have the ability of physical conditions causing changes in costs or quan-
being modified. Also they must be in conformity with tities. Because of O’Hara’s comprehensive analysis x
selected pattern for personnel estimation. In Table 1, will be the fixed scale factor and only K which repre-
the fiscal equations are presented in US dollar for the sents project factor or in other word the general project
base year (third quarter of 1978). factor will be modified and updated. This is because
the conventional technology is still in use.
As the equations of O’Hara cost estimator have spe-
3 MODIFYING AND UPDATING cific formats which differ from cost estimating system
handbooks, in this section at first an analysis on each
In this section the fiscal equations of Table 1, will fiscal equation was preformed in order to determine
be modified and updated. Corresponding numbers are the percentages of the impressive factors on each equa-
underlined in Table 1. tion. Then in the subsections in which there are some
Most of O’Hara’s equations were presented in the impressive factors and the equation/equations are not
form Q = KTX where Q represents the required cost limited to a category of engineering activities, these
Figure 2. Soil stripping cost in the base year and the target
3.2 Modifying and updating the equation 23 year in Iran and in general.
The studied inflation in this subsection is 3280.13 per
cent. After multiplying by the ratio of the exchange
rates and also by the base year general project factor,
the general project factor in modified model for this
equation will be 0.5255. While in updated model, it is
4.7813 (Fig. 2).
fied model for these equations, respectively, will be mate it should be modified by 10 per cent for each 1000
3566.8236 and 60.636. While in updated model they increase in degree-days. In hot climate it could be less
are 8964.7060 and 152.4. because of locating thickener and hydrometallurgical
equipment outside (Hustrulid & Kuchta 1995).
3.6 Modifying and updating the equation 39 The studied inflation in this subsection is 6021.15
per cent. After multiplying by the ratio of the exchange
The estimated cost of this equation includes 63.168 per rates and also by the base year general project factor,
cent electrical distribution costs with 8009.50 per cent the general project factor in modified model for this
studied inflation and 36.832 per cent communication equation will be 8138.1176. While in updated model,
costs with 7673.50 per cent studied inflation. Then it is 40341.1764 (Fig. 4).
the modification coefficient in this subsection after
multiplying by the ratio of the exchange rates is 0.6711
and the general project factors in modified model for 3.11 Modifying and updating the equation 49
this equation will be 98.6913. While in updated model The estimated cost of this equation is impressed by 80
it is 373.5299. per cent purchase payment, transport costs, and super-
vising cost in installation with 254 per cent assumed
3.7 Modifying and updating the equation 40 inflation rate in USD and 20 per cent labor and con-
The estimated cost of this equation is impressed by struction material costs for installation with 5752.06
11 per cent construction costs and 89 per cent devices per cent studied inflation in Rial which must be mul-
purchase payment. The studied inflation in such con- tiplied by the ratio of the exchange rates. Then the
struction cases is 5918.17 per cent which after mul- modification coefficient in this subsection is 2.1299
tiplying by the ratio of the exchange rates and 0.11, and the general project factor in modified model for
it would be 5.54 per cent. On the other hand, there this equation will be 84005.7618. While in updated
is another 33.56 per cent inflation which comes from model it is 100180.5883 (Fig. 5).
multiplying 4430.65 per cent (devices purchase pay-
ment inflation rate in Rial) by 0.89 and also by the ratio
of the exchange rates. Then the modification coef-
ficient in this subsection is 0.3910 and the general
project factors in modified model for this equation
will be 6.44. While in updated model it is 41.8353.
10
Figure 8. Processing capital costs for leaching, CIP/CIL Figure 10. Processing capital costs for high grade gold ores
carbon adsorption and refining in the base year and the target with base metal sulfides and pyretic gold/silver ores in the
year in Iran and in general. base year and the target year in Iran and in general.
11
Figure 12. Road construction cost in the base year and the
Figure 11. Tailing storage cost in the base year and the target target year in Iran and in general.
year in Iran and in general.
it would be 39.7 per cent. On the other hand, there
to 16759.2941.While in updated model it is 7470.5883 is another 76.2 per cent inflation which comes from
to 19424.8735. multiplying 254 per cent (loader purchase payment
inflation rate in USD) by 0.3. Then the modification
3.18 Modifying and updating the equation 61 coefficient in this subsection is 1.159 and the general
project factors in modified model for this equation will
The estimated range of cost by this equation belongs
be 4063.3177. While in updated model it is 8904.9413.
to different condition of Uranium processing. In all
condition it is almost impressed by 50.4 per cent pur-
chase payment, transport costs, and supervising cost 3.21 Modifying and updating the equation 64
in installation with 254 per cent assumed inflation rate The estimated cost of this equation fits graveled road
in USD and 49.6 per cent labor and construction mate- of 9 m width in moderate topography, tree, and rock
rial costs for installation with 5421.86 per cent studied outcrop condition and it should be modified by ±30%
inflation in Rial which must be multiplied by the ratio for better or worse condition.
of the exchange rates. Then the modification coef- The studied inflation in this subsection is 4640.94
ficient in this subsection is 1.5091 and the general per cent. After multiplying by the ratio of the exchange
project factor in modified model for this equation will rates and also by the base year general project factor,
be 133155.8823 to 177541.1764. While in updated the general project factor in modified model for this
model it is 224117.647 to 298823.5294. equation will be 69231.3491. While in updated model,
it is 445247.0587 (Fig. 12).
3.19 Modifying and updating the equation 62
The studied inflation in this subsection is 4514.69 per 3.22 Modifying and updating the equation 65
cent. After multiplying by the ratio of the exchange
rates and also by the base year general project factor, For estimating the cost of necessary bridges by this
the general project factor in modified model for this equation, each bridge cost must be estimated and then
equation will be 4520. While in updated model, it is all estimated costs must be summed. It should be
29882.3530 (Fig. 11). noted that this equation is just presented for estimating
small bridges costs to span creeks and small rivers and
the large necessary bridges must be built by national
3.20 Modifying and updating the equation 63 investment.
The estimated cost of this equation is impressed by 70 The studied inflation in this subsection is 5875.35
per cent construction costs and conveying and feed- per cent. After multiplying by the ratio of the exchange
ing devices purchase payment and 30 per cent loader rates and also by the base year general project factor,
purchase payment. The studied inflation in the 70 per the general project factor in modified model for this
cent portion of the cost is 6664.43 per cent which after equation will be 57.0579. While in updated model, it
multiplying by the ratio of the exchange rates and 0.7, is 289.8587 (Fig. 13).
12
13
Table 2. Parts of mining supply cost with their impression percentages and inflation rates.
70.4713
Blasting materials 36.5 23651.5 ×
8281
70.4713
Trucks fuel and lubrication 13.15 9102.75 ×
8281
Drills spare parts 12.95 254
Drills bits and steel parts 8 254
Trucks tires 7.4 254
Trucks spare parts 6.8 254
Shovels spare parts 2.6 254
Dozers spare parts 2.35 254
70.4713
Dozers fuel and lubrication 2.35 9102.75 ×
8281
70.4713
Drills fuel and lubrication 2 9102.75 ×
8281
70.4713
Loaders and graders fuel and lubrication 2 9102.75 ×
8281
Loaders and graders spare parts 1.51 254
70.4713
Drilling and Blasting auxiliary equipment fuel and lubrication 1.12 9102.75 ×
8281
Loaders and graders tires 0.8 254
Drilling and Blasting auxiliary equipment spare parts 0.25 254
70.4713
Shovels fuel and lubrication 0.12 9102.75 ×
8281
70.4713
Drilling and Blasting auxiliary equipment tires 0.1 10316.9 ×
8281
14
Table 3. Parts of milling supply cost with their impression percentages and inflation rates for base metal ores.
15
16
2 23 1.1 × 8281
Update Rials per Dollar Exchange Rate
9 48, 82, 86, 96, 98, 100, 102, 103, 105, 107, 110 1.12 × 8281
Update Rials per Dollar Exchange Rate
10 49 0.23 × 8281
Update Rials per Dollar Exchange Rate
+ 0.84
11 50, 51, 52 0.23 × 8281
Update Rials per Dollar Exchange Rate
+ 0.85
12 53 0.41 × 8281
Update Rials per Dollar Exchange Rate
+ 0.69
13 54 0.45 × 8281
Update Rials per Dollar Exchange Rate
+ 0.64
14 56, 58, 59 0.29 × 8281
Update Rials per Dollar Exchange Rate
+ 0.79
15 55, 57 0.37 × 8281
Update Rials per Dollar Exchange Rate
+ 0.72
16 60 0.2 × 8281
Update Rials per Dollar Exchange Rate
+ 0.88
17 61 0.58 × 8281
Update Rials per Dollar Exchange Rate
+ 0.53
18 63 0.84 × 8281
Update Rials per Dollar Exchange Rate
+ 0.32
19 65, 78, 94 1.19 × 8281
Update Rials per Dollar Exchange Rate
21 72 1.09 × 8281
Update Rials per Dollar Exchange Rate
23 88 0.91 × 8281
Update Rials per Dollar Exchange Rate
+ 0.29
24 95 0.90 × 8281
Update Rials per Dollar Exchange Rate
+ 0.45
25 97, 99 0.13 × 8281
Update Rials per Dollar Exchange Rate
+ 0.96
26 101 0.12 × 8281
Update Rials per Dollar Exchange Rate
+ 0.95
27 104, 106 1.28 × 8281
Update Rials per Dollar Exchange Rate
base year and the target year, the costs of activities can simply be done for the updated model which could
were monitored during recent ten years. Also some be used for cost estimating in industrialized coun-
other forecasts of local and general inflation rates for tries (specially in North America). This is because
next three years were utilized in this prediction. The of the existing economic stability in those countries.
predicted coefficients are presented in Table 5. Whereas currently in Iran, in spite of good economic
Obviously, using a combined index which calcu- potency of the country, there is a gradual climb in Rials
lated from PPI, GPD, CPI, and ECI , the same updating exchange rate per USD to encourage the exportation.
17
Preproduction soil stripping cost 0.042 0.044 Managing and planning 4.55 25
(USD/tonne) organization of Iran
Preproduction waste stripping cost 0.333 0.367 Managing and planning 9.26 25
(USD/tonne) organization of Iran
Drilling capital costs 1885449 2000000 International market 5.73 25
(per unit of drill with 10 inches
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bit diameter)
Grinding capital costs 30033384 32858000 Sungun Copper Project 8.6 25
Processing capital costs 6882792 7704000 Sungun Copper Project 10.66 25
Power supplying capital costs 7372904 8212000 Sungun Copper Project 10.22 25
Ore production operating costs 1.426 1.56 Sungun Copper Project 8.6 25
(per tonne of ore, assuming
1:1.63 stripping ratio)
Concentrate production operating costs 2.376 2.56 Sungun Copper Project 7.19 25
(per tonne of ore)
Also on the other hand some specific financial poli- localized guides are applied considering the exist-
cies are being used for controlling the consequent ing background of accomplished similar projects, the
inflation on the engineering activities costs.These real- experienced cost estimator can even gain more accu-
ities demand the above-mentioned monitoring when rate estimation than what is needed in preliminary
being concern in updating the fiscal equations of the feasibility study.
modified model.
REFERENCES
6 CONCLUSION AND RECOMMENDATION
O’Hara, T.A. 1980. Quick guides to evaluation of orebodies.
The estimated costs by modified model are in con- CIM Bulletin (2) 73814: 78–99.
A., Suboleski, S.C. 1992. Cost and cost estimation. Hartman,
cordance with the actual cost data (some examples
H.L. (ed), Mining engineering handbook 2nd edition:
are presented in Table 6). Then it is recommended 405–424. Colorado: SME.
to localize the O’Hara cost estimator in different Hustrulid, W., Kuchta, M. 1995. Mining revenues and costs.
parts of the world in order to take benefit of these Open pit mine planning and design: 101–122. Rotterdam:
quick guides in preliminary feasibility studies. If these Balkema.
18