The Feasibility Study is an extremely important stage of the mine development cycle. It is when you put your definitive business case together for financing. The success of the Feasibility Study can be measured by the time between starting a Feasibility Study and gaining finance. This can be extremely varied, ranging from months to decades and sometimes, never. Of course, this time span is largely driven by the quality of the Mineral Resource and the prevailing market conditions. But there are several owner-controlled decisions that dictate the success of the study.
There are a number of own goals that owners can kick which cause significant time and cost impacts. And this is important, because these items are not infinite. Over the years, we have seen most of these mistakes, and provide a short list of important ones below:
- Not doing your Scoping Study or Pre-Feasibility Study: At the start, the project is simple, so you think that you can save time and money by skipping one or both studies. Rarely does this pay off. There is a reason the deposit is still in the ground! Without these studies, you have probably not got appropriate data for the project, or understood the variability of the project or looked at options to optimise the project under any number of different scenarios. The assumption that the project is simple (uniquely simple!) is overwhelming. Ultimately, you learn this the hard way, and realise you need to go back to the start. Usually a PFS happens, whether you plan it or not.
- Identifying a key risk or complexity too late: Even if you have done all the precursor studies, you may still not have identified a key risk which potentially sets your project back. Commonly, this occurs out of variability testwork, not being able to produce the quality of product you thought, scale up issues with your pilot plant or assumptions around issues like power or water. It is important to have the right experts around you early in the study cycle in order to pick up as many of these issues as early as possible.
- Drilling too much or not enough: See our earlier article on this topic. Resource drilling represents a large portion of your mine development budget so it is important to use it wisely.
- Focus and indecision around unimportant things: Knowing and focusing on material decisions is the single best time and cost saving tip we know. However, the opposite is often true; time is spent on something that is not important. This not only costs time and money, it also diverts attention away from important project aspects. Worse still is when you are indecisive about unimportant decisions, consuming further valuable resources. Usually this is driven by each discipline working in silos and not understanding where they fit into the big picture. Develop a value driver tree and do some rough sensitivities to understand which areas to focus on and stick to them.
- Not focusing on the destination: Typically, the goal of the Feasibility Study will be to support gaining finance to develop the product. The result of much blood, sweat and tears. But often this goal is lost in wanting to develop the best theoretical solution or one that satisfies a mill throughput rather than an optimised plan. Often mine developers will not engage with financiers early enough and get a rude shock when they are told that they are reaching beyond their means and have to scale back the project (often going back to the start). Starting off by right-sizing the operation to finance by looking at this at the PFS stage would have saved a lot of time and effort. Engage with financiers at the earliest point in time and be guided by their requirements.
There is no doubt that completing a successful Feasibility Study on schedule and budget is a challenge. If you would like to work with a group that is focused on your destination, please contact us at firstname.lastname@example.org