Add the operating costs for the mined raw ore:
1a- Mining Cost (Ore, Waste) $2.10 + Mining Cost (OB) $1.05 + Processing Cost $1.95 + General and Administration (G&A) $1.13 = 6.23 $/t raw unprocessed ore.
There is a difference between $/t mined, $/t milled, and $/t FeCon.
Of everything that is mined, some of it is waste and goes to the waste pile.
Of everything that is milled, some of it is waste tailings and goes to the tailings storage.
And then you have your iron ore concentrate.
1b- The mining costs are different for ore/waste and overburden. You don't add both costs up together.
2- The pit optimization may use more conservative assumptions than the economic assessment. This is so if the ore price falls, you won't have a pit that was optimized for a higher price and you lose even more money.
Hebei is not stupid. They would not have negotiated a price of 95% Platt if they could get Platt - $15. The Platt price is based off 62% Fe. Alderon ore is 65.5% which would fetch a premium of Platt + $5/%Fe if pricing gets really competitive. Using Platt for the product price assumption seems pretty reasonable and a little conservative.
The way the benchmark pricing works is that it is a price for iron ore of a certain quality. It will have limits for the levels of impurity in the product... Alderon's ore likely exceeds that.
What normally happens is that the price will be reduced for impurities (e.g. smelter deductions) and increased/decreased for iron content above/below the 62% level. The smelter deductions will be linked to the level of impurities. We don't know what the exact level of impurities will be (since there are uncertainties as to resource estimation and metallurgy). The level of impurities may vary from shipment to shipment (it varies within the ore deposit). So if Hebei is smart, they will link their price to the level of impurities in the ore. This will protect them.
Otherwise Alderon could buy extremely low-quality ore from somebody else and sell that to Hebei.
So basically, Hebei will be getting 95% of Platt + adjustment for iron content - quality penalties / smelter deductions for manganese (and sulfur).
I don't know if the quality penalties will be $15/ton.
You're right here is the corrected Pit Optimization Costs:
Let’s look at the system as a whole:
From Table 16.6, Applying Costs from 16.2:
Step 1 - Remove overburden:
46,766 Kt * 1000 t/Kt * 1.05 $/t = $49 million
Step 2 – Mining Ore and Waste Rock:
Kt Mined Ore + Kt Mined Rock= (335,128 + 711,853) * 1000 t/Kt * 2.10 $/t = $2.198 Billion to produce 335,128 Kt of Ore
Step 3 – Process the Ore:
335,128 Kt * 1000 t/Kt * (1.95+1.13) $/t = $1.032 Billion to produce:
335,128 Kt * 37% Weighted Recovery = 123,997 Kt of FeCon
So adding all this up we get:
$49M + $2198M + $1032M = $3279M to produce 123,997 Kt of FeCon so production OPEX is:
$3279M/(123997 Kt * 1000 t/Kt) = 26.44 $/t
This is equal to Table 21.2 Mining + Concentrator Cost (20.36+6.28) = 26.64 $/t (within rounding error)
