Mining Cost Indexes: Surface & Underground Mining &

Milling Operations
The MCS Canadian indexes are composite indexes representing the cost of developing and
operating a typical mining and milling operation in Canada. Separate indexes are listed for
surface mine capital costs, surface mine operating costs, underground mine capital costs,
underground mine operating costs, mill capital costs, and mill operating costs. Composite
proportions are determined from base model estimates with cost distributions published in
Mining Cost Service. The surface mine base model is a typical truck/hydraulic excavator
operation mining 10,000 short tons ore and 20,000 short tons waste per day. The underground
mine base model is a 10,000 short tons per day room and pillar operation using conventional
drilling and blasting, with shaft access and LHD and truck haulage. The mill base model is a
10,000 short ton per day single product flotation mill.
Cost indexes provide a means of adjusting outdated cost information for the effects of
inflation. They are based on statistical averages of costs for specific items and time periods.
Following are the Mining Cost Service composite indexes for surface and underground
mining and milling operations. Indexes for specific cost centers, e.g. labor, equipment,
transportation, are available by subscription to Mining Cost Service.
Note: Beginning with January 2001 data, Statistics Canada began publishing labor data based
on the North American Industry Classification (NAICS) rather than the Standard Industrial
Classification 1980 (SIC80). This resulted in some minor changes to all the MCS indexes for
Canada. The current and historical MCS indexes have been adjusted to reflect the new
classification system.
Notice about change in basis: As of January 2009, all CCG indexes for capital and operating
costs were re-stated to reflect a change in estimating methods by Statistics Canada for Survey
of Earnings, Payrolls, and Hours (SEPH) for construction and mining employees. CCG
indexes from January 2001 to present are affected and the new indexes are provided here.
Indexes prior to January 2001 remain unchanged.
Mining Cost Service (MCS) Indexes for Canada

Surface Mine Underground Mine Milling/Processing
Year
Capital
Cost Index
Operating
Cost Index
Capital
Cost Index
Operating
Cost Index
Capital
Cost Index
Operating
Cost Index
2000 107.8 110.8 107 109.5 107.9 107.6
2001 108.9 114.5 108 114.1 108.1 111.2
2002 109.9 113 109.7 114.3 110.1 113.2
2003 110.7 116.2 110 116.6 111.3 116.6
2004 114.3 124.7 112.6 124 116 123.7
2005 118.9 132.5 115.7 128 120.6 131.5
2006 121.2 135.1 117.3 128.3 122.3 131.9
2007 126.2 143.7 121.5 136.2 126.4 136.4
2008 135.1 157.9 128.4 145.7 135.8 147.4
2009 133.1 146.4 129.9 142.5 134.3 139.9
2010 134.3 149.3 130.4 144.3 135 144.4
Data revised on June 22, 2011.
Model Smelter Schedule - Lead Concentrates
Payments
Lead: Pay for 95% of the lead content at market value, with minimum deductions of 1.5 to
3.0 units per dry tonne.
Gold: Deduct 0.03 to 0.07 troy ounce per dry tonne and pay for 95% of the remaining gold at
market value.
Silver: Deduct 0.5 to 2.0 troy ounce per dry tonne and pay for 95% of the remaining silver at
market value.
Copper: Some smelters will pay for as much as 40% of contained copper while at some other
smelters is considered deleterious.

Deductions
Treatment Charge: Terms for clean, very low-silver material for 2012 settled at $200 to $210
per tonne (flat), of $200 per tonne at a basis $2,100 per tonne with variety of up and down
escalators and a silver RC of $0.40 to $0.60 per ounce. Terms for clean, very low-silver
material for 2013 are estimated at about $200 at a basis $2,000 per tonne with variety of up
and down escalators and a silver RC of $1.50 per ounce. In 2012, TCs for high silver content
(100 ounces per tonne) concentrates settled at about $300 per tonne, basis $2,100 with an
up escalator of 4% and a down escalator of 1%, and a silver refining charge of $1.50 per
ounce. Generally, high silver long-term contracts range from $210 to $300 per tonne, with
silver refining charges at $0.60 to $1.50 per ounce.
Complex Concentrates: Smelters are charging an additional $50 to $100 per tonne for low-
grade, high-silver, complex or bulk concentrates.
Refining Charges
(1)

$6.00 - $10.00 per ounce of payable gold
$0.60 - $1.50 per ounce of payable silver
(2)


Penalties
Deleterious Element Penalties: Lead concentrates containing excessive amounts of the
following elements may be penalized of rejected: arsenic, antimony, bismuth, nickel, copper,
alumina, tellurium, and mercury. Iron in excess of 10% is also considered deleterious. See
individual smelter descriptions for details.
Moisture: High moisture content may also be penalized due to material handling difficulties.

Notes
Lead refining charges: These are rarely assessed directly in today's market. They are usually
built into treatment charges. Additional charges may be assessed in the form of a metal-to-
market levy if the smelter is not located near the lead metal market.
Silver refining charges: These previously ranged from $0.30 to $0.40 per troy ounce of
payable silver. However, with the rise in the silver price, smelters have increased this charge
to $0.60 to $1.50 per troy ounce, depending on the smelter and quality of concentrate.
Recent spot contracts are charging up to $1.50 per troy ounce for high silver concentrates
and some Chinese smelters are demanding $3.00 to $4.00 per troy ounce for these
concentrates.