BC Coastal Logging Contract

Overview

• Contract Services• Cost analysis• Assumptions • Operational Decisions

Madill 009 Madill 071Wash 118A

Wash 118A Madill 122

Tower Yarder

Mini Tower

Swing Yarder

Swing Yarder

Swing Yarder

(as is) (rebuilt)

OWNERSHIP COSTS

Purchase Price (P) $ $57,500.00 $130,000.00 $110,000.00 $470,000.00 $260,000.00

Expected Life (Y) y 6 10 3 6 6

Expected Life (H) h 8640 14400 4320 8640 8640

Sheduled hours/year (h) h 1440 1440 1440 1440 1440

Insurance Rate (Ins) % 2 2 2 2 2

Salvage Value (S) $25,000.00 $50,000.00 $50,000.00 $50,000.00 $50,000.00

Average Investment (AVI)=((P+S)/2) $ $41,250.00 $90,000.00 $80,000.00 $260,000.00 $155,000.00

Loss in resale value ((P-S)/H) $/h $3.76 $5.56 $13.89 $48.61 $24.31

Insurance ((INS*AVI)/h) $/h $0.57 $1.25 $1.11 $3.61 $2.15

Total Ownership Cost (OW) $/h $4.33 $6.81 $15.00 $52.22 $26.46

CREWBUS OWNERSHIP COSTS

Crew Bus Annual Depreciation $6,250.00 $6,250.00 $6,250.00 $6,250.00 $6,250.00

Daily Depreciation $19.05 $19.05 $19.05 $19.05 $19.05

Fuel, Oil, & Maintenance $30.00 $30.00 $30.00 $30.00 $30.00

Total Crew Bus Cost $49.05 $49.05 $49.05 $49.05 $49.05

Total Ownership Cost (OW) $/h $6.13 $6.13 $6.13 $6.13 $6.13

OPERATING COSTSAnnual wire rope (wc) $ 85400.00 85400.00 70300.00 70300.00 70300.00Rigging & radio (rc) $ 10000.00 10000.00 10000.00 10000.00 10000.00Rigging & radio life (rh) h 6000.00 6000.00 6000.00 6000.00 6000.00Fuel Consumption (F) L/h 36.00 36.00 35.00 35.00 35.00Fuel (fc) $/L 0.60 0.60 0.60 0.60 0.60Lube & oil as % of fuel (fp) % 10.00 10.00 10.00 10.00 10.00Annual operating supplies (OC) $ 10000.00 10000.00 10000.00 10000.00 10000.00Annual repair & maintenance (Rp) $ 56000.00 56000.00 60000.00 60000.00 60000.00Shift length (sl) h 8.00 8.00 8.00 8.00 8.00Wages $/h Operator 26.10 26.10 26.10 26.10 26.10 Hooktender 23.80 23.80 23.80 23.80 23.80 Rigging slinger 24.24 24.24 - - - Landingman 23.80 23.80 - - - Chokerman 23.16 23.16 - - - Chokerman 23.16 23.16 - - - Second Loader - - 24.24 24.24 24.24Driving Time (2 hours at overtime rate) 69.48 69.48 69.48 69.48 69.48Travel Time (2 hours)(1 1/2 @ standard time) 324.59 324.59 166.82 166.82 166.82Sunday Overtime (1/2 day in 7) 110.58 110.58 59.24 59.24 59.24Subtotal Labour 1658.73 1658.73 888.66 888.66 888.66Benefits @ 50% 829.36 829.36 444.33 444.33 444.33Total wages (W) $ 2488.09 2488.09 1332.99 1332.99 1332.99Wire rope (wc/h) $/h 59.31 59.31 48.82 48.82 48.82Rigging and radio (rc/rh) $/h 1.67 1.67 1.67 1.67 1.67Fuel (F*fc) $/h 21.60 21.60 21.00 21.00 21.00Lube & oil ((fp/100)*(F*fc)) $/h 2.16 2.16 2.10 2.10 2.10Operating supplies (Oc/h) $/h 6.94 6.94 6.94 6.94 6.94Repair & maintenance (Rp/h) $/h 38.89 38.89 41.67 41.67 41.67Track & undercarriage replacement (Tc) $/h - - - - -Tire Replacement $/h - - - - -Total wages (W) $/hr 311.01 311.01 166.62 166.62 166.62

Total operating costs (OP) $/h 441.58 441.58 288.82 288.82 288.82

TOTAL OWNERSHIP AND

OPERATING COSTS (OW+OP) $/h 452.04 454.51 309.95 347.17 321.41

TOTAL DAILY COST ((OW+OP)*8) $ 3616.35 3636.11 2479.62 2777.40 2571.29

EXPECTED PRODUCTION (EP) m3/day 144.50 144.50 0.00 225.00 235.00

EXPECTED COST (((OW+OP)*8)/EP) $/m3 25.03 25.16 - 12.34 10.94

Madill 009 Madill 071 Wash 118A Wash 118A Madill 122

Tower Yarder Mini Tower Swing Yarder Swing Yarder Swing Yarder

(as is) (rebuilt)

Total Volume (contract)

m3 m3 $/m3

Falling Hand Falling 150000 115 $761.48 1304 1304 $993,234.78 $6.62

Yarding Hoe Forward 15000 400 $1,147.72 38 38 $43,039.50 $2.87Swing Yarder

Madill 122 36000 235 $2,571.29 153 460 $393,899.74 $10.94Washington 118A (rebuilt) 30000 225 $2,777.40 133 400 $370,320.00 $12.34

High Lead TowerMadill 009 20000 144.5 $3,616.35 138 830 $500,532.87 $25.03

Madill 071 minitower 19000 144.5 $3,636.11 131 789 $478,104.43 $25.16Total 120000 $1,785,896.55 $14.88

Loading R/W and WR/WAmerican 5675 lineloader 30000 300 $1,204.53 100 100 $120,453.00 $4.02

WindrowBarko 450 53000 250 $1,184.20 212 212 $251,050.40 $4.74

American 5675 lineloader 28000 250 $1,204.53 112 112 $134,907.36 $4.82Tower

Linkbelt 19000 144.5 $1,234.79 131 112 $162,359.93 $8.55Washington TL5C 20000 144.5 $1,191.78 138 118 $164,952.25 $8.25

Total 150000 $833,722.94 $5.56

Tree to Truck 150000 $3,612,854.27 $27.06

Hauling Off Highway Haul 150000 160 $911.15 188 938 $170,931.74 $1.14Lowbed 150000 $709.48 20 20 $14,189.60 $0.09Total 150000 $185,121.34 $1.23

Road Maint. Grading 150000 7km/day $792.00 210 210 $166,320.00 $1.11Deactivating with John Deere 690ELC 150000 $921.96 40 40 $36,878.40 $0.25Reactivating with John Deere 690ELC 150000 $921.96 40 40 $36,878.40 $0.25Total 150000 $240,076.80 $1.60

Sort & Boom Sort & BoomWestcoast S/W 18' 150000 1000 $702.75 150 150 $105,412.50 $0.70

Caterpillar 966D 63000 420 $1,103.00 150 119 $165,450.00 $2.63Caterpillar 980G 87000 580 $1,296.31 150 103 $194,446.50 $2.24

Total 150000 $465,309.00 $3.10

150000 $4,318,240.07 $33.00

Expected Daily ProductionDays

Cost per unit

Production Costs

Total Production Costs

Daily Cost $ Man Days Total Cost $Cost Area Item

Total Volume (contract)

m3 $/m3Days

Cost per unit Daily Cost $ Man Days Total Cost $Cost Area Item

Staff Supervisors 150000 $185.00 229 458 $42,365.00 $0.28Timekeeper 150000 $160.00 229 229 $36,640.00 $0.24Total Staff 150000 $79,005.00 $0.53

Transportation Crew MovesTwin Otter (19 passenger) 150000 $5,191.64 44 88 $456,864.32 $3.05

FreightBarge (200' x 50') 150000 $2,200.00 4 4 $8,800.00 $0.06

Total 150000 $465,664.32 $3.10

Camp Facilities 150000 $75.00 200 7006 $525,439.37 $3.50

Town Office Office Costs 150000 436.52$ $110,439.70 $0.74

Misc

Total 150000 $50,000.00 $0.33

150000 $1,775,217.71 $8.20Total Overhead Costs

Overhead Costs

Fire Protection, Environment, First Aid, Unallocated Camp Vehicles

Final Costs

150000 $6,093,457.78 $40.62

150000 $914,018.67 $6.09

150000 $7,007,476.45 $46.72

Total Costs

Profit & Risk @ 15%

Indicated Contract Rate

Purchases

• 1994 Linkbelt LS4300– $450,000

• 2000 Caterpillar 980F Wheel Loader– $420,000

• Washington 118A Swing Yarder Rebuild– $360,000

Sales

• 3-Hayes HD35 Logging Trucks• 2-Pacific P10 Logging Trucks• 1-Kenworth 849 Logging Truck• Cat D8H• Cat D8K• Pacific Dump P9• 2-Cat 966C• Cat 518 Skidder

Net Sales

Total Purchases - $1,230,000

Total Sales - $361,000

Net Sales - $869,000

Total Investment

Purchase Price

$1,703,100 (+ “good will”)

Purchase Price + Net Sales

$2,572,100

Financing

Loan Required - $572,100

Financing Cost – 22.2% of profit = $203,300