Marble - Colorado Geological Survey

tiles. These are extremely capital intensive. CGS
has assumed that these tiles will be fabricated
at an existing off site facility. The Idaho Travertine
Company custom cuts tiles but they require
that the tile stock be in the form of marble planks
which generally fall into the waste category.
The blocks for calculation purposes are 100
cubic feet and comprise 10 percent of the annual
quarry production. CGS assumes that 940 tiles
can be recovered from these blocks at a cost of
$4.10 per tile and sold for $4.50 per tile. The
low margin compared to slabs is due to the shipment
for custom fabrication. The calcium carbonate
product is included in the calculations
because quarry costs have already been incurred
against it and it is a product which has a high
demand. It is a low margin material and extremely
sensitive to the haul. The CaC03 generally
has no deleterious factors unless contaminated
with hornfels or other noncarbonates
and is expected to be produced at 10 percent of
production from block fragments and to a
limited extent from other clean quarry waste.
The ashlar strips used for exterior building
facing and interior decorative walls would be
also recovered from clean quarry waste. These
strips are random in thickness and length but
approximate the planks in size. CGS has not
either seen any or heard of any gray marble
ashlar veneered walls so the annual sales and
margins are selected to be low. The amount of
production would build eighty walls eight feet
high and 50 feet long per year.
The actual calculation in the $EE program
requires selection of mine life, assumed to be 30
years. The project start date is January, 1990,
34
utilizing discrete compounding. The minimum
rate of return has been selected to be 18 percent
as a risk adjusted rate. The inflation rate
is assumed to be four percent and the escalation
rate is assumed to be six percent for capital
cost. There are four products; slabs, tiles,
CaCOs and ashlar as discussed previously. The
tax burden has been selected as forward carry
against future revenues. The federal tax rate of
34 percent and the state tax rate of 5.4 percent
total 39.4 percent. Zero severance tax is used
for quarry rock. The ad valorem rate is assumed
to be 1.5 percent however that rate is high
for this area of Pitkin County which has a very
low mill levy.
The property tax is a function of assessed
value given to CGS as $257,272 by Division of
Property Taxation, and the buildings, and permanent
equipment including underground
mining equipment, non drivable or towable surface
equipment and any fixture dedicated to
the mine. The non-dedicated equipment is
taxed also but at a different rate. Due to the
complexity of this tax situation the 1.5 percent
ad valorem rate was used and no other
property tax treatment was programmed.
The capital costs are escalated and include
land, development, buildings and equipment.
The building was assumed to have a 30 year
life and equipment a five year life for depreciation
purposes ( See Table 2).
It is assumed that loans for all costs will be
available at 16 percent except the no collateral
development loan which is 18 percent.
The production is a function of the season
lengths and costs are assumed to be incurred at
Table 2. Development and capital costs for the mining operation.
Cost $ Date Item (see costs list)
175,000 June/1990 Wire saws, drills, loader, etc. minimal development work
79,500 June/1991 Development, road, staging areas site prep
212,000 June/1991 Specialized underground quarry equipment
42,400 June/1991 Land near Basalt for fabrication plant
265,000 July/1991 300 ft x 60 ft fabrication building
1,590,000 July/1991 Fabrication equipment including gang saws, polishers, fork lifts