The capital cost of a gold project or other metal comprises three items: fixed capital cost, working capital cost and cost of land and other non-depreciable costs. Considering a gold project, this maybe a new mine, a modification of the current plant or an expansion of the plant. The fixed capital comprises major process equipment such as crushers, ball mills, tanks, pumps, filters, etc; installation of the major process equipment, civil work, structural framework, process piping, electrics, instrumentation, auxiliary facilities such as substations, transformers or fire control equipment, outside lines such as piping external to buildings, supports or posts for overhead piping; land and site improvements, buildings and structures, engineering and construction and contractors fees.
Working capital comprises the inventory of raw materials and supplies, one month supply at purchased value; inventory of products and in-process material, one month´s production valued at manufacturing costs, accounts receivable or extended one month`s production at sales value and available cash, one month´s manufacturing expenses.
Plant costs vary for several reasons apart from differences in capacity. But considering only capacity, a statically valid relationship between total plant cost and design capacity is the exponential formula as follow: cost of plant 2 = Cost of plant 1*(capacity of plant 2/capacity of plant 1)n. If the cost and capacity of an existing plant are known and it is considered to be sufficiently similar in general type to be used as a base for comparison, the cost of a new plant of different capacity may be roughly estimated by use of this relationship, with selection of an appropriate exponent “n”. The design of different processing plants indicates an average best fit of data with an appropriate exponent close to 0.70.
Other analysis tend to arrive at higher or lower values, depending upon the data available and also depending whether they derive the comparison by theoretical or statistical approaches. Since such an estimate method is suitable only for the purposes of estimation, a possible error of as much as 5% would be acceptable, small differences in the exponent used become of little significance. For example, if the major difference in plant capacity is due to the use of more or fewer multiple units rather than larger or smaller individual units, use of a higher exponent is logical. But in the early stages of considering a plant, such detail is rarely available. When plant cost data are plotted against capacity on a logarithmic chart, most plants built in the past fall within a range defined by two straight lines drawn with a slope of 0.70, and such plot represents the previous formula with an exponent of 0.70. Although there is a wide variation between plant costs, there is a little definite trend. In the absence of specific information indicating otherwise, it has been suggested that the average gold plant would probably be in the medium of the high and low ranges.
The location of the plant has a significant effect on the plant cost, particularly as a function of the proximity to services and to an established urban zone. The expense of construction many miles of roads, water and power lines adds to the total cost, and in some cases it has necessary to provide a power plant, comprehensive maintenance facilities, water wells, etc. In remote places, employee housing, cafeterias or even a complete townsite have been required. Construction is more expensive in an isolated areas and increases total costs. On the other hand, the cost of tailing disposal and contamination control may be higher in established population area. Climatic conditions affect plant cost through different requirements for building type and structure, insulation, heating and protection of equipment and piping against freezing.