An Introductory Review - Investment and Project Evaluation

It is common knowledge that there is an endless stream of possibilities, proposals, and projects - each representing a demand on available capital - for improving the mining company's performance measure. It is true that these proposals go through an increasingly stringent evaluation process as they move up the echelons of management for approval. Therefore, there is every reason to expect that a proposal or project accepted for deployment will make a substantial contribution to the organization's performance. The reality, too often, is otherwise. Castle (1985) reveals some significant insights into the difficulties in predicting the performances in the mining industry. A sample of eighteen mining ventures, which have been developed over the years, was selected by Castle to illustrate the problems. The actual performances were compared with the original projection. The sample encompasses both surface and underground mines, a large number of commodities, and a wide geographic distribution. The experiences in these mining projects were analyzed through answers to four specific questions.