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An updated and modified O’Hara cost estimating model based on World and
Iran economic conditions

Chapter · March 2005

DOI: 10.1201/9781439833407.pt1

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1. Business systems and project management
 Application of Computers and Operations Research in the Mineral Industry –
Dessureault, Ganguli, Kecojevic & Dwyer (eds)
© 2005 Taylor & Francis Group, London, ISBN 04 1537 449 9

An updated and modified O’Hara cost estimating model based

on World and Iran economic conditions

A.D. Akbari
Department of Mining Engineering, Azad University, Tehran, Iran

M. Osanloo
Department of Mining, Metallurgical and Petroleum Engineering, Amirkabir University of Technology,
Tehran, Iran

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.

1 INTRODUCTION is interesting to note that in each category at least 100

main cost items for the base year and the target year
Original O’Hara cost estimator was prepared for cost were studied and then a modification coefficient for
estimating in the third quarter of 1978 with an accu- each equation was prepared based on the items stud-
racy of ± 25% (O’Hara 1980). It was the result of ied and some other inflation information. The assumed
15 years detailed cost estimation around the world. base year is 1978 (third quarter) and the target year is
Also its 2nd version was prepared similarly, but for 2003 (third quarter) which is obligatory because the
the third quarter of 1988 (O’Hara & Suboleski 1992). inflation information always lags. And in case of base
Despite the passed time, this cost estimator can still year, it is supposed that the O’Hara’s equations were
be used after localization. It is because of O’Hara’s credible in Iran at that time and the cost condition
comprehensive analysis on detailed cost data which in Iran was the same as the cost condition in North
has determined the scale factors of different groups America in 1978 except for a part of labor costs in
of costs toward their appropriate variables which in operating cost section, but so far Iran and North Amer-
fact are the costs’ sensitivities versus the variables. ica have taken two different economic routs. Then all
These sensitivities in O’Hara’s equations appear in the O’Hara estimated costs in 1978 could be accepted as
shape of powers that can be applied when using con- the bases which the modification coefficients must be
ventional technology. In the first stages of this study multiplied by. After modification, by adding up the
a combined O’Hara model is arrange, considering localized equations, a crude guide is developed for
the modification constraints and the superiorities of estimating the total capital cost of open pit mine/mill
each of O’Hara models. Then, for modifying the equa- projects. This is expressed as a dependent variable to
tions which must be localized, the needed modification tons of ore mined and milled per day for Iran cost
coefficients were calculated, using the gathered infor- condition in 2003. Also the similar crude guide which
mation from Iranian open pit mining and the world of was developed by O’Hara (O’Hara 1980) for general
mining. Gathered information belonged to different cost condition in 1978 is updated using the escalate
categories of engaged engineering activities in mining factor of 2.54. It was updated before in 1989 using
industry like excavation, haulage, road and building the escalate factor of 1.50 by Hustrulid (Hustrulid &
construction, power distribution, water distribution, Kuchta 1995). The equations of these guides and their
water management, processing implementation, etc. It graphs are seen in Figure 1 beside the graphs and

3
equations which were developed and updated by for updating O’Hara’s equations in a parallel manner
O’Hara and Hustrulid. The aforesaid escalated factor with the above mentioned modification in order to
of 2.54 comes from combining the PPI, GPD, CPI, and obtain two equations in each part of the cost estimator.
ECI proportionately. This escalated factor will be used One of them is localized for Iran condition in 2003 and
the other one is escalated for general condition (mostly
for North America) in 2003. They facilitate compara-
bility of the mining/milling capital and operating costs
in two different parts of the world. Then the result is a
modified as well as an updated one. Finally this study
suggests two new equations for both models in capital
cost section in order to estimate the reclamation cost
as a dependent variable to the area of reclamation.

2 EQUATION SELECTION

The selected equations from both O’Hara models are

presented in Table 1. In capital cost section usually,
there are two different equations/groups of equations
for a purpose.
In such cases the equation/group of equations was
selected which presents more details. However, in
some cases there was something wrong with an equa-
tion/a group of equations, therefore selecting process
Figure 1. Combined capital cost of open pit mine/mill was obligatory. Also there were some obligations in
projects. operating cost section. In this section the selected

Table 1. O’Hara combined equipment selection and cost estimation model (fiscal equations are in USD for third quarter
of 1978).

Section Number Equation Source

Personnel 1 Drilling and Blastting Personnel = 0.075Tp0.5 original

2 Loading Personnel = 0.110Tp0.5 original
3 Haulage Personnel = 0.035Tp0.7 original
4 Miscellaneous Personnel = 0.070Tp0.5 original
5 Maintenance Personnel = 0.210Tp0.5 original
6 Mine Staff Personnel = 0.108Tp0.5 original
7 For precious metal ores original
Processing Personnel = 5.9T 0.3
8 For base metal ores original
Processing Personnel = 5.7T 0.3
9 For iron ores by gravity separation original
Processing Personnel = 7.2T 0.3
10 Nm = All operating personnel (No.1–9)
11 For power supplied by utility original
Electrical Services Personnel = 0.03Nm
12 For power supplied by diesel generator original
Electrical Services Personnel = 0.05Nm
13 General plant services personnel and original
Road maintenance personnel = 0.04Nm
14 For exciting townsite original
Townsite Employees = 0.0
15 For mine camp original
Townsite Employees = 0.03Nm
16 For family townsite original
Townsite Employees = 0.05Nm
17 Ns = All services personnel (No. 11–16)
18 General Administrative Personnel = 0.07Nm original

4
Table 1. (Continued)

Section Number Equation Source

Mine Capital Costs 19 Ap (acre) = 0.0173Tp0.9 updated

20 For flat site with shrubs updated
Total Clearing Cost = $176.47A0.9 p
21 For 20% slope and light tree updated
Total Clearing Cost = $941.18A0.9 p
22 For 30% slope and heavy tree updated
Total Clearing Cost = $1176.47A0.9 p
23 For less than 200 ft depth updated
Soil Stripping Costs = $1.88Ts0.8
24 Waste Stripping Costs = $200Tw0.6 updated
25 d (inch) = Bit diameter (Selective)
26 Tons of easily drillable rock = 230d2 updated
27 Tons of medium drillable rock = 170d2 updated
28 Tons of hard drillable rock = 100d2 updated
ton
29 If TDR 25000 day → Nd = 2drill updated
ton ton
If 25000 day ≤ TDR ≤ 60000 day → Nd = 3drill
ton
If TDR 60000 day → Nd = 4drill or more
30 Drilling Equipment Costs = Nd × $1176471d1.8 updated
31 S (yard3 ) = 0.145Tp0.4 updated
T 0.8
32 Ns = 0.011 pS updated
33 Loading Equipment Costs = Ns × $300000S 0.8 updated
34 t (ton) = 9.0S 1.1 updated
T 0.8
35 Nt = 0.25 pt updated
36 Haulage Equipment Costs = Nt × $12000t 0.9 updated
37 Ar (acre) = 360Tp0.4 updated
38 Cost of Open Pit Maintenance = $3529.41A0.6 r ×t
0.1
updated
39 Cost of Communication & Electrical Distribution = $147.6Tp0.7 updated
40 Cost of Refueling System = $16.47Tp0.8 updated
42 For flat sites original
Cost of Clearing, Soil St., and Mass Ex. = $35058.82T 0.3
43 For moderate slope original
Cost of Clearing, Soil St., and Mass Ex. = $52588.24T 0.3
44 For high slope original
Cost of Clearing, Soil St., and Mass Ex. = $87647.06T 0.3
45 For solid rock original
Cost of Detailed Ex., Filling, and Fondation = $17529.41T 0.5
Mill Capital Costs 46 For gravel and sand original
Cost of Detailed Ex., Filling, and Fondation = $31552.94T 0.5
47 For moist soil original
Cost of Detailed Ex., Filling, and Fondation = $61352.94T 0.5
48 For mild climate updated
Cost of Buildings = $1588235T 0.6
49 For primary, secondary, and even tertiary original
Cost of Crushing equipment = $39441.18T 0.5
50 For soft ores (55%–200#) updated
Cost of Grinding and Fine Ore Storage = $7352.94T 0.7
51 For mediumores (70%–200#) updated
Cost of Grinding and Fine Ore Storage = $11000T 0.7
52 For hard ores (75%–200#) updated
Cost of Grinding and Fine Ore Storage = $13235.29T 0.7
53 For high grade gold ores leached by cyanidation followed by zinc dust updated
percipitation of gold by Mrrill Crow process, filtering, drying, refining
Processing and Related Capital Costs = $35411.76T 0.5
54 For low grade gold ores leached by cyanidation, updated
CIP (carbon-in-pulp) or CIL (carbonin leach) adsorption, and refining
Processing and Related Capital Costs = $27823.5294T 0.5
(Continued)

5
Table 1. (Continued)

Section Number Equation Source

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
Differential flotation, selective roasting, recovery of deleterious materials,
cyanidation, thickening, precipitation filtering, and refining
Processing and Related Capital Costs = $105882.3529T 0.5
58 For high grade Cu/Pb ores, Cu/Zn ores, Pb/Zn ores, Cu/Ni ores. Recovery by updated
differential flotation, thickening, filtering, & drying separate concentrates.
Processing and Related Capital Costs = $12117.6471T 0.6
59 For complex base metal ores containing at least three valuable metals updated
with recoverable minor amounts of precious metals; Cu/Zn/Pb, Pb/Zn/Ag, Cu/Pb/Ag,
and Cu/Zn/Auores. Differential flotation, separate thickening, and filtering
Processing and Related Capital Costs = $17705.8824T 0.6
60 For non sulfide ores containing metals such as Niobium, Tantalum, Tungsten, updated
and Tin in minerals that do not respond to flotation. Separating by specialized
gravity concentration methods.
Processing and Related Capital Costs = $(2941.18to7647.06)T 0.7
61 For Uranume ores: acid leaching, counter current decantation, clarification, updated
solvent extraction and yellowcake.
Processing and Related Capital Costs = $(88235.29 to 117647.6)T 0.5
62 For minimum estimation updated
Costs of Tailing Storage $11764.71T 0.5
63 Cost of Concentrate Storage and Loadout = $3505.88 × original
(overall recovery × T × average ore grade 0.8
concentrate grade
)
64 For graveled road with 9 m width in moderate condition original
Cost of Road for Subsequent Truck Haulage = $175294.12 Per Mile
Vast Civil 65 Cost of Bridge to Span Creeks = $114.12 (each bridge length)1.5 original
Costs 66 For key staff only (excisting town) Cost of Housing = $3505.88 × Number original
of whole employees
67 For mine camp Cost of Housing = $17529.41 × Number of whole employees original
68 For family town site Cost of Housing = $81950 × Number of whole employees original
Plant 69 Volume of fresh water required for mine and mill T tons ore per day in gpm = 12T0.6 original
Utilities 70 Volume of reclaim water required for mine and mill T tons ore per day original
Costs in gpm = 0.026T1.2
71 Pipe Diameter in inches = 0.15(gpm)0.6 original
72 Cost per mile of pipe = $306.76(gpm)0.6 original
73 Cost of F. Water Pump = $2015.88(gpm)0.6 original
74 Cost of R. Water Pump = $2629.41(gpm)0.6 original
75 PL for a mine mills T tons ore/day(kw) = 78T 0.6 updated
76 Power Consumption (kwh) = 1400T 0.6 updated
77 For power supplied by utility updated
Cost of Substation = $341.18(PL)0.8
78 For power supplied by utility original
Cost of Transmission Line = $52588.24 per mile
79 Cost of Diesel Elec. Plant = $3529.41(PL)0.8 updated
80 Cost of L. Vol. Distribution = $676.47(PL)0.8 updated
General 81 Ao = 35 (General Administrative Personnel)1.3 updated
Services 82 Cost of Office = $91.18A0.9 o updated
Costs 83 Am = 85 × NS updated
84 Cost of Maintenance Shop = $60(Am )0.9 updated
85 Af = 24 × Nm updated
86 Cost of Change houses, First aid station, and Mine rescue facilities = $73.53(Af )0.9 updated
87 Cost of Warehouse = $3382T 0.4 updated
88 Cost of miscellaneous facilities including general purpose vehicle, garages, updated
seurity stations, fencing, parking lots, and etc. = $5882.35T 0.5
6
Table 1. (Continued)

Section Number Equation Source

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
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

7
percentages will be stated for equation/equations being should be noted that the loading fleet mainly, includes
modified. After that based on these percentages the shovels, loaders, and dozers. The general project fac-
calculated modification coefficient of the subsections tors for these equations in both updated and modified
are expressed. models are the same. They are 29882.3530, 762000,
In some cases, the modification coefficient is the and 30480 respectively.
average inflation shown in a studied category of
engineering activities which fits the cost estimating
equation because of their similar nature. In other cases, 3.5 Modifying and updating equations 38 and 84
it is the result of mixing the average inflation in some
related categories, and Iran and world cost conditions. Equation 38 is the estimator of maintenance facili-
It is interesting to note that these modification coeffi- ties cost for open pit and equation 84 is the estimator
cients can be used just after multiplying by common of maintenance and repair facilities cost for movable
fraction 70.4713/8281 which is the ratio of the Rials equipment from processing and service department.
per USD exchange rate in the base year to the target
year. The utilized updating coefficient is 2.54 as men-
tioned in introduction. In some cases like the operating
costs, this coefficient may cause over estimation. But it
must be noted that the major role of the updated model
is facilitating the comparability of the modified model
estimated cost with estimated cost in general and the
minor role is estimating the cost in North America.

3.1 Modifying and updating equations

20, 21 and 22
The studied inflation in this subsection is 4969.65 per
cent. After multiplying by the ratio of the exchange
rates and also by the base year general project fac-
tors, the general project factors in modified model
for these equations will be 74.6325, 398.0397, and
497.5496 respectively. While in updated model they
are 448.2353, 2390.5883, and 2988.2353.

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).

3.3 Modifying and updating the equation 24

The studied inflation in this subsection is 3569.20 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 60.7478. While in updated model, it
is 508 (Fig. 3).

3.4 Modifying and updating equations

30, 33 and 36
The equation 30 is the estimator of drill cost and other
drilling and blasting equipment. Also the equations 33, Figure 3. Waste stripping cost in the base year and the target
36 are the estimator of the loading and haulage fleet. It year in Iran and in general.

8
 The estimated costs of these equations are rates and also by the base year general project fac-
impressed by 78.28 per cent construction costs and tor, the general project factors in modified model for
24.72 per cent tools purchase payment. The studied these equations one after the other will be 6696.1922,
inflation in such construction cases is 5744.84 per cent 12053.1502, and 23436.681 respectively. While in
which after multiplying by the ratio of the exchange updated model, they are 44524.7060, 80144.4707, and
rates and 0.7828, it would be 38.27 per cent. On the 155836.4706.
other hand, there is another 62.79 per cent inflation
which comes from multiplying 254 per cent (tools
3.10 Modifying and updating the equation 48
purchase payment inflation rate in USD) by 0.2472.
Then the modification coefficient in this subsection The estimated cost of this equation fits buildings in
is 1.0106 and the general project factors in modi- mild climate (degree-days = 4000 c◦ ) and in cold cli-
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.

3.8 Modifying and updating equations

42, 43 and 44
The studied inflation in this subsection is 3939.66 per
cent. After multiplying by the ratio of the exchange
rates and also by the base year general project fac-
tor, the general project factors in modified model for
these equations will be 11753.9977, 17630.9957, and
29384.9928 respectively. While in updated model, they
are 89049.4163, 133574.1177, and 226623.5294.

3.9 Modifying and updating equations

45, 46 and 47
The studied inflation in this subsection is 4488.81 per Figure 4. Concentrator buildings costs in the base year and
cent. After multiplying by the ratio of the exchange the target year in Iran and in general.

9
Figure 5. Crushing capital costs in the base year and the
Figure 6. Grinding capital costs, in the base year and the
target year in Iran and in general.
target year in Iran and in general.

3.12 Modifying and updating equations

50, 51 and 52
The estimated costs of these equations are impressed
by 80.5 per cent purchase payment, transport costs,
and supervising cost in installation with 254 per
cent assumed inflation rate in USD and 19.5 per
cent labor and construction material costs for instal-
lation with 5754.92 per cent studied inflation in
Rial which must be multiplied by the ratio of the
exchange rates. Then the modification coefficient in
this subsection is 2.1402 and the general project fac-
tors in modified model for these equations will be
15736.7448, 23542.2, and 28326.1764 respectively.
While in updated model they are 18647.4707, 27940,
and 33617.6470 (Fig. 6).

3.13 Modifying and updating the equation 53

The estimated cost of this equation is impressed by 65
per cent purchase payment, transport costs, and super- Figure 7. Processing capital costs for cynidation of high
vising cost in installation with 254 per cent assumed grade gold ores in the base year and the target year in Iran
inflation rate in USD and 35 per cent labor and con- and in general.
struction material costs for installation with 5421.86
per cent studied inflation in Rial which must be mul- and construction material costs for installation with
tiplied by the ratio of the exchange rates. Then the 5421.86 per cent studied inflation in Rial which must
modification coefficient in this subsection is 1.8125 be multiplied by the ratio of the exchange rates.
and the general project factor in modified model for Then the modification coefficient in this subsection
this equation will be 64183.8235. While in updated is 1.7293 and the general project factor in modified
model it is 89945.8823 (Fig. 7). model for this equation will be 48115.2294. While in
updated model it is 70671.7645 (Fig. 8).
3.14 Modifying and updating the equation 54
The estimated cost of this equation is impressed by 3.15 Modifying and updating equations
61 per cent purchase payment, transport costs, and 56, 58 and 59
supervising cost in installation with 254 per cent The estimated costs of these equations are impressed
assumed inflation rate in USD and 39 per cent labor by 75 per cent purchase payment, transport costs,

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.

3.16 Modifying and updating equations 55 and 57

The estimated costs of these equations which belong to
compound processes, are impressed by 68 per cent pur-
chase payment, transport costs, and supervising cost
in installation with 254 per cent assumed inflation
rate in USD and 32 per cent labor and construction
material costs for installation with 5421.86 per cent
studied inflation in Rial which must be multiplied by
the ratio of the exchange rates. Then the modification
coefficient in this subsection is 1.8748 and the general
project factors in modified model for these equations
will be 113811.3883 and 198508.2352 respectively.
While in updated model they are 154192.9413 and
268941.1764 (Fig. 10).

3.17 Modifying and updating the equation 60

The estimated range of cost by this equation belongs
Figure 9. Processing capital costs for complex and simple to different specialized gravity concentration methods.
base metal ores in the base year and the target year in Iran
Then in this subsection, the modification coefficient
and in general.
must be a representative for the average of all mod-
ification coefficients which are needed for different
and supervising cost in installation with 254 per cent specialized gravity concentration methods. On the
assumed inflation rate in USD and 25 per cent labor other hand the average capital cost for such methods
and construction material costs for installation with is impressed by 83.235 per cent purchase payment,
5421.86 per cent studied inflation in Rial which must transport costs, and supervising cost in installation
be multiplied by the ratio of the exchange rates. with 254 per cent assumed inflation rate in USD and
Then the modification coefficient in this subsection 16.765 per cent labor and construction material costs
is 2.0204 and the general project factors in modi- for installation with 5421.86 per cent studied inflation
fied model for these equations will be 16282.047, in Rial which must be multiplied by the ratio of the
24482.494, and 35772.9648 respectively. While in exchange rates. Then the modification coefficient in
updated model they are 20469.4117, 30778.8234, and this subsection is 2.1916 and the general project factor
44972.9413 (Fig. 9). in modified model for this equation will be 6445.8824

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
 these equations will be 641.8859 and 837.2425 respec-
tively. While in updated model, they are 5120.341 and
6678.7060.

3.27 Modifying and updating equations 77 and 79

The studied inflation in this subsection is 7525.83 per
cent. After multiplying by the ratio of the exchange
rates and also by the base year general project factor,
the general project factors in modified model for these
equations will be 218.5929 and 2261.3059 respec-
tively. While in updated model, they are 866.5883 and
8964.7060. It is interesting to note that the estimated
cost of equation 79 will be defined as the back up sys-
tem cost if the necessary power of the plant is supplied
by utility or as the main system cost for small mines
in which the necessary power is supplied by diesel
generator.
Figure 13. Each bridge construction costs in the base year
3.28 Modifying and updating the equation 78
and the target year in Iran and in general.
The studied inflation in this subsection is 6173.95 per
3.23 Modifying and updating the equation 66 cent. After multiplying by the ratio of the exchange
rates and also by the base year general project factor,
The studied inflation in this subsection is 5518.21 per the general project factor in modified model for this
cent. After multiplying by the ratio of the exchange equation will be 27630.0203. While in updated model,
rates and also by the base year general project factor, it is 133574.117.
the general project factor in modified model for this
equation will be 1646.3623. While in updated model, 3.29 Modifying and updating the equation 80
it is 8904.9410.
The studied inflation in this subsection is 8009.51 per
cent. After multiplying by the ratio of the exchange
3.24 Modifying and updating equations 67 and 68 rates and also by the base year general project factor,
The studied inflation in this subsection is 5500.59 per the general project factor in modified model for this
cent. After multiplying by the ratio of the exchange equation will be 405.6866. While in updated model, it
rates and also by the base year general project factor, is 1718.2353.
the general project factors in modified model for these
equations will be 8205.5177 and 22565.1735 respec- 3.30 Modifying and updating equations
tively. While in updated model, they are 20899.4787 82, 86 and 87
and 122442.941. It should be noted that equation The studied inflation rates for such buildings, one after
67 can be used just when the number of the whole the other, are 5877.74, 5829.61, and 5687.43 per cent.
employees is less than 100. After multiplying by the ratio of the exchange rates and
also by the base year general project factor, the general
3.25 Modifying and updating the equation 72 project factors in modified model for these equations
will be 45.4150, 36.4779, and 1637.0588 respectively.
The studied inflation in this subsection is 3064.14 per While in updated model they are 231.5883, 186.7647,
cent. After multiplying by the ratio of the exchange and 8591.1764. It should be noted that the estimated
rates and also by the base year general project factor, cost by equation 87 just includes cost of warehouse
the general project factor in modified model for this building and furniture.
equation will be 79.9914. While in updated model, it
is 779.1823.
3.31 Modifying and updating the equation 88
The estimated cost of this equation is impressed
3.26 Modifying and updating equations 73 and 74 by 27.9 per cent construction costs, and 27.6 per
The studied inflation in this subsection is 3741.65 per cent imported instruments and devices purchase pay-
cent. After multiplying by the ratio of the exchange ment for security stations and some of miscellaneous
rates and also by the base year general project fac- services, and 44.5 per cent general purpose vehi-
tor, the general project factors in modified model for cle purchase payment. The studied inflation in the

13
27.9 per cent portion of the cost is 5551.13 per cent multiplying 9709.83 (general purpose vehicle pur-
which after multiplying by the ratio of the exchange chase payment inflation rate in Rial) by the ratio of
rates and 0.297, it would be 13.18 per cent. On the the exchange rates and 0.445. Then the modifica-
other hand, there are other 70.10 per cent inflation tion coefficient in this subsection is 1.2005 and the
which comes from multiplying 254 per cent (instru- general project factors in modified model for this
ments and devices purchase payment inflation rate in equation will be 7061.7647. While in updated model
USD) by 0.276 and 36.77 per cent which comes from it is 14941.1764.

3.32 Modifying and updating the equation 94

The estimated cost of this equation includes 31 per
cent administrative work force and 69 per cent labor
work force costs which in turn includes 53 per cent
direct excavation labor costs and 47 per cent mainte-
nance labor costs. Considering this conformation, the
comparison of the wages which O’Hara developed his
equation based on them, with nowadays wages will
result the modification coefficient of 0.1812. While in
updated model it could be about 2.54 (Fig. 14).

3.33 Modifying and updating the equation 95

This equation estimates the mining supply costs except
electricity consumption for the open pit mines that
utilize electric shovels, trucks, and rotary drills as the
main equipment fleet. This cost is impressed by the
contents of the Table 2.
According to this table the modification coefficient
Figure 14. Mining labor cost per ton in the base year and in this subsection is 1.9795. While in updated model
the target year in Iran and in general. it could be about 2.54 (Fig. 15).

Table 2. Parts of mining supply cost with their impression percentages and inflation rates.

Parts of the cost Impression percentage Inflation rates (per cent)

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
3.34 Modifying and updating equations per cent labor work force costs which in turn includes
96, 98 and 100 51.69 per cent direct labor costs and 48.31 per cent
maintenance labor costs. And the estimated cost of
The estimated cost of equations 96 and 98 include
equation 100 includes 35.85 per cent administrative
36.42 per cent administrative work force and 63.58
work force and 64.15 per cent labor work force costs
which in turn includes 58.065 per cent direct labor
costs and 41.935 per cent maintenance labor costs.
Considering this conformation, the comparison of the
wages which O’Hara developed his equations based
on them, with nowadays wages will result the modifi-
cation coefficient of 0.1946 for equations 96 and 98
and 0.1954 for equation 100. While in updated model
they could be about 2.54 (Fig. 16).

3.35 Modifying and updating the equations

97, 99 and 101
The equations 97 and 99 estimate the crushing, grind-
ing, and processing supply costs except electricity
consumption for simple base metal ores and complex
base metal ores. And equation 101 does the same for
precious metal ores. The estimated costs of equations
97 and 99 are impressed by the contents of the Table 3
and the estimated cost of equation 101 is impressed by
the contents of the Table 4.
Figure 15. Mining supplies cost per ton in the base year the According to these tables the modification coeffi-
target year in Iran and in general.
cients in this subsection are 2.3578 for equations 97
and 99 and 2.3498 for equation 101. While in updated
model it could be about 2.54 (Fig. 17).

3.36 Modifying and updating the equations

102, 103, 105 and 107
These equations estimate other wages and salaries
which must be paid for operating the plant. Compris-
ing the wages and salaries which O’Hara developed
his equations based on them, with nowadays wages
and salaries will result the modification coefficient of
0.2148 for equation 102, 0.2070 for 103, 0.1774 for
105, and 0.1418 for equation 107. While in updated
model they could be about 2.54.

3.37 Modifying and updating equations 104

and 106
The studied inflation in this subsection is 9268.17 per
cent. After multiplying by the ratio of the exchange
Figure 16. Milling labor cost per ton in the base year and rates and also by the base year general project factor,
the target year in Iran and in general. the general project factors in modified model for these

Table 3. Parts of milling supply cost with their impression percentages and inflation rates for base metal ores.

Crushers wearing Processing

materials and spare Mill Chemical machinery Lubrication and
Parts of the cost parts Mill balls liner agents spare parts service materials

Impression percentage 5.27 9.21 2.77 78.63 3.88 0.24

70.4713 70.4713
Inflation rates (per cent) 254 7162.23 × 254 254 254 9102.75 ×
8281 8281

15
Table 4. Parts of milling supply cost with their impression percentages and inflation rates for precious metal ores.

Crushers wearing Processing

materials and spare Mill Chemical machinery Lubrication and
Parts of the cost parts Mill balls liner agents spare parts service materials

Impression percentage 5.26 9.045 2.725 70.34 11.75 0.88

70.4713 70.4713
Inflation rates (per cent) 254 7162.23 × 254 254 254 9102.75 ×
8281 8281

Figure 18. Reclamation cost in Iran & in general for 2003.

Figure 17. Milling supplies cost per ton in the base year &
the target year in Iran and in general. of 2003 in Iran and in general are suggested. The
basic equation was prepared by curve fitting to actual
equations will be 4.1714 and 2.7651. While in updated reclamation cost data from China and the result was
model, they are 13.4336 and 8.9050. controlled by current reclamation cost in Iran. This
is because of insufficient accomplished reclamation
3.38 Modifying and updating equations 108 project number in Iran. Then the obtained equation
and 109 (Eq. 1) which was prepared as an enclosure for modi-
The studied inflation in this subsection is 9781.43 per fied model is multiplied by 6.7 to prepare an equation
cent. After multiplying by the ratio of the exchange (Eq. 2) for enclosing to updated model (Fig. 18).
rates and also by the base year general project factor,
the general project factors in modified model for these
equations will be 9.4810 and 3.6459. While in updated
model, they are 28.9306 and 11.1255.

3.39 Modifying and updating the equation 110 Where:

A – Area to be reclaimed (acre)
The studied inflation in this subsection is 6000 per
cent. After multiplying by the ratio of the exchange
rates and also by the base year general project factor,
5 NOTES ON UPDATING THE MODELS FOR
the general project factor in modified model for this
NEXT YEARS
equation will be 43.5512. While in updated model, it
is 216.6470.
In this study some updating coefficient are predicted
for each fiscal equation of the modified model in
4 NEW EQUATIONS FOR ESTIMATING next three years. The prediction of these coefficients
RECLAMATION COST was accomplished by monitoring inflation trends of
the different engaged categories of engineering activi-
In this section two new equations as crude guides for ties in mining industry which were used in calculating
estimating the cost of reclamation in the third quarter the modification coefficient. This time aside from the

16
 Table 5. Predicted updating coefficient per year for modified model up to three years after 2003.

Number Index Modification Coefficient

8281
1 20, 21, 22 1.15 × Update Rials per Dollar Exchange Rate
8281
2 23 1.1 × Update Rials per Dollar Exchange Rate
8281
3 24, 73, 74 1.11 × Update Rials per Dollar Exchange Rate
4 30, 33, 36 1.056
8281
5 38, 84 0.92 × Update Rials per Dollar Exchange Rate
+ 0.26
8281
6 39, 80 1.11 × Update Rials per Dollar Exchange Rate
8281
7 40, 45, 46, 47, 62, 64 1.14 × Update Rials per Dollar Exchange Rate
8281
8 42, 43, 44 1.12 × Update Rials per Dollar Exchange Rate
8281
9 48, 82, 86, 96, 98, 100, 102, 103, 105, 107, 110 1.12 × Update Rials per Dollar Exchange Rate
8281
10 49 0.23 × Update Rials per Dollar Exchange Rate
+ 0.84
8281
11 50, 51, 52 0.23 × Update Rials per Dollar Exchange Rate
+ 0.85
8281
12 53 0.41 × Update Rials per Dollar Exchange Rate
+ 0.69
8281
13 54 0.45 × Update Rials per Dollar Exchange Rate
+ 0.64
8281
14 56, 58, 59 0.29 × Update Rials per Dollar Exchange Rate
+ 0.79
8281
15 55, 57 0.37 × Update Rials per Dollar Exchange Rate
+ 0.72
8281
16 60 0.2 × Update Rials per Dollar Exchange Rate
+ 0.88
8281
17 61 0.58 × Update Rials per Dollar Exchange Rate
+ 0.53
8281
18 63 0.84 × Update Rials per Dollar Exchange Rate
+ 0.32
8281
19 65, 78, 94 1.19 × Update Rials per Dollar Exchange Rate
8281
20 66, 67, 68, 87, 1.17 × Update Rials per Dollar Exchange Rate
8281
21 72 1.09 × Update Rials per Dollar Exchange Rate
8281
22 77, 79 1.23 × Update Rials per Dollar Exchange Rate
8281
23 88 0.91 × Update Rials per Dollar Exchange Rate
+ 0.29
8281
24 95 0.90 × Update Rials per Dollar Exchange Rate
+ 0.45
8281
25 97, 99 0.13 × Update Rials per Dollar Exchange Rate
+ 0.96
8281
26 101 0.12 × Update Rials per Dollar Exchange Rate
+ 0.95
8281
27 104, 106 1.28 × Update Rials per Dollar Exchange Rate
8281
28 108, 109 1.3 × Update Rials per Dollar Exchange Rate
8281
29 (1) 1.12 × 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
Table 6. Examples of estimated costs by the modified model in comparison with the actual cases.

Estimated Actual Error of Tolerance

cost cost estimation limit
Type of cost (USD) (USD) Reference (per cent) (per cent)

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
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

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