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Capital Cost Estimate: AREVA Midwest Ore Body Project

Client: AREVA Resources Canada Inc.

The uranium ore body at Midwest was discovered in 1978 by Canada Wide Mines Limited. In 1993, Minatco Ltd., the mining operator at the time became a subsidiary of COGEMA, now AREVA Resources.

In 2006 AREVA Resources approached ENGCOMP to assist with the preparation of the feasibility cost estimate for the project. ENGCOMP's scope included estimation of costs for site infrastructure development, pit dewatering and treatment, and process modifications to the JEB Mill plant.

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In 2007, AREVA Resources awarded detailed engineering for the site infrastructure to AECOM. AECOM retained ENGCOMP to assist with the preparation of the capital cost estimate. The estimate was performed at the completion of basic engineering, i.e. when engineering was approximately 30% complete.

In 2009, AREVA again approached ENGCOMP for cost engineering assistance. This time, ENGCOMP prepared the final pre-construction / capital appropriation estimate based on issued for construction drawings and specifications produced by AECOM.

The final deliverable included the total direct and indirect cost to procure, construct and manage the construction of the infrastructure scope of the project, and a contingency analysis to determine the appropriate contingency to carry in the estimate.

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Background

  1. The Midwest Ore Body was discovered in 1978 and is located along the eastern edge of the Athabasca Sandstone Basin approximately 700 kilometers north of Saskatoon.
  2. Prior to AREVA owning the property, the concept for developing the ore body consisted of a underground mine, mill and tailings disposal facility.
  3. In 2005 AREVA submitted a proposal to use open pit mining to develop the ore body. Given the appropriate market conditions, the open pit mine is an economic and environmentally viable approach, has the potential to recover more uranium, and provides increased benefits to the northern work force.
  4. As of 2010, the regulatory approval process, including environmental assessments, is ongoing.

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The Project

  1. Since 2006, three phases of capital cost estimates have been completed including, feasibility study, budgetary and capital appropriation level estimates.
  2. Generally capital appropriation estimates are not prepared from issued for construction documents. However, given the uncertain economic environment AREVA desired the estimate to be as accurate as possible.
  3. ENGCOMP collaborated with Frontline Industrial Solutions, Stantec Mining and Clunie Consulting Engineers to produce the estimate.
  4. In addition to estimating, ENGCOMP also provided Contingency and Risk Analysis services.

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Capital Cost

  1. The Midwest estimate is considered to be a Class II estimate with an accuracy of +/- 15%.
  2. The final pre-construction / capital appropriation cost with contingency is estimated at over $350 million.

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Schedule

  1. The feasibility capital cost estimate was started in 2006.
  2. The estimate was updated to a budget capital cost estimate in 2007.
  3. ENGCOMP took on the capital appropriation estimate in early 2009.
  4. As of the completion of the final estimate in November, 2009, the construction of the Midwest project is on hold, pending regulatory approval and improvement in market conditions.

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Successes

  1. WinEst Pro Plus®, a database estimating program, enabled ENGCOMP to sort the estimate by procurement package, construction work package and work breakdown. This feature will result in a smooth estimate–to-budget conversion process when the project proceeds. For more information about WinEst visit www.winest.com.

 

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