Ore Reserve Estimates: Their Disclosure in Company Annual Reports

This is a question that will be asked many times and by many individuals during the various evaluation stages of any new project. However, the question itself will often have different connotations to the different groups invariably involved in such an exercise. As examples, consider just three of the several different groups involved in the development of a new mining project - Financiers, Consulting Engineers and the Sponsors of the project (potential borrowers). To the Financiers, a 'bankable project' will be one against which they will be prepared to lend funds (but not necessarily all of the funds requested by the Sponsors). This usually means that in the first instance the technical information presented to the bank has satisfactorily covered all of the requisite areas to the levels of accuracy required. More importantly, the financial evaluation of the projected economic performance of the mine, as a whole, is considered sound and a set of arrangements under which the bank is prepared to advance loan funds have been structured which fully satisfy the bank's credit criteria. To Consulting Engineers preparing a feasibility study (or a part thereof), on behalf of the project Sponsors, the term 'bankable' invariably only refers to the technical completeness and the level of detail contained in the report which they are preparing. Their scope of work will not necessarily have been broad enough to fully satisfy a bank's requirements. It is unusual to see any specific references to overall project viability or profitability in Consulting Engineers' feasibility reports, other than those which are automatically associated with the use of the term 'ore'.