One of the huge factors in the success of the Schaft Creek project is the capital costs. Back in 2008, the cost to build Schaft Creek was estimated at $2.9 billion. However, there are two factors that have changed significantly since then. The first factor is inflation. The second factor is the increase of the mine mill rate from 100,000 tpd to 120,000 tpd (minimum).

I've done a little research and my estimate for the new capital costs is $3.8 billion. For those mathematically inclinded, see below for my explanation.

Method 1: Applying Inflation to 2008 Costs

In October 2009, Terrane Metals estimated the capital costs for Mount Milligan at $915 million. As of August 2011, the actual costs are forecast to be $1265 million. This represents an increase of 38%. While this may sound extreme, I feel it is accurate because capital costs have sky rocketed for almost all major projects in the recent years.

In September 2008, Schaft Creek had an estimated capital cost of $2950 million. This included a contingency of $537 million, or 22%. This is very high so I'm going to disregard it for now. Therefore:

Less 22% contingency: $2950M - $537M = $2413M

Plus 38% inflation: $2413M x 1.38 = $3330M

Plus 15% contingency*: $3829M

*A 15% contingency is commonly used on large projects

Method 2: Comparing Against a Similar Project

Seabridge KSM - 120,000 tpd prefeasibility released in June 2011

KSM Capital Costs: $4684 million

Less 14% contingency: $4684M - $576M = $4117M

Less tunneling costs: $4117M - $323M - $180M = $3614M

Less complex water treatment: $3614M - $267M = $3347M

Plus 14% contingency: $3347M x 1.14 = $3815M

Therefore both methods yield similar results. Obviously there are multiple assumptions with each method, but I feel it provides a reasonable estimate for the costs we will see the the Feasibilility Study.