Transportation costs involve several components such as actual road, loading, unloading, storage costs at the rail head or the gold mine’s port, port and harbor dues, superintendence costs associated with rail and ship loading, documentation costs and costs of special containers. It is important to indicate that transportation costs are quite specific to each gold mining company. Also, international ocean freight rates are base on the worldwide balance of supply and demand for freight space and the rates tend to change with the time. For example, if one shipment of gold concentrate requires 6,000 wet metric tonnes and other 18,000 wet metric tonnes, the cost may be 25 to 30 dollars per wet metric tonne for the first case, and 30 to 30 dollars per wet metric tonne for the second case. Shipment costs by container are higher and under some circumstances, specific forecast for ocean freights must be performed by specialized bulk cargo ship brokers. Road and rail freight costs are taken from transportation companies.
Economic Evaluation of Gold Projects
For the economic evaluation of a gold mining project it is important to know the real value of the income obtained from the commercialization of gold concentrates or Dore bars. This consideration must be used during the different stages of the gold project. The feasibility study is the most important study and the information generated will be used to evaluate the economy of the project. In order to determine the income some factors must be analyzed. Some of them are gold process recovery, final product quality, gold price, commercial sales terms and the cost of introducing the product to the market.
Basically, the income obtained by the gold operation is the payment made buy the buyer less costs incurred and required for commercialization. Some of these costs are freight, insurance, and marketing. In this way the net income is the net smelter return less total costs. The net income is considered the actual values of the final gold product after all deduction are made. The net smelter return (NSR) is considered the payment received by gold mining company after the smelter, refiner or buyer has deducted all their cost. It is important to mention that the payment received from the buyer is influenced by the gross value of gold, silver, any platinum group metal present in the commercialization product, and impurities. In this way, the net smelter return for gold usually varies from 99.8% to 95%, depending on the gold concentration in the product. The percentages for the net smelter return can be considerable affected less once total costs are taken into account.
Essentially, total costs comprise transportation, insurance, superintendence, assaying and marketing aspects. The first one involves all freight needed to deliver the gold product to the buyer. The cost is due to road, rail, sea or air transportation and the main part of the costs. According the gold mine location, the cost and requirement of the gold product to the buyer varies with the commercialization terms used in the contract. It is possible to perform the transaction on a simple FOB (Free on Board) or CIF (Cost-Insurance-Freight) basis. In the first case the contract considers that the transport cost is on board the buyer’s vessel at the gold mine’s site. Loaded at seller’s port at seller’s cost on vessel supplied by buyer, which is responsible for insurance, sea freight and discharging costs at buyer’s port. In the second case, the seller or gold mining company is responsible for insurance, sea freight and for all costs up to the berthing of the ocean going vessel at the buyer’s port.