Capital and Operating Cost

Capital Cost Estimate

The capital estimate covers the design, procurement, management, construction and commissioning of the mining unit, primary concentrator, mineral separation plant, export facilities and infrastructure.

Additional geotechnical and marine studies are required to finalise the design study for the stand alone jetty. These studies will determine the piling requirements for the jetty. The port consultants quantified the range of possible outcomes for the cost of piling and have determined that they fall within a US$12m range. The base, low and high cases for capital expenditure reflect the geotechnical uncertainty in the piling cost of the jetty ($12m) described above.

Area Base Case
US$M
Low Case
US$M
High Case
US$M
Mine + Primary Concentrator 19 19 19
Mineral Separation Plant 26 26 26
Road + Port 71 69 77
Other Infrastructure 13 13 13
Indirect + Other 7 7 7
Process Plant and Infrastructure 136 134 143
EPCM (17%) 23 23 24
Contingency (20%) 32 31 33
Total 192 188 200

Capital Cost Summary.

Sustaining capital expenditure of less than US$1 million pa and the capital for the concentrator moves planned for years 9 and 16 (US$6 million each move) have been included in the project financial evaluation.

Working capital for operational labour prior to start-up, operating costs prior to the first sales revenue being received and other owners’ costs is estimated at US$24 million.

Operating Cost Estimate

Operating cost estimates have been developed over the life of the project. These estimates are based upon information provided by WTR, supplier quotes and cost information from TZMI’s database.

Area Annual Average
US$M
Annual Average
US$/t product
Mining 16.2 36
Concentrator 8.9 20
Mineral Separation Plant 10.4 23
Product Transport and Handling 8.9 20
Administration and Marketing 5.0 11
Royalties 2.3 5
Total 51.7 116

Operating Cost Summary by Area.

Mining is the largest component of the operating cost estimate, accounting for around 31% of annual operating costs. This cost includes clearing and stripping, contract ore mining and delivery of ore slurry to the wet plant, mine site administration, tailings management as well as rehabilitation.

Area Annual Average
US$M
Annual Average
US$/t product
Labour 6.7 15
Power & Fuel 15.6 35
Maintenance 3.0 7
Contract Mining 11.1 25
Contract Haulage 3.8 9
Royalties 2.3 5
Other 9.3 21
Total 51.7 116

Operating Cost Summary by cost driver.

The major operating cost drivers of the annual operating costs over the life of the project are shown in Table 4. Power and fuel account 30% of annual operating costs, based upon a delivered diesel price of US$1.125 per litre. Annual fuel consumption for the project is estimated at 14 million litres, inclusive of fuel consumed in generating power.

Contract mining is next largest cost component, accounting for 22% of annual project operating costs. If fuel and power costs associated with the mining operations are included, contract mining proportionate share of annual operating costs increases to 29%.