Dynamic Cost Curves

Dynamic Cost Curves

ACCESSIBLE AND COST EFFECTIVE ANALYSIS OF
COPPER, NICKEL, MOLY, ZINC AND LEAD MINE PRODUCTION COSTS

2012 CASH COSTS AND PRODUCTION DATA FOR 280 MINES
COSTS BY INDIVIDUAL MINE AND AGGREGATED BY COMPANY

AVAILABLE NOW FROM MINECOST.COM
&
CHR METALS LIMITED

The Dynamic Cost Curve model provides an easily accessible and affordable insight into the cost structure of the copper, nickel, molybdenum, zinc and lead mining industries. It can identify the lowest cost producers and most profitable mines and those with higher costs and likely to be vulnerable to a downturn in metal prices or other changes in economic conditions. Most importantly, the Dynamic Cost Curve model allows the analyst to explore the complex interface between mine costs, metal prices, treatment and refining charges and exchange rates, all of which have a direct bearing on the competitive cost position of individual mines.

Of course, to be of any real use at all in providing input for investment decisions, mine project appraisal, feasibility studies and the like, it is important that the base data in the cost model be up to date and accurate. Recognising this, the Dynamic Cost Curve model comes with 2012 actual data for all reporting mines and is based on 2012 input costs, prices, TCRCs and exchange rates. We also supply a 2013 model with estimated production data, based on price and exchange rate averages to June 2013. Subsequent updates add new data as it becomes available.

STANDARD FEATURES OF THE DYNAMIC COST CURVE MODEL
  • Single "live" spreadsheet containing all data and modelling inputs
  • Production data and detailed cash costs and curves for individual copper, zinc, lead, nickel and molybdenum mines
  • Production data and detailed cash costs and curves aggregated by company
  • Production data and detailed cash costs and curves aggregated by country
  • Ability to change all metal prices, exchange rates and treatment and refining charges
  • Ocean freight rates, diesel fuel prices and acid prices may be factored up or down
  • Display cost curves with and without royalties
  • Selectable cost curve options to display detailed cost breakdown or total cash costs
  • Draw cost curves showing mines, producer company and producer country
  • Complete control over what products are credited and which mines are displayed - get your project into the bottom quartile!
  • Copy cost curves into Powerpoint, company presentations and reports
  • Updates of production, costs and prices as they becomes available

QUICK DEMONSTRATION OF DYNAMIC COST CURVES

Dynamic Cost Curves give you complete control over all offsite cost inputs that drive the shape of the cost curve. You can also control the way the cost curve displays, and which mines are labelled on the cost curve. The complete dynamic cost curves model comes with data, charts and tables for copper, zinc, lead, nickel, molybdenum and silver.

This example is for a copper cost curve drawn for 2009 costs and prices (note that data has been changed to obscure actual mines), with labels for all mines producing above 200kt. The curve shows copper costs after 15% byproduct credits, ie non-copper products are credited as byproduct if they are worth less than 15% of net mine production values. Note how the value of the credits for each mine is shown by extending the bars below the zero cost line. This replicates the usual accounting treatment that credits are a deduction from total cash cost.

Dynamic Cost Curves

When 100% of byproduct credits are included, over one third of world copper production has a negative cost. Note how the chart scales to show this result.

Dynamic Cost Curves

The cost curve can also be displayed showing the main components of cash operating costs - mining, milling, TC/RC and shipping and royalties.

Dynamic Cost Curves

Alternatively, the cost curve can be displayed showing labor, fuel and power, reagents, other onsite costs and TC/RC and shipping.

Dynamic Cost Curves

The next curve shows the same cost curve for producer companies.

Dynamic Cost Curves

And the same for producer countries.

Dynamic Cost Curves

Now we increase gold and silver prices and assume an appreciation of a major producer country exchange rate. The effect can be seen on each mine prior to re-ranking the data.

Dynamic Cost Curves

And here is the same cost curve after re-ranking.

Dynamic Cost Curves

Next we see the effects of a 30% increase in Cu prices and a 25% increase in treatment charges - as well as the corresponding increase in refining charges through increased price participation.

Dynamic Cost Curves

And here is the same curve for producer companies.

Dynamic Cost Curves

To show the ability to control which labels display, we have set the controls to display the mines from one country only.

Dynamic Cost Curves

This is the same curve, this time showing only the mines owned by one company.

Dynamic Cost Curves

And you can generate a cost curve on a pro-rata basis before credits with all mines labelled. Looks a bit crowded, though!

Dynamic Cost Curves

Dynamic Cost Curves are a great tool for presentations. Assume you want to show a couple of mines on the cost curve drawn on your price and TC assumptions. Simply plug in your own price, TC/RC and exchange rate assumptions, use the names display switches to display only the names you want, and then copy the cost curve chart into Paintshop or Photoshop to add colours and copy the result into Powerpoint. Here is an example using 2004 costs:

Dynamic Cost Curves

The Dynamic Cost Curves model also generates neatly formatted tables ranking all mines and companies in the sample by cost, with the company ranking tables also identifying which mines are attributed to each company. All cost curve charts and all the tables may be printed and or copied into other programs.

The first table shows the mines ranked by cost. The co-product and by-product columns show which metals are co- or by-products in the cost curve. These change automatically according to the co-and by-product assumptions you select in the model.

Dynamic Cost Curves

The second table shows the company rankings, and the third table the country rankings, with attributed mines identified as well.

Registered minecost subscribers may download a free evaluation set of the copper dynamic cost curves model.

ORDER DYNAMIC COST CURVES

newSEE DYNAMIC COST CURVES FOR IRON ORE & MANGANESE

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