Hi again Wilma


Below is a good article Jack wrote a while back regarding feasability studies. Just for the record, I use +-20% accuracy for the DFS (if I like it and is in good format) and +-30% for the PFS but these will vary. AJM used +-10% but I converted to 20% out of habit.

https://www.australianmining.com.au/features/mining-pre-feasibility-studies-the-costs-to-consider/


Mining pre-feasibility studies – The costs to consider

Features Jack Caldwell*

Pre-feasibility is supposed to be about deciding if you have a mine: is there ore enough in the ground to pay the costs of mining and yielding a reasonable profit for investors?  The costs of mining are many, and need all be considered during pre-feasibility studies.  The following are some of the costs to be considered:

• Continued exploration to firm up the nature and extent of the ore body.
• Definition of the mining methods and establishment of the mine plan that will enable the ore to be gotten out of the ground at a rate that yields the required return on investment.
• Milling processes, including crushing, grinding, chemicals, and all the other processes needed to liberate the valuable constituents from the rock.
• Waste management including the construction and operation of tailings facilities, heap leach pads, waste rock dumps, and the many and different pools and ponds that must be managed to control surface and groundwater.
• Staffing and the many issues that arise in hiring, training, housing, and managing qualified staff.
• Access facilities including the roads and bridges, buses and plane, trucks and haulers needed to enable people and equipment to come to and leave the mine.

And you need to consider the costs of permitting, environmental protection, securing a social license to mine, and of course closure.

These and other site-specific costs should be estimated to a sufficient degree of accuracy to ensure that you are within the ballpark.  The tendency is to prolong the pre-feasibility stage for too long—everybody wants more detail, more specificity, and greater accuracy.  The tendency is to undertake too much site characterization; too much ore processing evaluation; too  many comparative studies; too many detailed layout.

This is where a prudent project manager and an experienced team play the most valuable of roles, namely bringing experience to bear in deciding what needs further investigation and deciding what can be postponed to the feasibility study or to the detailed design phase.

This is when you may choose to do risk assessments in order to pinpoint the risks that may derail the project.  This is when you need to establish how sensitive the project is to various parameters like the market price of the materials being mined.  You need to establish how environmental factors may balloon into project-killing impediments.

It is for the mine proponents to decide what risks they are prepared to assume in going forward with the project.  The consultants and technical staff may generate the data; experts may opine; regulators will probably equivocate; the public will hang back until the profit potential is clear.  But all along the mine’s proponents need to understand and consider the risks; for it is their money and the money of their backers that is being gambled.

Another detail to watch if you have a project management team at work on your pre-feasibility project is the human tendency to want to paint the rosey picture rather than the gloomy clouds.  We have seen projects kept alive way beyond their worth, simply because the project staff did not want to see the project terminated.  They did not want to move on, find another job, move to another town, or admit their project is not viable.

For what it is worth, here is what I have previously written on this subject.

There are many conventional rules for what constitutes a pre-feasibility study of a mine.  Similarly what constitutes a feasibility study for a mine.  We need not delay on these.

But there are no guidelines that I am aware of that define what is adequate for the pre-feasibility study of a TMF; or of the feasibility study of a TMF.  Net alone what is enough for a detailed design of the mine’s TMF.

Obviously for a pre-feasibility study of a TMF you need to demonstrate that the site is correctly selected; that the site is big enough for the mine life; that the environmental impact is minimal; and that it is cost-effective to develop the site.

Obviously for a feasibility study of a TMF, you need to to demonstrate that the embankments can be constructed to be stable; that the tailings can be practically deposited; and that the seepage and discharge waters will not contaminate the surface and groundwater of the site and receiving environment; and that the costs of operation & closure are not excessive.

Obviously for detailed design, you need to compile documents to enable the TMF to be constructed and operated within reasonable cost limits.

Easy, you say?  Not necessarily!  The ordinary human tendency is to push for more detail, to demand more detail, and to expect a complete & confident conclusion that the TMF will be safe, protective of the environment, and cost-effective.  Nobody is normally prepared to suspend final conclusions and to go with the flow of doubt, risk, and uncertainty of the normal sequence of pre-feasibility, feasibility, and detailed design.  It is all too risky to delay the demand for detail and finality.

Yet the prudent mine developer will demand this of his consultants: delay expenditure to as late a stage as possible.  Do not spend money on site characterization and design now if such data is not needed to make a pre-feasibility decision, or to make a feasibility study decision.  Spend the characterization and design money only when and as needed to support the level of detail appropriate to the stage of the overall mining evaluation.  This is hard for ordinary civil and tailings engineers to do.  We instinctively demand more detail and conclusions of certainty.

It is all well and good to say that the design detail should be sufficient to support a cost estimate that is 50% accurate, or 30% accurate, or 10% accurate.  There are too many examples (case histories) of over optimistic cost estimates that bias toward the low side.  Too many case histories of cost estimates blowing up by more than 100%.  The consultant is biased toward over-optimism and the good-news story.  The client, the mine developer, is biased to good-news stories (myths) of low costs and no problems.