These cost estimates assume the application of biological treatment technology, which is currently being installed in the water treatment plant under construction at our Line Creek mine. We are actively investigating alternative treatment technologies with the potential to substantially reduce treatment costs. Our draft valley-wide selenium management plan also assumes that relevant regulators will agree to site-specific downstream selenium concentrations in certain aquatic environments already affected by selenium discharges from our coal mining operations in excess of those in provincial water quality guidelines. The modeling on which our valley-wide selenium management plan is based indicates that the selenium levels we are proposing for the upper Elk and Fording Rivers will result in selenium levels further downstream, including at Lake Koocanusa at the U.S. border, which comply with provincial water quality guidelines and applicable limits on selenium concentrations prescribed by the U.S. Environmental Protection Agency ("EPA").
While we believe that there is good scientific evidence that the measures that we will propose are protective of the environment and of fish populations in the affected water bodies, and that these measures will meet our previously stated objective of reversing the trend of increasing selenium concentrations in the Elk Valley, there can be no assurance that regulatory authorities will not ultimately impose more stringent limits on selenium discharges, which could substantially increase both capital and operating costs associated with selenium management.
We expect that permitting for current and future projects may be delayed until regulatory authorities have accepted the valley-wide selenium management plan and are able to assess the cumulative effects of new projects in the context of the selenium management plan for the valley as a whole. There can be no assurance that delays in obtaining approval of our valley-wide selenium management plan will not result in consequential delays in permitting new mining areas, which would limit our ability to maintain or increase coal production in accordance with our long term plans. The potential shortfall in production may be material.
We are continuing with research and development aimed at identifying new and more cost-effective treatment technologies and are reviewing mining plans with a view to reducing the water treatment capacity required to manage selenium and the associated costs.
ZINC
Trail (100%)
Operating results at the 100% level are summarized in the following table:
Three months ended Year ended December 31, December 31, 2012 2011 2012 2011----------------------------------------------------------------------------Metal production Zinc (000's tonnes) 67.2 74.6 284.2 291.2 Lead (000's tonnes) 23.5 21.6 87.9 85.6 Silver (million ounces) 6.7 5.8 22.9 21.8Metal sales Zinc (000's tonnes) 67.1 75.1 287.4 289.1 Lead (000's tonnes) 23.4 21.7 88.3 84.2 Silver (million ounces) 6.7 5.8 22.9 21.7Cost of sales ($ millions) Concentrates $ 346 $ 312 $ 1,239 $ 1,258 Operating $ 102 $ 103 $ 456 $ 373 Distribution $ 25 $ 28 $ 106 $ 102 Depreciation and amortization $ 13 $ 12 $ 50 $ 49Gross profit summary ($ millions) Before depreciation and amortization $ 26 $ 48 $ 64 $ 256 Depreciation and amortization (13) (12) (50) (49)----------------------------------------------------------------------------After depreciation and amortization $ 13 $ 36 $ 14 $ 207----------------------------------------------------------------------------
