Suction Dredge Suction Dredge Economic AnalysisEconomic Analysis

Placer Examination Placer Examination TechniquesTechniques

Analysis Based on Dredging Analysis Based on Dredging TimeTime

Gold recovered per hour Gold recovered per hour rather thanrather than goldgold

recovered per cubic yard.recovered per cubic yard. Labor is overriding costs.Labor is overriding costs. Dredging time is precise, hole Dredging time is precise, hole

volume is hard to measure.volume is hard to measure. Production rate is highly variable.Production rate is highly variable.

Working Time and Dredging Working Time and Dredging TimeTime

Working time is greater than dredging Working time is greater than dredging timetime

Ratio of work time to dredge time is Ratio of work time to dredge time is ~1.6:1~1.6:1

40 hr. work week includes 25 hrs. of 40 hr. work week includes 25 hrs. of dredgingdredging

Revenues based on dredging timeRevenues based on dredging time Labor costs based on working timeLabor costs based on working time

Dredging TimeDredging Time

Gold is only produced during Gold is only produced during dredging timedredging time

Working Time IncludesWorking Time Includes

In addition to dredging time includesIn addition to dredging time includes Transporting supplies to dredging siteTransporting supplies to dredging site Moving equipmentMoving equipment Dredge site preparationDredge site preparation Cleanup sluiceCleanup sluice Panning, sluicing, classifying or processing Panning, sluicing, classifying or processing

concentratesconcentrates Work breaksWork breaks PlugsPlugs Repair and maintain equipmentRepair and maintain equipment

Adjustments to Dredge & Adjustments to Dredge & Work Time RatioWork Time Ratio

Observations of dredge operatorObservations of dredge operator High boulder factorHigh boulder factor Clay - decreases visibility or needs breaking Clay - decreases visibility or needs breaking

upup Deep or fast moving waterDeep or fast moving water Very cold water-more breaks or dry suitVery cold water-more breaks or dry suit Murky water-decreases visibility & efficiencyMurky water-decreases visibility & efficiency Difficult access-addressed as 1-time cost for Difficult access-addressed as 1-time cost for

seasonseason

Number of WorkersNumber of Workers

Number generally varies from 1 to 3 Number generally varies from 1 to 3 workersworkers

2 people are generally more efficient and 2 people are generally more efficient and safersafer

1 person has lower labor cost but less 1 person has lower labor cost but less efficient and less safeefficient and less safe

1 person is ~60% as efficient as 2 people1 person is ~60% as efficient as 2 people Need to look at site specific situationNeed to look at site specific situation

Role of Second PersonRole of Second Person

Moving bouldersMoving boulders Clearing clogs in hose, jet or boxClearing clogs in hose, jet or box Dispersing tailsDispersing tails Repositioning the dredgeRepositioning the dredge Clearing the sluiceClearing the sluice Alternate on intake nozzleAlternate on intake nozzle Less fatigueLess fatigue SafetySafety

Safety Hazards Where 2Safety Hazards Where 2ndnd Person Provides AssistancePerson Provides Assistance

Unstable highwalls or working facesUnstable highwalls or working faces Unstable bouldersUnstable boulders Cold and fast moving waterCold and fast moving water Diving with supplied airDiving with supplied air Walking and carrying equipment in Walking and carrying equipment in

streams and wet, slippery rocks, deep streams and wet, slippery rocks, deep waterwater

Provide first aid or go for helpProvide first aid or go for help

Wage Rates & Job Wage Rates & Job RequirementsRequirements

Suction dredging is strenuous workSuction dredging is strenuous work Expertise from experienceExpertise from experience Knowledge of gold deposition in stream Knowledge of gold deposition in stream

depositsdeposits Small engine repairSmall engine repair Diving in deep, cold or fast moving waterDiving in deep, cold or fast moving water Hazardous conditions-unstable banks or Hazardous conditions-unstable banks or

bouldersboulders

Wage RateWage Rate

Not reasonable to work for minimum wageNot reasonable to work for minimum wage Use wage rate between minimum wage Use wage rate between minimum wage

and equipment operator wageand equipment operator wage No charge for cost to employer for No charge for cost to employer for

owner/operator, which is most suction owner/operator, which is most suction dredge operationsdredge operations

Wage rate for job requiring strenuous Wage rate for job requiring strenuous physical labor outdoors is generally physical labor outdoors is generally reasonablereasonable

Gold PricesGold Prices

Gold Futures – Federal Register Gold Futures – Federal Register GuidanceGuidance

Spot Price vs. What Local Buyers PaySpot Price vs. What Local Buyers Pay Consider jewelry or specimen value if Consider jewelry or specimen value if

samples warrantsamples warrant Survey local or regional gold buyers to Survey local or regional gold buyers to

find criteria for specimen valuefind criteria for specimen value

Dredge Production RateDredge Production Rate

Volume of material dredged is Volume of material dredged is difficult to estimate due to difficult to estimate due to irregularity of the size and shape of irregularity of the size and shape of the holethe hole

No accurate way to measure dredge No accurate way to measure dredge throughput material off of tail sluicethroughput material off of tail sluice

Holes slough and may contain Holes slough and may contain boulders or tailsboulders or tails

Rated Capacity v. Production Rated Capacity v. Production RateRate

Manufacturer’s capacity do not reflect actual Manufacturer’s capacity do not reflect actual throughputthroughput

Manufacturer’s rated capacity assumes Manufacturer’s rated capacity assumes optimum conditions, which are not optimum conditions, which are not encountered in the field – minimal lift, encountered in the field – minimal lift, unconsolidated material, sand or gravel, unconsolidated material, sand or gravel, steady supplysteady supply

Most gold is recovered where conditions are Most gold is recovered where conditions are not ideal-around boulders, in crevices and not ideal-around boulders, in crevices and joints, weathered bedrockjoints, weathered bedrock

Rated Capacity v. Production Rated Capacity v. Production RateRate

We have estimated 1.5 to 5 cy/hr of We have estimated 1.5 to 5 cy/hr of actual production rate for 4 & 5-inch actual production rate for 4 & 5-inch dredgesdredges

Manufacturer’s rated capacity is 5-10 Manufacturer’s rated capacity is 5-10 cy/hrcy/hr

Actual capacity less due to oversize, Actual capacity less due to oversize, dredging around boulders, crevices, dredging around boulders, crevices, breaking up bedrock, moving dredge, breaking up bedrock, moving dredge, discontinuous gravel bedsdiscontinuous gravel beds

Production Rate EstimateProduction Rate Estimate

Hole Volume/Dredging Time = Hole Volume/Dredging Time = Estimated Production Rate (cy/hr)Estimated Production Rate (cy/hr)

Mine LifeMine Life

Calculate using volume of gravel on Calculate using volume of gravel on claim from mapping & sampling, & claim from mapping & sampling, & average dredge production rateaverage dredge production rate

Exclude portions of stream that cannot Exclude portions of stream that cannot be dredgedbe dredged

Use information from sampling to Use information from sampling to supplement mapping informationsupplement mapping information

Gravel volume/production rate=mine lifeGravel volume/production rate=mine life

Mine LifeMine Life

Use actual number of dredging Use actual number of dredging hours/week, not total work hourshours/week, not total work hours

Dredging season – weeks/yearDredging season – weeks/year Generally 25 hrs of dredging/40 hr Generally 25 hrs of dredging/40 hr

work week using ~1.6 hrs work work week using ~1.6 hrs work time:1.0 hr of dredging timetime:1.0 hr of dredging time

Gold RechargeGold Recharge

Normally gold recharge is not significant Normally gold recharge is not significant over the life of the mineover the life of the mine Previously worked areas do not contain Previously worked areas do not contain

significant deposits of goldsignificant deposits of gold

Significant recharge may occur where Significant recharge may occur where source of gold is very near and is source of gold is very near and is depositing significant amounts of gold depositing significant amounts of gold into drainage on a regular basisinto drainage on a regular basis

Gold RechargeGold Recharge

Evidence is gold with pieces with Evidence is gold with pieces with high-character throughout high-character throughout unconsolidated gravelunconsolidated gravel

Mineral examiner should stop Mineral examiner should stop dredging periodically to check sluice dredging periodically to check sluice box to try to determine where gold is box to try to determine where gold is coming from in the gravelcoming from in the gravel

Sample Analysis for Each Sample Analysis for Each Sample Should IncludeSample Should Include

Total dredging timeTotal dredging time Actual work timeActual work time Volume of gravel processedVolume of gravel processed Production rate –hole volume/dredge Production rate –hole volume/dredge

timetime Gold recoveredGold recovered Gold production rate (mg Au/hr)Gold production rate (mg Au/hr) Grade (mg Au/cy)Grade (mg Au/cy)

Sample Summary for ClaimSample Summary for Claim

Sample No.Sample No. Dredging HoursDredging Hours VolumeVolume Gold Recovered (mg)Gold Recovered (mg) Gold Production Rate (mg/hr)Gold Production Rate (mg/hr) Grade (mg/cy)Grade (mg/cy)

Gold Production ValueGold Production Value

Sample No.Sample No. Recovery (mg)Recovery (mg) Time (hrs)Time (hrs) Recovery/Hour (mg/hr)Recovery/Hour (mg/hr) Au value/hour ($/hr)Au value/hour ($/hr)

Mining ScenarioMining Scenario

Either use operator’s or develop scenarioEither use operator’s or develop scenario Base on weekly cost estimateBase on weekly cost estimate 40 hrs work & 25 hrs dredging40 hrs work & 25 hrs dredging Weekly revenue based on 25 hrs dredgingWeekly revenue based on 25 hrs dredging Weekly labor based on 40 hrs work/personWeekly labor based on 40 hrs work/person Include operating & capital costsInclude operating & capital costs Mobilization & demobilizationMobilization & demobilization

Cost Analysis – Operating Cost Analysis – Operating CostsCosts

HOURLY COST BASED ON DREDGING HOURLY COST BASED ON DREDGING HOURS – (i.e. 25 hrs/week)HOURS – (i.e. 25 hrs/week)

Fuel-local ratesFuel-local rates Repair & maintenance for dredge (Cost Repair & maintenance for dredge (Cost

Reference Guide Bluebook)Reference Guide Bluebook) Use hourly cost for parts, supplies & Use hourly cost for parts, supplies &

lubrication for gasoline powered pumplubrication for gasoline powered pump

LABOR BASED ON 40 hrs/weekLABOR BASED ON 40 hrs/week

Cost Analysis – Capital CostsCost Analysis – Capital Costs

HOURLY COSTS BASED ON DREDGING HOURLY COSTS BASED ON DREDGING HOURS – (e.g. 25 hrs/week)HOURS – (e.g. 25 hrs/week)

DredgeDredge Wetsuits, hoses, airlines, regulators, Wetsuits, hoses, airlines, regulators,

weight belts, ropes, pans, screens, weight belts, ropes, pans, screens, buckets, shovels, tools, pry bars, winchesbuckets, shovels, tools, pry bars, winches

Only engine, pump & wetsuit wear out Only engine, pump & wetsuit wear out over timeover time

Engine & pump depreciate based on hours Engine & pump depreciate based on hours of useof use

Cost AnalysisCost Analysis

Claims with difficult access from roads, Claims with difficult access from roads, or along the river may require extra or along the river may require extra time for mobilization & demobilization time for mobilization & demobilization at beginning and end of seasonat beginning and end of season

Reclamation – disperse tailing & knock Reclamation – disperse tailing & knock down boulder piles, accounted for in down boulder piles, accounted for in non-dredging work timenon-dredging work time

Cleanup camp & ancillary facilitiesCleanup camp & ancillary facilities

Cost AnalysisCost Analysis

Must be very careful to distinguish Must be very careful to distinguish between dredging hours & actual between dredging hours & actual work hours in the report, & specify work hours in the report, & specify which type of hours are being which type of hours are being referred to in the reportreferred to in the report

Remainder of economic analysis is Remainder of economic analysis is similar to other placer examinationssimilar to other placer examinations