NORTH RIVER NAMIB LEAD / ZINC PROJECT … · The cost estimate covers the capital cost requirements...
Transcript of NORTH RIVER NAMIB LEAD / ZINC PROJECT … · The cost estimate covers the capital cost requirements...
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Tenova Bateman SSA
Tenova Mining & Minerals
NORTH RIVER NAMIB LEAD / ZINC
PROJECT
FEASIBILITY STUDY
Volume 1
Section: 6 Basis of Estimate
NORTH RIVER NAMIB LEAD ZINC PROJECT
FEASIBILITY STUDY
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Basis of Estimate
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TABLE OF CONTENTS
1 CAPITAL COST ESTIMATE .............................................................................. 3
1.1 Introduction ................................................................................................. 3
1.2 Battery Limits .............................................................................................. 4
1.3 Estimate Criteria ......................................................................................... 6
1.4 Work Breakdown Structure (WBS) Level 2) ................................................. 8
1.5 Estimate Methodology ................................................................................. 9
1.6 Indirect Costs ............................................................................................ 23
1.7 Risks and Considerations .......................................................................... 25
1.8 Owner’s Costs ........................................................................................... 26
1.9 Exclusions ................................................................................................. 27
1.10 Capital Cost Summary .............................................................................. 29
1.11 Cash Flow, Forward Escalation and Financial Modelling ........................... 29
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1 CAPITAL COST ESTIMATE
1.1 Introduction
The following defines the Basis of Estimate (BOE) for the Feasibility Study
for the treatment of 250 000 ROM tonnes per annum Namib lead-Zinc
Project located near Swakopmund, Namibia for North River Resources
(NRR) and the manner in which the Feasibility Study Estimate was
compiled. The cost estimate covers the capital cost requirements only.
The details of estimated costs are available in the Capital Cost Estimate
Summary sheets. It must be stressed that this document must not be read in
isolation and that all engineering disciplines basis of estimates must be
consulted in conjunction with this document.
Tenova Bateman have neither provided for cost escalation nor exchange
rates fluctuations from the estimate base date. All costs are at base date of
December 2013.
The estimate was primarily compiled using deterministic estimating
methodologies in which components of the project scope definition are
quantitatively surveyed, generated and priced using the most realistic unit
prices available. Deterministic estimating methods are typically used for
Class 3 through to Class 1 estimates (AACEI Classification).
This type of estimate is typically used for budgetary purposes or determining
project viability and for appropriation or control baseline and will have to
form the basis for the completion of a Control Budget Estimate (CBE) prior
to project execution.
These estimates are generally not intended to be used for detailed control
baseline or for monitoring variation to the execution budget.
The Namib Lead-Zinc Project comprises the establishment of a brownfields
Lead-Zinc ore receiving, crushing, milling, flotation plant which included
dewatering of tailings and concentrates. The works are to be executed on an
existing mine which stopped production in 1992 and has since been
dewatered by North River Resources.
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The project is highly sensitive to capital cost and a “fit for purpose” approach
has been adopted for the plant design considering the small scale (250 000
tonnes/annum) and limited (approx. 7 years) lifespan of the plant.
It is envisaged that the plant will treat 250 000 ROM tonnes per annum,
producing both lead and zinc flotation concentrates. This will be achieved by
initial recovery of zinc concentrate from the existing tailings dump and then
subsequent recovery of lead and zinc concentrates from the underground
ore. It is intended that the overall design be based on the processing of
fresh ore.
The scope of this Feasibility Study estimate comprises:
Initial recovery of Zinc concentrates from tailings (Option 1).
Subsequent recovery of both Lead and Zinc concentrates from fresh
ore (Option 2).
1.2 Battery Limits
1.2.1 Incoming and Outgoing
The major battery limits for the Tenova Bateman scope are:
ROM ore storage and ore reception.
Tipping point for incoming tailings from old dams.
Lead flotation concentrate (filter cake) at drop point on Namib site.
Zinc flotation concentrate (filter cake) at drop point on Namib site.
Water supply at off-take point on existing Rossing line.
Incoming flotation reagents and flocculant.
Handling and disposal of generated tailings to tailings dam.
Return water from tailings dam to plant storage pond.
Diesel fuel storage tank.
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In addition, reference must be made to all engineering disciplines battery
limits documents that clearly define the Incoming and Outgoing Battery
Limits of the scope of work for each discipline.
1.2.2 Temporary Construction Facilities
A suitable fenced lay-down/contractors area within 100m of the site, suitably
compacted, will be allocated to the contractors by the Client. The Client will
be responsible for the supply and erection of security fencing, access control
and security services for the duration of the works.
The Client will provide all the necessary potable water supply for
construction and operational requirements to the edge of the boundary of
the areas allocated for the construction facilities.
The contractors will be responsible for all necessary temporary electrical
power supply and the power distribution network and water reticulation to
the actual place of work. The contractors will also allow for their own waste
water disposal and ablution facilities during the construction period.
All site development which includes all infrastructure and utilities servicing
the plants are assumed to be available and are therefore excluded from this
estimate with the exception of the incoming 33kV overhead power line and
water supply pipeline from the existing Rossing Line. It is assumed that the
site has been cleared, prepared, graded and levelled by the client ready for
construction, and that it is free of any other obstructions and does not
require any drainage.
Any underground utilities and services that could be affected during
construction and/or the removal of old foundations have been excluded from
the estimate.
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It is assumed that Tenova Bateman personnel will utilise the on-site facilities
to be provided by the Client during the construction period. The costs for
these on-site facilities have been included in the estimate and comprise of:
Site offices (3 off prefab modular containerized units complete with air
conditioning)
Office furniture
Site vehicle (1 off utility vehicle)
Standby generator (75kVA generator set)
The Client will be responsible for the running and maintenance costs of the
site vehicle and standby generator during the construction period.
Tenova Bateman will be responsible for the accommodation and catering
facilities for its construction personnel during the construction period.
1.3 Estimate Criteria
1.3.1 Base Date/Escalation
The base date of the estimate is December 2013 and will be subject to
contract price adjustment and escalation as from 1st December 2013.
1.3.2 Base Currency/Exchange Rates
The estimate was compiled in South African Rand (ZAR). Prices for
imported items quoted in ZAR but subject to foreign currency fluctuations
have been converted to ZAR using the Rates of Exchange (ROE) as issued
by the Client on 24th February 2014 and therefore no foreign currency or
rate of exchange variations have been considered in the estimate.
The indicative ROE issued by the Client and utilised in the cost estimate is
shown below:
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Currency (1=) Equivalent in ZAR
US$ 11.00
EURO 15.00
GBP 18.00
Approximately 28% of the total direct field costs have exposure to foreign
currency fluctuations.
It will fall within the Client scope of work to make adequate provision and
risk allowance for cost escalation and rate of exchange variations or forward
cover.
1.3.3 Accuracy
This estimate for the Namib Lead-Zinc Project should be compared with the
Tenova Bateman Estimator’s Best Practice Guide PCNG-0920-002 Rev )
Class 2 estimate classification as a minimum and should be within an
accuracy range of -5% to +15% at a probability of no more than 70% after
inclusion of contingency. This closely conforms to the Association for the
Advancement of Cost Engineering International (AACEI) Class 2 estimate
classification guidelines.
The Tenova Bateman Estimator’s Best Practise Guide Class 2 estimate
classification relates to costs that have mainly been obtained through firm
bids and quotations based on defined work packages.
1.3.4 Scope of Pricing
The scope on which the estimate is based is as follows:
Process flow diagrams (PFD’s).
Equipment lists and data sheets.
General arrangement layouts and drawings.
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Bills of Quantities (BOQ’s) / Materials Take-Offs (MTO’s) (by
Bateman).
Engineering basis of estimate.
The pricing for direct costs are based on a variety of sources as follows:
Fixed and firm price quotations.
Informal budget quotations.
Tenova Bateman historical database / Schedule of unit rates.
Factored or estimating allowances.
Discipline engineers estimates.
Allowance of a sum of money.
1.3.5 Estimating System and Format
The overall capital cost estimate has been compiled using Microsoft Excel.
1.3.6 Estimate Structure
The estimate has been formatted around the traditional code of account
structure for direct cost calculation, indirect costs and EPC costs.
1.4 Work Breakdown Structure (WBS) Level 2)
A project WBS level 2 was prepared clearly defining the major plant areas
for ease of referencing and cost management. The cost estimate has been
compiled in line with the WBS.
The WBS level 2 reflects the following major plant areas:
Area 100 Ore receiving and Crushing
Area 200 Tailings Receiving
Area 300 Milling Circuit
Area 400 Flotation
Area 500
Area 600
Concentrate Dewatering / Thickening
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Area 600 Reagents Receiving, Make-up and Distribution
Area 700 Plant Services
Area 800 Plant General
1.5 Estimate Methodology
1.5.1 Earthworks and Infrastructure
The bulk earthworks and levelling of the site are excluded from the estimate.
The works are to be executed on a brownfield site and the Client is
responsible for providing levelled terraced areas, principally consisting of
exposed marble surface. It is assumed that the structures will be located on
terraces that have previously been established.
The ROM pad scope of work comprises an earth ramp access to the
stockpile, a reinforced earth wall, and an earth ramp and terrace for access
to the tip bin including a jockey slab to provide a working surface for the
front-end loader and to protect the bin against impact. Physical barriers such
as bollards have not been included in the estimate due to lack of Client
definition.
The ROM pad costs are based on preliminary designs based on information
extracted from the mechanical layout drawings. The drawings were then
quantified (rough material take-offs) and priced using all-inclusive unit rates
derived from Tenova Bateman historical database of pricing information for
recently completed cost studies.
The demolition and preparatory work to carry out the ROM pad scope of
work are excluded from the estimate and fall within the Client’s scope of
works.
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The preliminary and general (P&G’s) allowance has been assumed at 35%
of the total direct costs for the earthworks based on the P&G’s percentage
allowance priced by the recommended civil works contractor.
No cognisance has been taken of the underground structures as the location
and extent of this is currently not known.
The infrastructure works comprises of:
Supply and installation of the 7km water supply pipeline from the
existing Rossing Water Line.
Supply, delivery, installation and commissioning works for the 33kV
overhead distribution power line to the site boundary obtained from the
existing Nampower grid.
Supply, installation, testing and commissioning an extension of the
33kV overhead power line from the site boundary to the site
transformer.
The infrastructure costs are based on pricing obtained through single
sourcing from formal budget quotations submitted by Pexmart cc (water
supply) and Power Line Africa (33kV overhead power line). The quotations
include for contractor’s P&G’s, material and labour.
1.5.2 Civil Works
In the absence of a geotechnical report, it is assumed that all structures will
be constructed atop the exposed marble or prepared surfaces. In general
excavation is limited to the installation of drainage sumps approximately 1
metre deep and consisting of precast concrete pipes.
The civil scope of work was estimated using a combination of statistical
factors and preliminary sizing of critical elements. Preliminary designs were
then performed based on information extracted from the mechanical general
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arrangement layout drawings. The drawings were then quantified (material
take-offs) to produce bills of quantities (BOQ’s) which were priced using unit
rates received through competitive bidding from a formal tender submission
by Kennedy and Botes Civil Engineers and Contractors (B&K Civils).
The contractor’s preliminary and general (P&G’s) allowance has been priced
at 31% of the total direct costs for the civil works.
Contractor indirect costs (P&G’s) caters for the contractor’s mobilisation and
demobilisation including establishment and later removal of construction
plant and equipment, contractor’s manual indirect and non-productive
labour, scaffolding, safety equipment, personal protective equipment,
transport and travelling, accommodation and supervision including
contractual requirements relating to finance costs, insurance, bonds and
work permits.
Demolition of existing structures and grubbing up of foundations are
excluded from the estimate and fall within the Client’s scope of works.
All rates applied to the civil works reflect the preferred contractor’s pricing
based on technical and commercial adjudication of the formal, competitive
bid received.
The costs for the following on-site facilities and equipment have either been
obtained from single source budget/informal quotations or Tenova Bateman
historical cost data information:
Site Offices, Furniture & Computers
Protective Clothing (PPE)
Mobile Equipment
Workshop Tools
Telephone Data
Laboratory Facility & Equipment
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Change Houses
The refurbishments costs for the main workshop building and explosives
store have been included in the estimate based on single source quotation
obtained from MaxSpan Roofing CC as furnished by the Client.
1.5.3 Structural Steelwork
Structural steelwork quantities have been extracted from the Namib Lead-
Zinc Plant mechanical general arrangement layout drawings for the different
plant areas. Approximate quantities were extracted from a combination of
preliminary design and sizing of critical elements and volumetric take-offs to
produce structural bills of quantities (BOQ’S).
The supply, shop detailing, fabrication, painting and erection cost for
structural steel is based on unit rates obtained through competitive bidding
from Concor Engineering priced bills of quantities for the structural,
mechanical, platework and piping (SMPP) package. The supply cost
includes for transportation to site, Swakopmund, Namibia based on the total
tonnage of approximately 65 tons of structural steelwork.
Contractor’s indirect field cost (P&G’s) has not been apportioned from the
overall P&G’s for the SMPP Contractor and is reflected in the Capital Cost
Estimate summary sheet.
The preliminary and general allowance has been priced at 187% of the total
direct field costs for the SMPP Contract. It will be necessary to conduct
further bid clarifications and interrogate the P&G’s allowance with the
preferred SMPP contractor prior to execution.
The costs of major construction equipment including cranes and scaffolding
have been priced within the SMPP contractor’s P&G’s costs.
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All rates applied to the structural steelwork estimates reflects the preferred
contractor’s pricing based on technical and preliminary commercial
adjudication of the formal, competitive bid received.
Provision has been included in the estimate for 13 tons of secondary pipe
supports and fittings not covered by the structural discipline. The estimated
total tonnage of steel has been priced using the unit rates for supply and
erection derived from the SMPP contract.
1.5.4 Platework and Liners
Platework quantities and items preliminary bill of quantities (BOQ) rev. F
was compiled by the relevant discipline engineer. For each platework item,
the platework area has been estimated from the mechanical layouts and
volumes required according to the Process Flow Diagrams (PFD’s).
The following values were then used in calculating the platework mass:
Bins and Sumps
Platework Thickness based on 8mm
Density of Steel based on 7860kg/m3
Stiffeners & Flanges based on 25% Allowance (added to mass of “flat”
measured platework)
Chutes and Bag Breaker
Platework Thickness based on 8mm
Density of Steel based on 7860kg/m3
Stiffeners & Flanges based on 25% Allowance (added to mass of “flat”
measured platework)
The ROM hopper lining is included with the crushing plant package. All
transfer chutes and bins are VRN lined internally. All sumps and tanks are
rubber lined internally.
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The supply cost is based on the total estimated platework tonnages
multiplied by the unit rates obtained from the Concor Engineering priced bills
of quantities for the SMPP package. The supply cost includes for
transportation to Swakopmund, Namibia. The erection unit rates in Namibia
are based on the Concor Engineering priced unit rates.
The contractor’s indirect field cost (P&G’s) has not been apportioned from
the overall P&G’s for the SMPP Contractor and is reflected in the Capital
Cost Estimate summary sheet.
Provision has been made for 6mm thick HDPE plate lining to the sumps.
1.5.5 Conveyor Mechanicals
The conveyor mechanicals have been priced within the mechanical
equipment costs.
1.5.6 Mechanical Equipment
The mechanical equipment list rev F. identifying and quantifying the major
mechanical equipment was prepared by the discipline engineer from
process flow diagrams (PFDs). The mechanical equipment packages
complete with relevant specifications was issued to selected vendors to
obtain current market prices. The estimate reflects the recommended
vendor’s pricing based on technical evaluation and commercial adjudication
of the bids received.
The mechanical equipment supply pricing comprises of formal fixed and firm
price bids, budget quotations and Tenova Bateman historical database of
pricing information obtained from recently completed cost studies.
Tenova Bateman will be responsible for the preparation of procurement
documentation for the Client to place orders and will assist with the logistics
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for delivery to Swakopmund, Namibia of the mechanical equipment
packages.
The costs for the supply of the following mechanical equipment were
obtained either through formal fixed and firm price bids or budget quotations:
Ball Mill
Flotation Cells
Crushing Plant
Mobile Impact Crusher (Option 1 Only)
Hydro cyclones
Thickeners
Filter Presses
Conveyors
Centrifugal Pumps
Peristaltic Pumps
Dosing Pumps
Froth Pumps
Agitators
Samplers
Weighbridge
Belt Feeders (BQ)
Tanks (BQ)
Fire Water Pumps and Tanks
Flocculant Make-up (BQ)
Air Compressors
Diesel Storage & Dispensing Facility
Hoists
The costs for the on-site erection and installation of the mechanical
equipment are based on unit rates extracted from the SMPP Contract
submitted by Concor Engineering through competitive bidding.
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Contractor’s indirect field cost (P&G’s) has not been apportioned from the
overall P&G’s for the SMPP Contractor and is reflected in the Capital Cost
Estimate summary sheet.
The preliminary and general allowance has been priced at 187% of the total
direct field costs for the SMPP Contract. It will be necessary to conduct
further bid clarifications and interrogate the P&G’s allowance with the
preferred SMPP contractor prior to execution.
The pricing for the on-site erection and installation of mechanical equipment
includes costs for major construction equipment such as cranes and
scaffolding which have been priced within the SMPP contractor’s P&G’s.
1.5.7 Pipework and Valves
The scope of work used for the piping priced BOQ covered the process and
utility pipe and tubing systems. The piping bills of quantities (BOQ’s) were
generated from MTO’s derived from process lines modelled from the
mechanical 3D model, mechanical general arrangement drawings and
piping layout comprising of single line routings supported by the Process
flow diagrams (PFD’S). The PFD’s were redlined with preliminary line
numbers and valves to facilitate control and revisions to the BOQ’s.
The pipe lengths and elbow quantities were recorded by the drawing office
and the remaining pipe fittings estimated by the discipline engineer.
Additional quantities were allowed for in the BOQ to cater for pipe lines
smaller than 65NB.
The following pipe layouts were created for the study:-
7km Overland Water Supply Pipe Line
Tailings Slurry Delivery Line
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Tailings Reclaim Water Return Line
The piping supply and installation packages comprise of:-
Manual Control Valves
Metallic Piping (Carbon Steel)
Non-Metallic/Plastic Piping (HDPE)
Bolts & Gaskets
Pipe Supports (U-bolts and pipe clamps)
The supply and installation packages for piping complete with specifications
were issued to selected vendors to obtain current market prices. The
estimate reflects the recommended vendor’s pricing based on technical and
commercial adjudication of the bids received.
The piping and valves estimated costs are based on the pricing submitted
by the Structural, Mechanical, Platework and Piping (SMPP) contractor,
Concor Engineering, through a competitive bidding process. The costs
include for the supply and delivery of all piping materials to Swakopmund,
Namibia including offloading, storage on site, on site handling and site
erection and installation complete with new pipe support systems.
An allowance to cater for detail design components such as vents, drains,
instrument connections, flushing points, etc. has been included in the
estimate.
NDT testing, hydro-testing, painting and insulation including all quality
documentation is included in the cost.
Contractors indirect field cost (P&G’s) has not been apportioned from the
overall P&G’s for the SMPP Contractor and is reflected in the Capital Cost
Estimate summary sheet.
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The preliminary and general allowance has been priced at 187% of the total
direct field costs for the SMPP Contract. It will be necessary to conduct
further bid clarifications with the preferred SMPP contractor prior to
execution.
Provision has been made for air piping and ducting costs from the blower to
all re-agents based on Tenova Bateman historical database of pricing
information obtained from recently completed cost studies.
The costs for stainless steel tubing for the transportation of re-agents are
based on single source budget quotation obtained from Pentair Valves and
Controls. The costs for the pressure reducing valves are based on an
informal budget quotation obtained from Duplex Liquid Meters.
Piping and Instrumentation Diagrams (P&ID’s) are excluded from the
Tenova Bateman scope of works at this stage of the project and have
therefore not been prepared for the project study.
1.5.8 Electrical
The relevant discipline engineer produced and issued electrical equipment
list for preparation of electrical packages, specifications and bills of
quantities (BOQ’s) for electrical bulks for inclusion within the estimate. The
mechanical load list was used to create a corresponding electrical load list
from which the single line diagrams (SLD’s), cable schedules, bill of
quantities (BOQ’s) and electrical equipment list was developed. The BOQ’s
was then used to quantify the electrical requirements for the plant. Plant
general arrangement layouts were used for estimating the lighting, cable
and cable rack quantities.
The following electrical equipment packages supply prices are based on
preferred vendor quotes obtained through formal, competitive bidding:
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Low Voltage Motor Control Centres (LV MCC’s) Containerized
Low Voltage Substation Containerized
Transformers
The vendor package for the low voltage MCC’s includes for the supply of 2
off UPS including detail design, factory acceptance testing (FAT), internal
cabling and installation of the MCC’s and UPS’s in containers. The
containers are modified and equipped as per specification complete with
ventilation, air conditioning and fire protection.
A provisional allowance has been included in the estimate for the
procurement of an emergency standby generator set for provision of
emergency power supply to small motors, instrumentation UPS and MCC
control power supply UPS. The change-over between diesel generator and
grid power will be manual.
Provision for earthing and lightning protection is included in the estimate
based on the vendor quote obtained from HHK Earthing & Lightning
Protection Systems through competitive bidding. Provision has been made
within the vendor quote for earth conductivity survey on site.
The electrical scope of work includes all electrical equipment installation,
reticulation and distribution of electrical power to all electrical motors and
other electrical loads in the plant. The scope also covers the reticulation and
distribution of small power including plant lighting. The supply of small
electrical equipment such as light fittings, local isolators, socket outlets and
motor control station as well as electrical materials such as cables, cable
racking, cable terminations and support steel is also included.
Electrical bulks and installation contractor’s estimated costs are based on
unit rates submitted by SMEI Projects for the Electrical Installation Contract
obtained through competitive bidding. Technical bid evaluations and
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commercial bid adjudications were conducted to identify the preferred
Electrical Installation contractor.
The preliminary and general allowance has been priced at 65% of the total
direct field costs for the electrical installation contract.
1.5.9 Control and Instrumentation
Control and Instrumentation costs have been factored from the mechanical
equipment total cost based on industry accepted norms for the Beneficiation
and Materials Handling areas.
A provisional allowance has been included for cyanide detectors based on a
single source budget quotation from Drager SA.
Contractor’s P&G’s are factored based on a percentage of the total capital
costs for control instrumentation works.
The preliminary and general allowance has been assumed at 65% of the
total direct field costs for the control and instrumentation works based on the
P&G’s percentage allowance priced by the recommended Electrical
Installation contractor.
1.5.10 Growth Allowances
Experience tells us that there is a gap between what is known and identified
during the estimating process and what is expected during the execution or
construction phase. The addition of growth is intended to allow for the most
likely cost in the estimate. For this reason an allowance for growth on
quantities and prices should be included in the estimate.
A quantity growth allowance is a subjective amount added to the material
take-off (MTO) based on the degree of engineering completed and a
comparison to historical experience of the expected quantity.
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Estimates are generally based on budget quotations that rarely take into
account firm specifications or commercial terms and conditions. A price
growth allowance is an amount added to the price of materials and
equipment to account for the cost difference between the budgetary amount
quoted now and the expected firm price quotation obtained prior to
execution.
The following growth allowances have been included in the estimate based
on guidelines recommended by the Tenova Bateman Estimator’s Best
Practice Guide for a class 2 estimate classification:
Earthworks - 15%
Civil Works - 8%
Structural Steel - 8%
Mechanical Equipment - 5%
Piping - 10%
Electrical Packages - 5%
Electrical Installation contract - 10%
Control and Instrumentation - no growth allowance (factored)
Traditionally, the accuracy range in an OOM estimate accounts for the
growth allowances, considering the conceptual nature of the estimate and
the defined scope of work. No allowance for growth in quantities and price
has been included for Control & Instrumentation for reasons that the
discipline costs have been factored and already includes allowances for
design growth and wastage.
1.5.11 Allowance for Transport of Equipment
The costs for sea freight and inland transportation costs included in the
estimate for delivery of equipment from the country of origin to
Swakopmund, Namibia is based on formal competitive logistics costs
obtained from reputable freight forwarders. The package types vary from
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40ft containers, wooden skids, break bulk, skeleton crates, full crates and
pallets. The estimate reflects the recommended logistics services vendor’s
pricing based on technical bid evaluation and commercial bid adjudication of
the tenders received
An allowance has been included for the delivery to site of equipment
excluded from the logistics services vendor package.
The logistics costs will have to be firmed up through competitive bidding
from reputable freight forwarding companies prior to execution.
Marine insurance, customs/import duty and import VAT are excluded.
1.5.12 Allowance for Commissioning Spares Only
An allowance based on a factored percentage of the total capital cost of
equipment was allowed for commissioning spares only.
These costs should be verified with detailed spare listings and quotations
before execution.
No allowance for strategic or two year critical spares has been included in
the estimate as instructed by the Client.
1.5.13 Allowance for Re-agents
The cost for first fills of re-agents comprising steel balls for the mills and
flocculants for the tailings thickening has been estimated and provided by
the process engineer.
These costs should be verified with detailed quotations before execution.
1.5.14 Allowance for First Fills of Lubricants
An allowance based on a factored percentage of the total mechanical and
electrical equipment supply cost was allowed for first fills of lubricants.
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These costs should be verified with detailed quotations before execution.
1.5.15 Allowance for Vendor Assistance during Construction
An allowance for vendor assistance during construction and commissioning
based on a factored percentage of the mechanical, electrical and control
instrumentation equipment supply cost has been allowed for within the
estimate.
These costs should be verified with detailed man-hour estimates and
quotations prior to execution.
1.6 Indirect Costs
1.6.1 Engineering, Procurement and Construction Management
These costs cover the project management, detailed engineering and
procurement, and construction management, pre-commissioning (C1 & C2)
and cold commissioning (C3) costs directly associated with the
implementation of the project.
Hot commissioning (C4) assistance is excluded from the estimate. Should
hot commissioning assistance be required, this will be charged at day work
rates to be agreed.
A detailed man-hours estimate based on the EPCM scope of work, project
schedule, defined deliverables and required resources has been included in
the estimate.
The EPCM costs are based on a reimbursable contract type using Bateman
2014 WIP rates for computing the man-hour costs. The WIP rates are
subject to escalation from January 2015 to project completion.
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A fee of 10% of the total man-hours costs has been included within the
EPCM costs.
1.6.2 Bonds and Guarantees
An allowance based on a factored percentage of the Total Net Cost (TNC)
has been included in the estimate to cater for bonds and guarantees.
1.6.3 Insurance
Insurance included in the estimate is an allowance for project related risks
which are insurable. It is dependent on project variables and project specific
circumstances. It typically includes for the following:
o Contractors All Risk on construction and site activities typical
cover - this depends on the extent of cover required
o Third Party Liability insurance typical cover
o Medical Evacuation and casavac typical cover. This depends on
the area, location and the detailed circumstances
o Marine Cargo and difference in excess typical cover
The following risks are not allowed for in the estimate and thus excluded due
to the specific requirements the owner may have. These should be strongly
considered in addition to those listed above:
o Delay in Start-up insurance (DSU)
o Project Specific required professional indemnity
o Advance Loss of Profits (ALOP)
An allowance based on a factored percentage of the Total Net Cost (TNC)
been included in the estimate for insurance. The insurance estimate
allowance should be finalized by performance of an insurance review by
specialized parties, once the exact requirements of the owner and the
project are available in more detail.
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1.6.4 Contingency
Contingency is a sum of money included in an estimate to allow for
uncertainty. Project contingency is not intended to cover scope changes or
project exclusions. Scope changes are covered by the Owner’s
contingency.
Since no quantitative risk analysis has been done on the capital estimate
and considering the engineering/scope definition currently available and the
estimating methodologies followed, a nominal contingency allowance of
12% has been included in the estimate. The typical level of contingency
recommended is between 10% and 15% based on the Tenova Bateman
Estimator’s Best Practice Guide Class 2 estimate classification.
1.7 Risks and Considerations
No risk review has been held to quantify risks to the project. The estimate
therefore does not qualify or quantify risk. However a few items identified at
this stage need to be considered further:
No geotechnical information has been received from the Client. The
earthworks and civil works costs are therefore based on certain
assumed geotechnical conditions. This may have significant impact on
the costs for these disciplines during execution.
The validity of all quotations received will have expired by the
assumed contract start date of 15th May 2014. It will be necessary to
verify and re-validate all quotations prior to their expiry dates. Cost
escalation from study through to project completion is a risk that will be
borne by the client.
All budgetary and informal quotations for equipment supply will have to
be confirmed through a formal, competitive bid process prior to
execution.
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Logistics costs related to transportation of equipment and materials to
site needs to be firmed up based on final equipment specifications
sizing and tonnages.
The estimate does not consider the risk in foreign exchange variations.
This will be for client scope.
No escalation allowance has been included in the estimate. Cost
escalation from study through to project completion is a risk that will be
borne by the client.
1.8 Owner’s Costs
This estimate specifically excludes Owner’s costs. These costs shall fall
under the Client scope of work. Owner’s costs will not be included in the
estimate unless specifically directed and provided by the Owner.
Generally Owner’s costs are, but not necessarily limited to, the following:
Owner's project management team and consultants
Owner’s contingency for changes in scope or additional work
Pre-development costs (cost of study, etc.)
Land acquisition
Community relations
Insurance as indicated above
Business systems
Loss of production and efficiency resulting from implementation
Owner’s start-up and commissioning crew
Project taxes, fees, duties, customs, permitting and approvals
Development fees and approval costs of statutory authorities
Cost of any disruption to normal operations
Cost of shutdowns
Working capital or any additional stay in business capital
(sustainability capital)
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Pre-production costs (operator training)
Workplace health and safety fees
Site medicals and safety induction services
Medical staff and practitioners during construction
Geotechnical, site survey and soils testing
Environmental considerations (EIA)
Operational readiness
Finance fees or cost of capital
Provisional sums based on Client information and consultancy budget
estimates have been included in the estimate for the following Owner’s cost:
Tailings Storage Facility capital costs allowance (Provision of circa
US$237 728 included in the estimate)
1.9 Exclusions
The following costs are specifically excluded from the estimate:
Costs of EIA permitting and regulatory compliance requirements,
together with any costs associated with process design changes
necessitated by the outcome of such investigations
Any costs associated with process design changes necessitated by
the outcome of geotechnical investigations, site surveys and
metallurgical test work
Any costs associated with statutory requirements, local permits,
licensing, royalties and approvals, social, community or environmental
requirements
Owner’s costs unless provided by Owner
Owner’s contingency allowance
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Development fees and approval costs of Statutory Authorities unless
specifically included
Value Added Tax (VAT) and Goods & Services Tax (GST)
Sales tax, excise duties, import surcharges, withholding, service or
other taxes unless specifically included
Financing costs
Marketing costs
Business system costs
Pre-development and operational readiness costs
Operational costs (included in the Operating Costs Estimate)
Higher level management systems (MIS, MES or ERP)
External auditing costs
Appointment of Approved Inspection Authority (AIA)
Permit applications unless specifically included
Escalation from the estimate base date unless specifically included
Foreign currency exchange rates variations from the estimate base
date
Money for risk in schedule variances from what has been assumed
Any cost resulting from weather conditions other than fair
Schedule acceleration costs
Schedule delays and associated costs, such as those caused by:
o Unexpected site conditions
o Weather conditions other than fair
o Unidentified ground conditions
o Labour disputes
Force Majeure
Any cost for a logistical study or resulting increase in capital cost as a
result of such a study
For “Brownfields” work, the cost of any disruption to normal operations
All infrastructure, bulk earthworks and site development
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ROM stockpile blending and management strategy
Test work and laboratory costs
Special tools and general equipment for maintenance
Any spares costs in excess of allowances made
EPCM contractor support charges and Owner’s costs associated with
hot commissioning activities (Only assistance to Client)
Provision of landscaping and nursery services
Facilities for disposal of hazardous products generated by operations
Mining and mine closure/rehabilitation costs
Site security during construction
Medical staff and practitioners including emergency vehicles during
construction
Communications and Data/IT infrastructure
Laboratory information management systems (LIMS)
1.10 Capital Cost Summary
Refer to the Cost Estimate Summary sheets which are provided separately
to this document.
1.11 Cash Flow, Forward Escalation and Financial Modelling
1.11.1 Cash Flow
An indicative cash flow forecast has been prepared on the basis of a generic
typical project monthly expenditure expressed as a percentage of the total
project cost assigned to an S-Curve based on the duration of the project.
The project cash flow will have to be prepared on the basis of the proposed
implementation schedule by taking the total cost for each package and the
vendor payment terms and spreading it across its duration according to the
dates in the schedule.
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1.11.2 Forward Escalations
No escalation allowance has been included in the estimate. The Client
should make appropriate allowance for forward escalation.
1.11.3 Financial Modelling
Financial Modelling is excluded from the Tenova Bateman scope of work