Minimum Engineering Requirements for Assessing Mining Projects

"The development of a mining project necessarily progresses through many steps, beginning with the identification of a mineral resource and continuing through project construction. Several classifications of engineering study development are described, including preliminary economic assessment (PEA) or scoping studies, prefeasibility studies (PFS), feasibility studies (FS) and regulatory codes, each with a specific project organizational objective. This paper addresses the PEA, PFS and FS types of reports that are used by companies to evaluate projects, meet regulatory requirements and seek financing. The minimum requirements for engineering studies, focusing on the needs of financial institutions considering investment in a project, are outlined. IntroductionThe financing of mining projects in recent years has come under increased scrutiny by financial institutions owing primarily to an increasing percentage of projects whose capital expenditures had overrun project budgets or had failed to produce the economic returns anticipated during the project development process. Often, unfavorable project outcomes are not the result of widespread failures of the project engineering process but arise from inadequate engineering in limited specific areas of the project scope, such as overestimated mineral reserve, inadequate mine design, insufficient metallurgical testing or underestimated capital costs. Mill facilities and process infrastructure typically are responsible for up to 80 percent of the capital expenditures required by greenfield mining projects. They are often the project areas where capital costs are inadequately developed, and consequently are the areas highly scrutinized by financial institutions. This paper offers a perspective on the level of engineering expected by financial institutions as a prerequisite to committing support to developing mining projects.The evaluation of a mining project from exploration through development and production is a lengthy and complicated process. Mine development commitment activities for a potential project are initiated when a mineral resource is identified and continue through to the start of construction. The technical feasibility and the economic viability of each project are determined during the phases of mine development with more detailed engineering data required at each stage. There are at least four levels of engineering studies during development that are commonly acknowledged by the mining industry:"