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Operating Cost for Miners

Gary Poxleitner
Monday, October 17, 2016
First presented: 

Opening a new mine or expanding an existing operation can be a challenging and daunting task. Aside from assessing and evaluating social-environmental concerns and designing the mining and material movement approach, the first question often asked is, "how much will it cost us to mine?" This may need to be determined even before you decide that there is a potential project. Mine cost estimation may be done at many levels. At first it may be a simple “back of the envelope” estimation using similar operations to benchmark against. Later it may be decided to use an existing mine that the company owns and factor and compare costs against them. In the final stages a detailed bottom-up estimation based on first principles may be completed.

This paper will investigate common methodologies of estimating operating costs for mines and present examples from actual operations and why those methods were selected. It will highlight why some methods are superior to others. Finally, we will explore the potential pit falls in cost estimation that often occur and the opportunities that may exist to lower mine costs.

Feature Author

Gary M. Poxleitner
Gary Poxleitner has more than 27 years of operational, engineering, management, and consulting experience in the mining industry. He specializes in underground mine design and economics, due diligence, and operational improvement.
Gary has worked with a wide range of commodities at near surface and ultra-deep producing mines around the world. This work has included operating cost estimates, operational audits, due diligence reviews, and technical studies from PEAs to Feasibility and projects into the execution phase. His operating experience includes narrow vein gold mining at Giant Mine near Yellowknife, a room and pillar and bulk mining zinc-copper operation at Myra Falls on Vancouver Island, sub-level caving, open stopping and remnant mining at the nickel-copper Sudbury basin with Vale and caving and VCR methods at the DeBeers Kimberley diamond mines in South Africa.
Gary serves actively on a number of boards including local and national CIM and is a regular guest speaker and lecturer at mine conferences and universities.
Principal Mining Engineer
P.Eng, PMP
SRK Sudbury
SRK Africa