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18 April 2014 (revision 1.1, 29 April) wc-zott-mdoi
Ms. Celene Hawkins
Associate General Council
Utc Mountain Ute Tribe
PO Box 128
Towaoc, CO 81334
Re: White Mesa Uranium Mill, Updated Closure Cost Analysis([or Reclamation Plan Rev. 3.2
Cost Estimate Rev. 4 14
Dear Celene,
This letter summarizes my recent review of the surety cost estimate (Rev 4.14) submitted to the Utah
DEQ by Energy Fuels (EFRI) for the White Mesa Mill (WMM). This revised letter contains the
following changes from the original letter issued on 18 April:
o Formatting;
o Correction to a math error in the labor adjustment;
o Discussion of 25% contingency; and,
o Revised the benchmark analysis to additionally consider the costs without Title I sites.
1. Review of the EFRI closure plan
The focus herein is on the capping systems and how they compare to the Monticello cap. Monticello is
an important reference project because it is nearby and in a similar climate, geologic and social-
ecggom-ie-settings. Monticello was also closed by a government agency and thus presents the methods
(and costsj^jltat would most likely be applied to White Mesa in the event of an owner walk-away. Table
'“co'mpares the components of the two projects’ tailings cell caps.
Cap Component Monticello
Thickness
WhUe-Mesa TTOrtcness^,
( Rec Plan 4
Vegetation a few inches '''----nanT"’
Erosion control 0.67 ft 0.25 ft
Water storage/frost protection ■ 4.83 ft 2.0 ft
Biotic intrusion (gravel)1.00 none
Geotextile -100 mil none
Capillary break (sand)1.17 ft none
HOPE geomembrane liner 60 mil none
Radon barrier (compacted clay) 2.00 ft 1.0 ft
Radom Fill (foundation)none 3.0 ft
TOTAL 9.67 ft 6.0 ft
The White Mesa cap omits several important components used at Monticello, listed and discussed
below. All of these missing components should be included in the White Mesa caps
o Vegetative cover: Vegetation is the only truly sustainable cover, but rather than provide any
vegetation White Mesa has proposed a 3-inch think layer of gravel. Further and equally
important, vegetation reduces the net infiltration of rainwater, and thereby the net discharge of
leachate, through two important mechanisms: hold-up of water in the root zone, and evapo-
P.O. Box 4049, Incline Village, Nevada 89450 USA +1.530.575.6555
Review of Containment and Closure Issues, Rev. 1.1
EFR1 White Mesa Mill Relicensing Application, Revision 4, Cost Est. 4.14, April 2014
transpiration (evaporation and loss through the leaves of the vegetation). Without a .
layer the leachate loss into the.environment will increase:----
Biotic intrusion layer: this is both standard practice on closure caps and needed to prevent <■ , deep burrowing animals from penetrating the cap; )A-tcX
S^Geotextilc & capillary break, for a +200 year closure design, as required by la<v'and'industry ^
practice, a water storage layer must be isolated from the balance oT the system with a capillary
break. Without said break, the water stored in the upper layer will be drawn into the radon
barriers through the capillary action of the soils. Clayey soils can develop capillary suctions
approaching I atmosphere and 15-foot draws are commonly seen in the field; and.
As-Built Saturated Hydraulic Conductivity. (cm/s)
Figure 1: Long-term cap performance v. as-built permeability (Benson, 2007)
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P.O. Box 4049, Incline Village, Nevada 89450 USA +1.530.575.6555
Review of Containment and Closure Issues, Rev 1,1
EFRI White Mesa Mill Relicensing Application, Revision 4, Cost Est. 4.14, April 2014
2. Review of the White Mesa closure cost estimate
2.1 A review of cost estimating methods
Cost estimating can be divided into three broad categories, each commonly used in the industry and
each having an important role. These are:
o Benchmarking: costs from other sites are adapted to the target site to give guidance on total
costs. The more sites studied and the more directly applicable those sites, the more accurate a
benchmarking estimate can be. With a modest level of effort a cost estimate of +/-50%
accuracy can be developed, and the author has had success with developing better than +/-15%
estimates from robust benchmarking efforts (IPA, 2004). The benchmarked costs for uranium
null closures referenced herein represent over two-thirds of the total world uranium production
capacity;
o Contractor, EPCM or CM bids: this is a process where the detailed design is put out to bids
where firm pricing is obtained for either the entire package or logical work areas These
estimates are generally very accurate (+/-I0%) to the extent they include all required closure
actions. Bid-supported estimates are generally only applicable when a detailed design has
been completed and the project is within a year or two of construction; and,
o Built-up estimates: these cost estimates are developed by “building up” the costs from line-
items, following the engineered design to the extent it is complete. This is the most common
method and this is what EFRI has submitted as its closure cost estimate. A built-up estimate
can be done at a wide-range of accuracies, typically ranging from +/-10% for a very detailed
design supported by contractor bids for the major cost items, to +/-50% for a conceptual
design or a more advanced design for a distant future installation (Lazenby, 2010). These
accuracies apply only to the considered closure actions; for example, if groundwater
remediation is not considered in the design the accuracy would be before adding possible
groundwater remediation costs
Most built-up costs will have four basic inputs:
o Direct costs (labor, equipment and materials to perform the construction including
mobilization and demobilization);
o Indirect costs (project and company overhead, insurance, bonds, profit, etc) which commonly
run 15% to 35% of direct costs for non public works construction, and higher for public works;
Owner’s or Agency’s costs (the cost of the owner’s or agency’s team to administer the project,
including bidding and awarding the construction contracts, hiring a project management or
construction management team, performing design changes during construction, and so forth)
Owner’s-or A^pnpy’c msts g^rierallv run 10% to 25% of the direct costs; and p.
Contingency, which is reflective of the level of design and the risk of unknowns. The mosl
common contingency used in the mining industry is 1 5 to 20% of the direct costs (and, as
discussed below, this is almost always inadequate). Larger contingencies arc appropriate when
. either the design is conceptual (as in the case of most, including the Whit Mesa, closure plans)
V^r Ihe site is subject to significant uncertainties (such as the extent of contamination in need of
jf1 remediation). Contingencies are sometimes applied at different rates by either line item or
work area subtotal. For example, the contingency for dismantling the mill could be lower than
t ^ the contingency for remediating groundwater contamination.
Most cost estimates do not recognize inflation or cost escalation and as such should be cited in terms of
/^thc year the estimate was based (e.g., 2014 dollars). The estimate must then be escalated to the time. j-klllU ycdl me CMliiUUC was uaseu uunais;. ine csumaie musi men uw eaeataiem iw me ume
•Vperiod in which the work will be completed, using forward-looking inflation factors appropriate for the
region. Common escalation factors are 3.0 to 5.0% per year (Zuzulokc, 2004). The failure to recognize
inflation in cost estimates looking out 10 to 15 years in the future creates a strong built-in bias to
underestimate costs; all other factors being correct, the actual cost will be 151% to 198% of the
estimate. This is commonly included in the bonded amount because the cost will escalate regardless ofmate, in
&A*
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P.O. Box 4049, Incline Village, Nevada 89450 USA +1.530.575.6555
the operator’s ability to obtain larger bonds in the future. That is, the liability for the escalated future
cost of closure is created in the year the impacts are created and the bond should reflect that.
Even detailed built-up cost estimates, supported by detailed engineering and claimed to contain high
levels of accuracy, are generally too low. A study issued by the well-respected engineering and project
management firm Pincock, Allan and Holt in 2000 made the following disturbing observations (PAH,
2000).
o "It is rare, not the norm, for the actual project capital cost to be within 10 percent of the
feasibility study capital estimate [including contingency];”
o "Within the 21 projects, only three [14%] came in under the feasibilih’ study cost estimate,"
o "Site earthworks are often underestimated" [closure costs are principally earthworks];
o After escalating the estimates for the time between the estimate and actual construction at
3.5% annually, 52% of projects considered came in at 118% of the estimated cost (and those
estimates included contingencies), 14% came in at 137%. The projects in North America
averaged 124% of estimate. The cost overruns would be much larger if original cost estimates
were not escalated;
o Smaller projects (i.c., under about $200 million) performed by smaller mining companies are
most likely to have higher cost over-runs [i.e., higher than 124%]; and,
o Other important areas that are either omitted or underestimated include owner's (or agency’s)
costs, working capital, freight^envirOmHentaTjjduties and taxes.
In another study of cost overruns, those researchers analyzed 63 mining projects and found that the
mean actual cost was 125% of the estimate (including contingency) and that the maximum cost was
214% of the estimate (including contingency). Nearly 70% (44) of the 63 projects underestimated the
cost (Bertisen, 2007).
Several other studies, summarized in a mining industry blog (Caldwell, 2007), reached two important
conclusions;
o The average actual closure cost in Australian mining (not uranium specific) is 6.8 times the
average estimate; and
o Total US mining closure liability is up to $12 billion more than the bonded total.
It’s one thing for a mining company to underestimate its liabilities if it has the resources to cover the
higher costs; such liability is the cost of doing business. However, transferring this risk to the public is
generally considered bad public policy and clearly not the intent of state and federal closure regulations
Thus, when a mining estimate is prepared for public purposes a much more robust estimating method is
needed to avoid transferring liabilities to the public sector. Such robustness should include:
o Higher unit rates to recognize the inherently more expensive delivery method;
o Full recognition of indirect and agency costs; and
o Significantly larger contingencies than traditionally used in mining.
2.2 Cost benchmarking
In 2010 the author completed a broad mining cost benchmarking study focusing on liner and capping
systems. The liner costs were determined for 37 phases of recent projects either constructed or in
advanced stages of design with detailed engineers’ cost estimates. The closure cost was developed as a
“typical” for tailings and mine waste in semi-arid sites, using data from a dozen sites and several
parallel studies. These systems were nominally F.O m thick, from base of bottom-most component to
top of the drainage gravel and protective layer (for the liner systems) or top of the vegetative layer (for
the caps). Factoring these costs for the requirements of UMT caps and escalating the costs to 2014,
produces $410,000/ac or $102/m2 (Smith 2010, Smith & Athanassopoulos 2013).
Review of Containment and Closure Issues, Rev. 1.1
EFRI White Mesa Mill Relicensing Application, Revision 4, Cost Est. 4.14, April 2014
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P.O. Box 4049, Incline Village, Nevada 89450 USA +1.530.575.6555
Two authoritative sources for mine closure costs (non UMT) are AFCEE (mid 1990s) and Dwyer
(1998). In a broad survey of industry practices they found the following range of capping costs for
tailings and waste dumps (but not considering the more robust requirements of uranium mill tailings).
o AFCEE: $36 to $97/m2 or $145,828 to $392,926/ac (ET and capillary barriers, plus synthetic
liners at the upper end, mid-1990s dollars);
o Dwyer: $72 to $96/m2 or $291,657 to $388,876/ac (ET and capillary barriers only, 1998
dollars); and,
o Averaging those two sources and escalating the costs to 2014 produces $472,000/ac or
$1 18/m2. This compares well to the Smith and Smith & Athanassopoulos studies (S102/m2).
A German study of the 14 major uranium-producing countries and the associated closure costs was
completed over a decade ago. That study considered mines producing a total of 63% of the world's
uranium and as such should be considered statistically relevant. Part of the findings of that study
include: "The accumulated and estimated costs for the decommissioning and rehabilitation of the
uranium-producing plants referred to in this study amount to about US $3.7 billion [cost basis: 1993]
The resulting specific rehabilitation costs are US $1 25 per lb of U308 and US $2 20 per tonne of
tailings. Omitting plants which produce/produced uranium as by-product of gold and copper
production, the specific cost per tonne of milling doubles to nearly US $4 00" (Gennany, 2002).
Escalating that to 2014 dollars, the average closure cost is $7.44 per metric tonne of tailings. For an
average depth of tailings producing 10 to 15 tonnes per square meter (typical values for the industry),
that equates to $75 to $112/m2 or a mid-range value of $93/m2. This compares well with the studies by
Smith, Dwyer and AFCEE ($ 102 to $ 118/m2).
Review of Containment and Closure Issues, Rev, 1.1
EFRI White Mesa Mill Relicensing Application, Revision 4, Cost Est. 4.14, April 2014
Table 2: Uranium Mill Closures in the USA (U S. DOE, 1995 & Robinson, 2004)
Facility Permitted Site 2014 Dollars
(Title 1 & 11 Sites) Area (ac)
Total Cost, $S/acre
Sites with Costs >$100M
Grand Junction, Co 56 1,072,000,000 19,000,000
Moab, Ut 439 810,000,000 1,800,000
Monticello, Ut 380 585,000,000 1,600,000
Old & New Rifle, Co 55 251,000,000 4,500,000
Salt Lake, Ut 128 199,000,000 1,600,000
Naturita, Co 63 182,000,000 2,900,000
Durango, Co 120 146,000,000 1,200,000
Maybell, Co 316 137,000,000 440,000
Gunnison, Co 90 125,000,000 1,300,000
Falls City, Tx 593 122,000,000 200,000
Mexican Hat, Ut 235 118,000,000 500,000
Ave of Sites >$100M 225 341,600,000 1,510,000
Average of All 43 Sites 180 120,300,000 670,000
Average Title 11 Sites Only 174 31,200,000 179,000
During the heyday of US uranium mining, there were over 50 operating conventional mills. All but one
\ th/^cp ic 'uith varymp degrees of attention to closure. The US DOE has published reportsVr'fnriF, iqqs ifc Robinson. 20041-0^43 of those sites, including both Title I and II sites (10 C.F.R. Part
40), detailing the closure costs, surety levels and other issues. Most of the closure liability comes from
securing the tailings storage facilities and addressing control of radon emissions and contamination to
groundwater, surface water, and land (principally dust). In some cases, tailings have been completely-^
relncpted. such as at Monticello, Utah. In others, the tailings were secured on site. About a third of
these 43 sites are still the subject of on-going active controls and, to some extent, dispute about whether
the sites are secured (Smith 2010, Smith & Athanassopoulos 2013). Table 2 summarizes the costs at
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P.O. Box 4049, Incline Village, Nevada 89450 USA +1.530.575.6555
those 43 US sites Key lessons from these studies are average closure costs per permitted acre of
$ 179,000 for Title II sites and $670,000 for all US UMT sites (in 2014 dollars).
To summarize, the references reviewed considered a total of at least 110 sites and about 80% of global
uranium production. These are summarized in Tables 3a and 3b. One conclusion that must be drawn is
that a closure cost estimate significantly lower than $356,000 per acre of tailings must be viewed with
suspicion. EFRTs latest estimate is $93,098 per acre of tailings, which is less than 15% of the average
of all US UMT closures and 6% of the cost for Monticello (Table 2).
Review of Containment and Closure Issues, Rev. 1.1
EFRI White Mesa Mill Relicensing Application, Revision 4, Cost Est. 4.14, April 2014
Tabic 3a: Benchmarking data on closure costs (including Title 1 & II sites, 2014 dollars)
Source Number of Sites
Considered
Closure &
Remediation
Costs, $/ac
Comments
US DOE 1995, Title
I & II Sites
43 sites $670,000 Per “permitted acre”, 80% of all US
UMT sites
Germany, 2002 14 countries $380,000 Sites total 63% of world uranium
production, all UMT sites
AFCEE & Dwyer
mid 1990s & 1998
>10 sites $472,000 Non UMT sites
Smith 2010, 2013,
factored
40 sites $410,000 Non UMT sites, factored to 3.0m
thick capping system
Average All Studies >110 sites $511,000 Representing 80% of global
uranium production
Table 3b: Benchmarked data on closure costs (excluding Title 1 sites, 2014 dollars)
Source Number of Sites
Considered
Closure &
Remediation
Costs, $/ac
Comments
US DOE 1995, Title
11 Sites Only
21 sites $179,000 Per “permitted acre”, excluding
Title 1 sites
Germany, 2002 14 countries $380,000 Sites total 63% of world uranium
production, all UMT sites
AFCEE & Dwyer
mid 1990s & 1998
>10 sites $472,000 Non UMT sites
Smith 2010,2013,
factored
40 sites $410,000 Non UMT sites, factored to 3.0m
thick capping system
Average All Studies >88 sites $356,000
2.3 Built-up estimates for closure bonding
The regulatory purpose of a closure cost estimate is to ensure that sufficient funds exist to properly
close and secure the site in the event that the owner defaults. In an industry-supported initiative to
standardize closure guarantees, a model agreement has been prepared and includes this language: “(a)
The mine closure guarantee shall be in an amount calculated to be necessary to implement the Closure
Plan should the Company fail to implement the Closure Plan ...f'(MMDA, 2011). Given this; the
method of preparing the cost estimate must assume thatt^LC--proje&t—wi 11 ,hg under government
management, for which government-contracting rules apjrty^TTiis means that: Owr" ACm7
X,The cost efficiencies available to the mining company cannot be recognized;
An engineering, procurement and construction management (EPCM) firm with governmental
experience and a high bonding capacity will be used;
o Prevailing wage (Davis-Bacon Act) rules wilWapply;
. ° a A** work w'" t>e contracted to public-works qualified construction companies with applicable
\\ilT ,„A’Vo’overhead and other indirect cost factors;
P.O. Box 4049, Incline Village, Nevada 89450 USA +1.530.575.6555
Review of Containment and Closure Issues, Rev, 1.1
EFRI White Mesa Mill Relicensing Application, Revision 4, Cost Est. 4.14, April 2014
o The cost estimate must have reasonable consideration for unforeseeable .circumstances.
including unexpected contannnaiion: ■—
o Agency required insurance, bonding, health and safety, independent inspection, and other rules
will apply; and,
o Agency oversight costs must be recognized and reasonable. l/l&zA ■
2.4 White Mesa mill reclamation cost estimate. Rev. 4.14
The White Mesa estimate fails to meet the criteria set forth in the preceding section, prevailing industry ■
standards, and legal requirements onjijvanety of grounds, as summarized belmw^ tV0
Equivalent earthworks umyc^st: The Rev. 4.14 estimate as prp^uded by DEQ includes no back up
information; no earthworks quantities, no equipment cycle times, etc. This makes it impossible to
review or verify the accuracy of the ERFI estimate. Using the Rev. 5 estimate, which had supporting
detail, the direct cost for earthmoving was equivalent to $3.39 per cubic yard moved. Prorating that for
the increased total cost of the latest White Mesa estimate (Rev. 4.14), the cost would be $4.03/cu.yd.
Anyone familiar with public works construction will recognize this as unrealistically low. This is also
below the average costs for private works construction on mine sites. The author is the peer reviewer
for a major tailings dam in Peru and the lowest unit rate (direct costs only) on that job, in low-cost Peru,
was US $5.00 per cubic yard, in 201 I dollars and for mass grading of a multi-million cubic yard fill and
thus getting considerable cost advantage due to economies of scale. In 2014 dollars this project would
cost $5.46/cu.yd, or 35% more than the White Mesa estimate. White Mesa is small, complex, and with
significant regulatory oversight, all of which increase unit costs. A more likely real cost would be at
least $ 10.00/cu.yd.
Labor hourly rates: White Mesa apparently obtained 3 quotes for labor (those were not provided and x
thus not reviewed). However, according-to federal law, the minimum wage and fringe benefits packages^
arc set based on “prevailing wage" determinations. These come irTthe form of regional and protect- T“prevailing wage" determinations. These come irTthe form of regional and proiect
specific “Wage Decisions.’’ There are two Wage Decisions for the San Juan County, issued in 2011 and
2014 for specific labor categories. The labor rates used by White Mesa are much lower than these
Wage Determinations. Further, White Mesa failed to include the employer’s share of the taxes and
insurance, as required hv law. These rates depend in part on the total compensation of the employee-, during the calendar year, and a commonly used typical value is 10% of the base wage rate for F1CA and ^
unemployment insurance, and 8% for workers compensation insurance. A sampling of rates used in the
White Mesa closure cost estimate (Rev. 4.14), along with the applicable regulatory rates, are presented
in Table 4. The White Mesa rates average 44.5% of the all-in Wage Determinations. However, direct
labor cost is what a contractor uses to estimate his expenses, but the bid price includes direct costs,
utilization rate (that percentage of an employee’s time that is actually productive), administration and
overhead. 1 spoke with two contractors as part of this review and both advised me that they use 2 times
the base wage rate to estimate the “all in” labor costs, include fringe, taxes and overhead That adds
another $9.36/hr to the labor costs, decreasing the White Mesa labor rate to just 36.5% of what a
contractor would quote. Using Cell 3 as a proxy for the balance of the project, labor is 19.1% of the
total costs.
There is another important error in the labor estimate, the lack of a number of categories of workers that ~
will be required to execute the project. Supervisor, foremen, engineer, laborers (provided in some but
not all areas of work), assistants and similar personnel are missing from the estimate but required to
compete the work. At a minimum, there would be one supervisor (other than the “Manager” included
in the estimate) and two foreman, at a total loaded cost of about $26,500 per month. Again using the
Cell 3 details as a proxy for the entire cost estimate, this additional labor adds the following: 6.15
months of construction x $26,500 = $162,975, or 7.9% to the total cost of Cell 3. That percentage is
consistent with what the author has seen on other projects of similar complexity, which tend to range
from 5 to 15%.
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Review of Containment and Closure Issues, Rev. 1.1
EFRI White Mesa Mill Relicensing Application, Revision 4, Cost Est. 4.14, April 2014
Table 4: Labor rates from Rev 4.14 and corrected for prevailing wage & taxes
Labor Category
White Mesa
Rate
(total, $/hr)
Prevailing Wage Rate
direct + fringe
Base
Wage
(S/hr)
Fringe
Benefits
($/hr)
FICA,
Unemployment,
Workers’ Comp
($/hr)
Total
($/hr)
Escalated
since last
labor ruling
(note 3)
Laborer (notes 1,4)$12.51 $17.61 $4.94 $3.17 $25.72 $26.65
Mechanic (note 1)$20.13 $35.10 $12.49 $6.32 $53.91 $55.85
Equipment operator
(note 2)
$21.51 to
$27.26
$25.37 $15.65 $4.57 $45.59 $45.59
Notes:
1. Prevailing wage according to General Decision Number: UT100073 09/30/2011 UT73 for San
Juan County, Utah, adopted 9/30/2011.
2. Prevailing wage according to UT140043 adopted 01/03/2014 for San Juan County.
3. Laborer & Mechanic rates have not been reviewed since the 9/30/2011 ruling; a new ruling
would be issued before any public works takes place, and it is likely the rates would increase
by the same amount as Equipment Operator, or 3.6%.
4. There are no Laborers in the Rev. 4.14 cost estimate, but this is unrealistic. Thus, the rate for
this category has been taken from the Rev. 5.0 estimate.______________________________
Equipment hourly rates: No details for the Rev. 4.14 were provided, and thus this section discusses the
Rev 5 cost estimate. A local leasing company provided equipment rates. The rates include a nominal
50% discount for hours after 40 per week, and the assumption has been that a 50-hour workweek is
average, producing an average rate less than the straight rental rate. However, the corresponding labor
rates do not reflect any overtime multiplier as required by prevailing wage rules. This means that either
(i) the equipment rates are too low or (li) the labor rates need to be adjusted for overtime. Public works
projects tend to limit overtime because of the high hourly rate penalty and thus the safe assumption is
no overtime. This increases equipment rates by 11%. The price used in the equipment cost
calculations is $2,332 per gallon, representing the 12-month “off-road use” cost for 2010. The
commercial pnee in Sept. 2011 for off-road use was $2.97/gallon. Thus, the rate used is about
$0.65/gal lower than the current market price, or 27.9%. Based on the built-up equipment unit rates,
fuel is 10.6% of the total hourly rate and thus the hourly rates should be increased by 27.9% x 10.6% =
3.0%. Combining the equipment overtime and fuel adjustments, the equipment hourly rates should be
increased by 11% + 3% = 14%. Using the Cell 3 cost details as representative of the entire project as
an approximation, equipment costs are 78.8% of the total closure costs, and thus they should be
increased by 11.0%. The Rev. 4 14 equipment costs also exclude any provisions for maintenance parts.
The estimate uses rental rates and those generally include normal wear and tear, but exclude routine
maintenance while on the job (oil, lube, filters, etc) or damage beyond normal wear and tear (tires, wear
steel, glass). Taking typical allowances for light construction equipment, trucks would cost $3.22/hr for
oil, lube, tires and misc wear parts while track equipment would be $5.67
(www.fao.org/docrcp/t0579c/t0579c05.htm). Taking the average and applying it to the equipment rate
used by White Mesa, the hourly equipment cost increases by 3.7%. Thus, the combined uplifted
needed for the equipment rates is 11.0% + 3.7% = 14.7%.
Quantities (labor and equipment hours): No details on quantities were provided for Rev. 4.14, and thus
this section referees to Rev. 5. The benchmarked costs arc vastly higher than the costs produced from
Energy Fuel’s quantity estimates, suggesting the quantities are unrealistically low. The quantity
estimates were prepared by EFRI, by neither an independent party nor a registered engineer. The basis
for the quantity estimates is provided in the hand-written notes following the cost tables, these suggest a
traditional mining view on economies of scale, which are not available to a public works project.
Without having a full peer review of the quantity estimates it is not possible to estimate an adjustment.
Specialized Professional Services: The cost estimate includes three highly specialized labor categories:^
Survey crew, environmental sample crew, and quality control contractor. The hourly rates used for (
these arc: $14.46, $14.46 and $62.00 per hour. These arc all far below industry norms. ^
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P.O. Box 4049, Incline Village, Nevada 89450 USA +1.530.575.6555
Review of Containment and Closure Issues, Rev. 1.1
EFRI White Mesa Mill Relicensing Application, Revision 4, Cost Est. 4.14, April 2014
Survey crews include the licensed surveyor and his or her support team (“chainman,” “rod man,” and so
forth). The most common way to price surveying is an all-in hourly rate; this includes the 2-person
^crew plus equipment and software. 1 have requested informal quotes from two Utah-based survey firms
for providing construction survey control, and their rates average $125 for a 2-person crew with
equipment and truck (excluding travel to and from the site, for which they charge labor and truck
mileage). This rate is also identical to that cited by the USFS Northern Region for a two-person Field
crew (USFS, 2011). This is 865% of the rate used in the cost estimate by EFRI. This adds about
$32,895 to the total costs.
Environmental sample crew. This is most likely I person with the required equipment (sampling, health
and safety). I obtained an estimate from a Colorado-based firm that specializes in both environmental
and construction quality control testing. Their environmental techs charge $95.00 per hour, plus $5.00
for equipment and $320/week for a truck (or $8.00 per hour on a 40-hr week). That truck can be shared
between this position and the quality control position and thus is included herein with the QC
technician only. Thus, the “all in” rate for the environmental sampling technician is $ 100.00/hr, or
692% of the rate used by EFRI. EFRI estimated 6,083 hours for this labor category, which seems high.
I reduced this by 50% and adjusted the rate to the prevailing commercial rate. Thus, the total cost
should be adjusted from $87,960 to $304,150, adding $216,190 to the total costs.
Quality control. The same firm gave me a price for a QC technician, including field testing equipment.
That rate is $85.00 per hour for a “Technician II,” their mid-priced technician. In addition, they charge
$5.00 per hour for the field equipment and $320/week (or $8.00/hr for a 40-hour week) for a vehicle.
Thus, the total for the technician and the field package is $98.00/hr, or 158% of the rate used by EFRI.
Further, any geotechnical firm is going to require oversight of the field technical by a registered
engineer, and the rates for that position range from $150.00 to $210.00 per hours. No time for this
position has been included in the estimate. There is also nothing in the budget for geotechnical
laboratory testing to support the quality control program, but testing would be required (Proctor
compaction curves, soil classification tests, permeability for the clay, etc).
Table 5: Summary of Rates for Survey, Environmental and Quality Control
hem Description Rate Used by EFRI,
$/hr
Industry Rate, $/hr
(including equipment)
Difference, %
Survey Crew $14.46 $125.00 764%
Environmental Sampler $14.46 $100.00 592%
Quality Control $62.00 $98.00 58%
Professional Engineer
(oversight & review)
Not included $150 to $210 na
Management & Support. At the end of the cost estimate EFRI has included a category for
“Management/Support.” The rates range from $8.96/hr for security to $64.81/hr for health physics. rhlii
salary loading .or employer’s share of taxes have been included and thus these rates are understated A
similar approach as used for the prevailing wage analysis would be appropriate here, and would
produce a similar adjustment, increasing the total labor costs by $996,93 1, or 4.7% of the total cost.
Cell dewatering costs: A unit rate of $0.48/hour ($11.52/day) has been used with no basis. Given the
electrical power rates in Utah, this equates to the electrical cost for one 4 hp motor, which might be a
reasonable total power demand but excludes labor, supervision, reporting, purchase or rental of the
pumps and motors, and costs for installation and maintenance. The same quantity of hours is used for
each cell, though they vary in size, retained water and efficiency of the dewatering system Dewatering
has two stages for cost-estimating purposes: that performed during the active operating life of the mine
and that performed afterwards. An approach based on a nominal cost per hour or cost per gallon may
be logical during the operating life, since there is a core staff already on site along with the equipment,
infrastructure and administration systems. However, once operations have ceased there will be no
support and the dewatering program will be operated by a contractor and a significantly higher unit
cost. If operator time required just 1 hour a day that would increase the total closure cost by 5.67%.
9
P.O. Box 4049, Incline Village, Nevada 89450 USA +1.530.575.6555
Review of Containment and Closure Issues, Rev. 1.1
EFRI White Mesa Mill Relicensing Application, Revision 4, Cost Est. 4.14, April 2014
Supporting quotes: The Rev. 5 estimate included supporting price information for some of the relatively
minor costs (e.g., road haulage of rip rap from the borrow source 7 miles from the site, rental rates for a
gravel screen, and so forth). None of these “quotes" (some are as informal as telephone notes) suggest
that the vendor understands' that he or she is quoting a-pul50clw.ork.s-^pmigcl—wjth the applicable
contracting, insurance and prevailing wage criteria. -----------------T
Remediation costs: There is no provision for any currently unknown contamination. It is unlikely that'
the extent.of surface or groundwater contamination is currently fully known and providing no such
provision is irresponsible.
Indirect costs:
o Contingency: 20% is allowed and is too low for the level of design and the lack of supporting
fixed price bids. Considering the findings of the prior section on industry experience with cost A)|,i
estimates versus actual costs, a contingency of 25% to 30% is recommended and the DRC has''^
advised that they will require 25% for future cost estimates. For the purposes of this analysis,
the contingency has been left at 20% of the direct cots and updated as the direct costs have
been adjusted;
o License & bonding: 2.0% is reasonable for a private-works project but is much lower than
seen oiypubhcworks projects^ ^
o UDEQ contract administration: 4.0% is allowed. This item is equivalent to “owner’s costs’/
for conventional cost estimating, which run from 10% to 25%, with 12% to 15% being typiqal; t
Detailed engineering, procurement and construction management (EPCM) has been omitted'?
and typically runs about 12%; and, ^
o Estimate provides 2.25% for “Engineering design review.” This suggests that the design will
be prepared by EFRI then reviewed and stamped by an external PE. Not only is this
inappropriate for a project which has been taken over by the State, it is in violation of the
Professional Engineers and Professional Land Surveyors Licensing Act.
Long-tenn care fund: At current deposit interest rates a fund of $847,862 provides an annual cash flow
of about $12,000. This provides for no on-site care and is unlikely to provide for the mandatory report
filings. A more reasonable provision is $100,000 per year, at least for the decades immediately
following closure, increasing the long-term care fund requirements to $7,485,471.
Cost escalation- The EFRI costs have been estimated using a range of base dollars from 2007 to 2013.
None have been escalated to the date of closure.__(jjjvfl-efc-*
3. More probable closure cost
A reasonable range of closure costs can be estimated by approaching the costs from two directions:
adjusting the EFRI cost estimate for the line-item corrections discussed in the prior section, and
applying the benchmarked costs to the White Mesa closure areas. Tables 6 and 7 summarize the results
of those two approaches. The benchmarked costs range from $76.5M to $144.0M, with an average of
$1 10.1M. This compares well with the benchmarking case including all documented closures (Table
3a) of $109.9M and with the adjusted WMM cost of $96.8M.
A key purpose of benchmarking costs is to check the validity of a built-up cost estimate The
benchmarked average estimate is within 9% of the average for all 43 of the documented US uranium
mill closures and thus checks well with industry experience. The author has used benchmarking to
verify built-up costs on over 100 sites; this has produced variances generally within 15% to 25% of
actual or the detailed estimate. In the current case, the benchmarked cost is 5.2 times higher than the
unadjusted EFRI estimate, but within 13% of the EFRI estimate after adjustments for errors and
omissions. This strongly suggests that the correct estimate is between $96 million and $110 million,
with reasonable allowance for remediation and cost escalation.
10
P.O. Box 4049, Incline Village, Nevada 89450 USA +1.530.575.6555
Review of Containment and Closure Issues, Rev. 1.1
EFRI White Mesa Mill Relicensing Application, Revision 4, Cost Est. 4.14, April 2014
Table 6; Adjusted closure cost estimated (using EFRI estimate as basis)
Total direct costs (from EFRI): (Rev. 4.14)$21,126,000
Adjustments:
Labor rates $8,682,000
Equipment unit $3,106,000
Survey Crew, Environmental Sampling, Quality Control $1,009,000
Management & Support $997,000
Cell dewatering, adjusted for 1 hour per day oversight 1,204,000
Adjusted direct costs:$36,125,000
Indirect Costs:
Contingency, 20% of adjusted direct costs (to be increased so 25% in 2014)$5,332,000
UDEQ contract administration, 15% vs 4% in estimate $3,974,000
EPCM, 12% (no provision in estimate)$4,335,000
Long-term care fund (based on annual cost of $100,000 and 1.2% deposit rate)$7,485,000
TOTAL before remediation costs $57,251,000
Probably remediation costs:
Upgrade cap to Monticello system $19,900,000
Escalation to end of closure (5 years x 3.0%/yr)$3,165,000
Off-site soil remediation (50 acres x 6” deep) $480,000
Groundwater remediation (perpetual treatment at $20,000/mo)$16,000,000
TOTAL including remediation costs $96,796,000
Notes:
1. Quantities unverified.
Table 7a: Closure cost from benchmarking data with escalation (using Table 3a costs)
Cell Area
(acres)
Capping Costs
(2014)
Comments
Cell 1 55 (exclude)-0-To be removed
Cell 2 65 $33,215,000
Cell 3 70 '$35,770,000
Cell 4A 40 $20,440,000
Cell 4B 40 $20,440,000
Demolition debris 12 (exclude)-0-Costs included in per-acre tailings costs
TOTAL 215 $109,865,000 91% of the average cost for 43 UMT sites
Note: Capping rate of $511,000 per acre used from benchmarking data.
Source White Mesa
Area (ac)
Cost per Acre
($/ac)
Total as Applied to
WMM ($)
Title 1 & 11 Sites
215
670,000 144,050,000
Benchmarked Costs, Table 3a
(includes Title I & 11)
511,000 109,865,000
Benchmarked Costs, Table 3b
(excludes Title 1)
356,000 76,540,000
11
P.O. Box 4049, Incline Village, Nevada 89450 USA +1.530.575.6555
Review of Containment and Closure Issues, Rev. 1 1
EFRI White Mesa Mill Relicensing Application, Revision 4, Cost Est. 4.14, April 2014
Respectfully submitted,
RRD INTERNA TIONAL
Mark E. Smith, PE
Civil, Geotechnical & Structural Engineer
References
AFCEE “Conventional landfill cover cost,” US Air Force Center for Engineering & the Environment,
afcce af.mil/resources/technologvtransfer/nrogramsandimtiatives/ (undated, mid 1990s)
Benson, C. H., Sawangsuriya, A., Trzebiatowski, B., and Albright, W. H., “Post-construction changed
in the hydraulic properties of water balance cover soils,” Desert Research Institute Alternative Cover
Assessment Program (DRI-ACAP) (2007)
Bertisen, J. and Davis, G. A., “Bias and error in mine project capital cost estimation,” SME Annual
Meeting, Preprint 07-082, Feb. 25-28 (2007)
Caldwell, J , “Mine closure bonds: are they adequate to pay actual costs?” 1 Think Mining industry blog
site, ithinkmining.com/2007/08/29/mine-closure-bonds-are-lhev-adequatc-to-pav-actual-closure-costs/.
August 29 (2007)
Dwyer, S. F., 1998. “Alternative Landfill Cover Pass the Test.” Civil Engineering, Sept. (1998)
1PA, Guidelines for 1PA Benchmarking Evaluations, Major Capital Projects, BMP Billiton, Ver. 1.0,
Sept(2004)
Lazenby, FI., “Cost model improves mine cost estimation and forecasting,” Mining Weekly, Cramer’s
Media, April (2010)
MMDA, “Model mining development agreement project," www.mmdaprojeet.org/?p=1662, March 30
(2011)
MWH Americas, “Revised infiltration and contaminant transport modeling report. White Mesa Mill
site, Blanding, Utah,” page K.-3, March (2010)
Roberts, H. R., “Request to revise the surety for White Mesa uranium mill, license SUA-135S,” letter to
Mr. John Surmejer, U.S. Nuclear Regulatory Commission, from International Uranium (USA)
Corporation, November 9 (1999)
Robinson, Paul, “Uranium Mill Tailings Remediation Performed by the US DOE: An Overview,”
Southwest Research and Information Center, Albuquerque, NM, May 18 (2004)
Smith, M.E., “Uranium Mill Closure in the USA: a Flistorical Perspective,” E&MJ, Nov. 2010 and The
Mining Record, Dec. (2010)
Smith, M.E. and Athanassopoulos, C., “An evaluation of geosynthetics in engineered cover systems for
mine rock and tailings,” proceedings of the annual meeting of the Society for Mining. Metallurgy and
Exploration (SME), Feb. (2013)
U S. DOE, “Decommissioning of U.S. Uranium Production Facilities,” DOE/E1A-0592, Dist. Cat. US-
950, February (1995)
USDA Forest Service, Northern Region, “Cost estimating guide for road construction,” Feb (2011)
12
P.O. Box 4049, Incline Village, Nevada 89450 USA +1.530.575.6555
WHITE MESA URANIUM MILL
Condition of Cells 1, 2 & 3
Prepared by
Mark E. Smith, PE, SE, D.GE
Likely State of
Tailings Cells 1, 2 & 3
Industry standards
Compatibility with tailings chemistry
Compatibility with alternative feed chemistry
Design life
Likely leakage rates
Industry Standards
Liner did not meet industry standards in 1979:
- Less dangerous mine wastes were using more robust liner
systems (36 mil CSPE, 40 to 60 mil HOPE)
- US EPA began drafting municipal solid waste standards in 1979,
required 60 mil liner + clay (for lower risk waste)
here are no other contemporaneous examples of PVC-lined
impoundments for acidic tailings
- No manufacturer in 1979 offered a warrantee for over 20 years,
or for any period exposed to low pH / organic solvents
State of practice in 1979 was inadequate to protect the
environment:
- Every pre-1985 geomembrane-lined tailings facility in North
American has been replaced or decommissioned. Except White
Mesa.
PVC: not Compatible with Acids
Both the base resin and the plasticizing agents are
subject to attack in low pH environments.
"Long-term compatibility of [PVC] liner material with
the acidic tailings is unknown" (White Mesa
consultants MWH, 2007)
PVC seams and thin sheets are much more
vulnerable than most other geomembranes
Immersion Time in Loss of Elongation Loss of Elongation
H2S04 of Base Sheet of Seams
30 days
60 days
58%
71%
90%
94%
PVC Compatibility Ratings
Chemical Harmsco Spilltech Cole-Palmer
Benzene NC B (for <1%)C
Carbon Tetrachloride C C D
Chloroform NC X D
Methylene Chloride NC not rated D
Naphthalene NC X D
Ranking Keys:C=compatible
NC=not compatible
B=Minor to
moderate effect
C=severe effect
X=no test date,
likely severe effect
C=fair
D=severe effect
Notes: For PVC basin resin without plasticizers or other additives. Plasticizers are usually
more aggressively degraded than the resin.
PVC: not Compatible with Alt Feed
Alt Feed contains organic solvents: benzene, carbon
tetrachloride, chloroform, methylene chloride, naphthalene
Every manufacturer and rating agency says that PVC is not
compatible with those solvents. Both the PVC resin and
plasticizers are aggressively attacked.
Vinyl chlorides are then mobilized into the environment,
creating another constituent of concern.
Changing chemistry is a key cause of failure of containment
systems.
Regardless of which cell the Alt Feed material is discharged
to, the entire process circuit and thus all cells will be
contaminated.
Cells 4a & 4b used thick HOPE for these reasons.
Design Life is Integral to Design
"Of critical importance to the long-term
performance of a liner system is the service
ife of the GM component of the system.....
Perhaps the most important factor governing
the service life of the GMs is the polymer
type....” (EPA/600/R-02/099 “Assessment and
Recommendations for Improving the Performance of Waste
Containment Systems," Bonaparte, Danidi & Koerner, Dec
2002)
Service Life as Design Criteria
Design life = 15 yrs in 1979, but only 5 yr per cell
The engineer selects components, load and
chemical ratings with the expected service life to
achieve the intended Factor of Safety or Risk of
Failure, based on both rational analysis, industry
experience & US ERA guidelines.
That this is critical is manifest in the closure rules
which specify a service life of the capping system
of 200 to 1,000 years.
Exceeding the design life decreases the factor of
safety and increases the risk of failure.
PVC Service Life is Under 34 yrs
There are neither data nor case histories supporting a
service life of 34+ yrs for PVC in low pH
For a given plastic, thinner material has shorter life
Koerner (2011) estimated service life of PVC at 18 to 32
yrs for non-aggressive chemical environments
Stark (2005) measured plasticizer loss at 10 sites over
22 yrs and found that all reached 50% loss in <20 yrs
Alt Feed further shortens service life by introducing
organic solvents, not considered by original design and
broadly banned from PVC-lined containments.
Solvents will mobilize vinyl chlorides, another
regulated contaminate
PVC Service Life is Under 34 yrs
Absence of elevated contaminates is not evidence of
no leakage, but of a dysfunctional monitoring system
(ERA Liner and Leak Detection Rule, 1987). HGC (2007)
estimated time for first intercept at 290 yrs
The monitoring system should have been modernized
when (i) extended service life, (ii) allowing Alt Feed, (iii)
converted Cell 1 to surface impoundment
ERA (2002) surveyed 26 modern double-lined Subtitle
D-compliant landfills:
- Thick liners, leachate collection, installed within last 20 yrs
- Top Liner Leakage = 45 to 29,000 gal/ac/day
- Average Leakage = 3,250 gal/ac/day
- Applying that rate to Cells 1, 2, 3 = 225 million gals/yr
PVC Service vs Leakage
If liners are leaking excessively, system has
exceeded service life
Lack of leakage is not evidence of good
performance:
— Centuries for leakage to intercept monitoring wells
(HGC 2007)
— Require sufficient remaining service life for planned
operations (~10 yrs) and completing closure (>5 yrs)
Any extension to service life should be supported
by rational analysis including:
— Comprehensive determination of the actual condition
of the geomembranes
— Chemical and physical environment through closure
— Prediction of remaining useful life of geomembranes
White Mesa Cell #1
This is a Failed Liner System!
Observations from DMT Q2 2012 EFR
Report:
• Degraded liner
• Small holes, cracks, tears
• Liner looks aged, very brittle, lots
of cracking, breaks when pressure
applied
• Several areas of missing liner
• Sun damage (should not apply
where properly buried)
• A total of 6,618 ft of PVC required
repair or replacement; 79 ft caused
by repair crew, 210 ft sun damaged
Evidence of Failure or Incipient Failure
-Chloride & Nitrate plumes co-located
-UGW12-03 decreasing pH, increasing
trends in indicator parameters
-MW-22 increasing trends
-Fluoride spike while processing high
fluoride Alt Feed material
-Uranium seep across from mill
-Design Life was only 5 vrs per cell
-Research on useful life of PVC
-Industry experience with PVC
-Industry experience with all
geomembranes installed before 1985
-Alt Feed's aggressive chemistry
-Manufacturers' warrantees: none
apply to WMM chemistry
-2012 EFRI's inspection of upper
section of Cell 1 liner; ~6,600 ft of
failed liner
Evidence of Satisfactory Performance
-Controversy around source of plumes
(but HGC predicted 290 yrs for first intercept)
-University of Utah study
(report is 7 years old, admits leakage likely,
recommends more work, data discounted by
MWH 2010)
Cells 1, 2 & 3
Heightened risk of catastrophic release
Cell liners:
- Not BAT compliant
- Not designed for 30+ yr service life
- Original design life was 15 yrs
- Original environmental analysis contemplated
concurrent closure
- No functional leak detection systems
- Liners are leaking
- Liners have never been tested for continuity
WHITE MESA URANIUM MILL
Closure Cost Estimate & Surety
Prepared by
Mark E. Smith, PE, SE, D.GE
Closure & Financial Surety
The proposed capping system is inadequate to
meet regulatory intent or industry standards
The cost estimate excludes key technical and
legal requirements
The estimated cost makes White Mesa the 4th
cheapest uranium mill closure in US history,
though it is the largest, longest operating and
faces the strictest closure rules
Capping System is Inadequate
State and federal law require that the cap:
- Minimize infiltration into/out of the tailings cells
— Provide a service life of up to 1,000 years and at
least 200 years
MWH (2011) estimated average infiltration at
13 million gallons during the first 200 years
after decommissioning mi
That estimate is very optimistic given the
actual performance of other ET Cover systems
ACAP Study of Capping Systems
Alternative Cover Assessment Program
conducted by the US ERA, which sets the
benchmark standards for modern caps
Goal: determine actual performance of a
range of cover types and climates to help
guide design of new covers for landfills
Study included 12 sites throughout the US
Comparison of ACAP Sites
to White Mesa
Two sites with similar rainfall and similar caps:
- Altamont, CA
• 358 mm/yr precipitation
• 44.8 mm/yr infiltration
• 100 times higher than White Mesa prediction
- Sacramento, CA
• 422 mm/yr precipitation
• 2.7 mm/yr infiltration
• 6 times higher than White Mesa prediction
Monticello Uranium Mi
Essentially identical climate conditions as White
Mesa
More robust capping system:
— Thicker cap, capillary barrier & geotextile
— Excluded geomembrane from test cap
Measured infiltration = 0.7 mm/yr, or 1.6 times
higher than White Mesa's estimate
The only sites with 0.45mm/yr or less had
geomembrane and clay in the cap, as did the
actual cap at Monticello
Adjusting White Mesa Leakage to
Match US ERA Study
Sacramento & Altamont are close analogies
- Infiltration = 2.7 & 44.8 mm/yr
- In first 200 yrs: 70 million & 1.3 billion gallons
The only way to get leakage down to White
Mesa's estimate & meet regulatory mandate is
to upgrade cover to Monticello's installed cap
standards
Closure Cost Estimate
Approved Closure Plan is version 3.2.
- Deemed "obsolete" by State
- Cost estimate is not for Plan 3.2
Cost Est 4.14 appears to be for Plan 4
- No supporting documents were provided by DEQ
- Relied on both Plan 4 and 5 for my review
White Mesa's estimate is defective:
- Unit costs are too low
• Fails to meet industry adopted Model Agreement
• Fails to meet standards used in adjacent states and by DOE
• Fails to meet legal requirements
- Not independently prepared
- Missing major items
- Estimate is less than 20% of the actual closure cost of similar sized
uranium mills
Benchmarking is a near-universal way of
validating estimates (IPA, 2004)
Deviations from benchmarked costs should be
justified or revised (IPA, 2004)
Broadly used by lenders, insurers, peer
reviewers, regulators, forensic analysis, US
BLM, US FS, US EPA, US DOE
Industry Benchmarking
Source # of Sites Cost
$l,000/acre
Comments
US DOE 1995, Title 1 & II
Sites
43 $670 80% of all US UMT sites
Germany 2002 14 $380 63% of global U production
AFCEE & Dwyer 1998 >10 $472 non-UMT
Smith 2010, 2013 40 $410 non-UMT
Average All US UMT
Sites
43 $670
Average All Sites
Including Title 1
>110 $511 Range of reasonable estimates
Average All Sites
Excluding Title 1
>88 $356
White Mesa 1 $98 19% of average cost for 110
sites/~80% of global U308
production
Notes: Costs are in 2014 dollars per acre of tailings.
Adjustments to EFRI Estimate
Item Comments Adjusted Estimate
($1,000)
Direct Costs:
Labor Prevailing wage rate, fringe benefits,
employer's taxes
$8,682
Equipment Overtime, wear parts, fuel price $3,106
Survey Crew,
Environmental,
Quality Control
Survey & Env rate of $14.46/hr is
unrealistic, QC rate of $62 is below
commercial, excludes PE oversight
$1,009
Management &
Support
Rates used are less than prevailing wage,
less than commercial
$997
Cell Dewatering Estimate excludes labor, pumps,
maintenance (i.e., funds only electricity)
$1,204
Adjustments to
Direct Costs
$14,999
Adjustments to EFRI Estimate
Item Comments Adjusted Estimate
($l,000s)
Indirect Costs:
Contingency Held rate at 20%, adjusted for increased
direct costs (should be at least 25%)
$5,332
UDEQ Costs 4% is much lower than industry
experience. 15% would be typical for a
private owner, likely more for public
$3,974
EPCM Excluded from cost estimate; 12% is low
end of industry standard
$4,335
Long-term Care Fund $l,000/mo allowed. More realistic would
be $8,300/mo
$7,485
Adjustments to
Indirect Costs
$21,126
Adjustments to EFRI Estimate
Item Comments Adjusted Estimate
($l,000s)
Excluded Costs
Upgrade Cap to
Montecello System
Add biotic intrusion, vegetative cover,
geomembrane, geotextile, increase
thickness from 6.0 to 9.67 ft
$19,900
Escalation to End of
Closure
Escalated by 3.0% per year x 5 years
required to complete closure
$3,165
Off-site Soil
Remediation
Assumes 50 acres x 6" deep, plus
revegetation
$480
Groundwater
Remediation
Provide fund for treatment in perpetuity
to pay $20,000/mo (labor, energy,
treatment, testing, oversight)
$16,000
Contingency Not considered, but should be included -0-
Total Excluded Costs $39,545
Adjustments to EFRI Estimate
■■I Item Adjusted Estimate
.($1,000)
EFRI Estimate $21,126
Adj Direct Costs $14,999
Adj Indirect Costs $21,126
Subtotal $57,251
Excluded Items 39,545
Total Adjusted Cost $96,796
Benchmarked Cost $109,865
Why is this Important?
• Only 3 of 44 US mills were
closed within WMM surety
EFRI has inadequate cash flow
and net worth to fund
closure: cash = $6.6M, down
from $43M in 2012
• Taxpayers will inherent
$80M in un-funded costs
• Closure will be delayed
by decades, increasing
threat to Tribal water
supply
EFRI's Annual Loss
{$millions)
zm? 3S&S 38S9 36W 3.8*1 SO 13 381* .00
Points of Agreement?
Closure plan & surety estimate exclude
groundwater remediation, off-site soil
remediation, Monticello cap
Surety estimate does not fully contemplate
government contracting (i.e., prevailing wage)
Surety estimate does not include cost
escalation to time of closure
Concurrent Closure
Concurrent closure was contemplated in original
environmental study and project design; approved plan
excludes it
Would reduce the risk of:
- Irreversible or long-term GW contamination
- Exceeding Radon-222 emissions standard
- Violations of NESHAPS work practice standard
- Risk of default by EFRI
Reduced financial liability assumed by State of Utah in
event of EFRI default
Allows verification of closure technologies
Industry standard and regulatory standard in most
jurisdictions, even for low risk sites
WHITE MESA URANIUM MILL
Prepared by
Mark E. Smith, PE, SE, D.GE
Extra Slides
Temporary or Interim Covers
are Inadequate
NESHAPS does not contemplate interim covers as part
of final closure process.
Waste cells are intended to be decommissioned,
dewatered, fully capped by end of PVC's service life.
Thin, temporary caps will continue to allow excess
infiltration into the tailings (and thereby into the
groundwater) and radon emissions into the air.
There is no good technical or regulatory reason to
defer final capping.
Concurrent closure is the standard of practice, both in
the US and internationally.
EFRI is financially unable to fund end-of-life closure, or
to obtain a bond appropriate to the likely all-in costs
Concurrent C osure
Reduces the environmental footprint annually
Reduces the risk of contamination annually
Reduces the liability that will be transferred to
taxpayers at abandonment
Allows full-scale verification & optimization of the
selected closure technologies
Provides better cash-flow management for both
the owner and agency
Reduced likelihood that owner will abandon
facility
EFRI Stock Price History
2007 2008 2009 2010 2011 2012 2013 2014
250
200
150
100
50
0
-10
-20
-30
-40
-50
-60
-70
-80
-90
H
EFRI's Annual Loss
($millions)
Hi
100