Note: The following is not a verbatim transcript of the Zoning Hearing Board meeting; it is simply one person’s summary of the major points made by those involved in the hearing process.  For that reason, quotation marks are not used unless a direct quote was recorded.  For information about obtaining an official ZHB transcript, contact the New Hanover Township office.

The meeting began the testimony of witness Dr. Rose, a colleague of the previous witness Dr. David Gold. Rose is also an economic geologist and was entered into testimony by Ms. Julie Von Spreckelsen, the townships attorney for Gibraltar 1.

After testimony establishing Dr. Rose as a credible geologist, Von Spreckelsen began asking questions about what Rose called a "sensitivity analysis."  Rose stated that a sensitivity analysis is an evaluation of data surrounding the proposed quarry where it is analyzed for factors on rate of return to evaluate it as an investment.  Rose continued that he first developed a base case.  His initial case was based on the testimony of Stagg, who was GRI's economic geologist. Rose made changes to the data to test its viability.  Rose changed the production rate from 500,000 ton/yr. to 600,000 and 700,000 tons/year.  He also changed selling price, crusher cost, property costs, and tax rate. 

From this he viewed different scenarios.  In scenario 1 the property cost increased, the transportation cost increased, as did the tax rate. In the second scenario capital equipment costs were more accurate, there was a decrease in crusher/screener system, and he separated depreciation calculations for all separate pieces of equipment . In scenario 3 it placed the berms in the LI zone, identified higher ore reserves, added a fourth truck, and changed the property and transport costs.

After analyzing the scenarios, Rose decided to use scenario 3 as the 'base case' in the sensitivity analysis.  His parameters therefore were:

Production rate - 500,000 tons/year

Selling Price - $6.50/ton for type A (good stone)

Selling Price - $2.50/ton for type B (waste stone)

Property Acquisition Costs - $2.677 Million

Rolling Stock - $3.92 initial purchase

Rolling Stock - $1.39 late purchase 

And the results were? Return on Investment was calculated at 3.9% or 5.9% with a 2% inflation adjustment.  

Note: You may remember the thrilling testimony of Mr. Alan Stagg from 2002 and 2003. During his testimony Mr. Stagg projected that an overall rate of return on the project would vary from about 2.9% to over 5% for the various Gibraltar development plans. He also explained that these were acceptable investments in the mining industry. So, in effect, Dr. Rose's numbers projected a higher return on investment than Stagg's numbers.

Rose then talked about how he tested his parameters by changing some of the values to see what the impact would be. He ran 12 test cases where he changed parameters to see the effect of the cost of rolling stock, selling price, salvage value, support costs, among others. He also ran analysis with combined changed parameters.

After running these test cases, Dr. Rose concludes that scenario 3 was the best case and produced a good rate of return for Gibraltar Rock. 

Von Spreckelsen then switched gears by asking Rose about a report that dealt with including the berms within the HI area of the portion North of Hoffmansville Rd. After taking us through the entire report, Rose concluded that the current zoning allows the quarry in the HI and that overall the return on investment is attractive.

Von Spreckelsen concluded. Mr. Harris requested the backup spreadsheets and Rose commented that he would provide them.  The meeting adjourned. 

The next GR1 meeting is May 5, 2005.

See Also:
Summary of the previous meeting (March 3, 2005)