The Importance of Feasibility Studies for Project Financing FINEX 2012.

The Importance of Feasibility Studies for

Project FinancingFINEX 2012

Tetra Tech –Mining & Minerals

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• Business Focus - extractive industries• Fully integrated consulting service provider• Undertake 100’s of mining studies every year

Tetra Tech – Global reach

340 locations & 22 countries

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Why are feasibility studies important?

Provides project definition – scope, quality, cost and schedule

Understanding of risk and opportunity

Necessary condition – Independent evaluation

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Context: Project Lifecycle

1. Exploration Phase – Recce work, geochem, field geology, etc.

2. Project Discovery – delineation, drilling, scoping level testwork, etc.

3. Project resource definition and scoping studies – open pit vs. underground, PFD, etc.

4. Prefeasibility Studies – infill drilling, metallurgical sampling/testwork, TMF studies, etc.

5. Feasibility Study

6. Project Financing

7. Project Execution

8. Project Operations

9. Closure and Reclamation

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$$$

Project Engineering Phases

Revised Source: Noort Adams – 2006

Exploration Scoping Study / PEA

Pre-Feasibility Study

Feasibility Study

Detailed Eng / Construction

Operation

Incr

easi

ng

Val

ue

Level of Resource/Reserve Definition

Ability to Influence/Reduce Risk

Increasing Company Value

Project Value and Influence

5 Critical Determinants

Resources/Reserve

Geometallurgy

TMF

Supportability (Power, Water, etc.)

Permitting (Social and Environmental)

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Resource to Reserve

Mineral inventory !!! Geological interpretation Block sizing Geostatistics

Mining reconciliation Production factors (availability, utilisation, truck/bucket

factors, seasons, etc.)

Dilution

Grade control – reality vs. planned

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List not exhaustive

Strategy: Appropriate Engineering and Pragmatism

Resources and reserves (Value/grade continuity)

106

104

102

1

0.01

Estimatio

n Diffi

culty

homogeneity lowhigh

GEOLOGICAL CONTINUITY

StratiformLead, Zinc

IronCoal

PlatinumStratiformGold

PorphyryMolybdenum

CopperVein Tin

VolcanogenicCopper, Lead, Zinc

Vein Gold

AV

ER

AG

E G

RA

DE

(p

pm

)

DisseminatedGold

Placer

Kimberlite

(after King et. al. 1982)

Resource to Reserve ‘Boilerplate’

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Is it there…?Is it the right size, shape, quality and dimension…?Is it exploitable…?Is it exploitable at a profit…?

Source: JORC

Geometallurgy – process response

Understanding the variability of orebodies Orebodies are variable, so is metallurgy Appropriate (representative) sampling !!!!!

Grade, recovery and processing cost information relating to each orebody

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Strategy: Variability testwork & process flexibility

Tailings Management Facility (TMF)

Estimation of volumes & ground investigations !!!! For every tonne of ore you will need approx 2m3 of

storage volume For every cu.metre of waste rock you will need

approx 1.4X of storage volume

Acid mine drainage considerations

Suitability and Availability of build materials (clays, sand, rock, etc.)

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Strategy: Front-end loading

Supportability

Power

Water !!! For every tonne of ore you will need approx.

1000 litres of water

Human Capital

Supply Chain

Security

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Strategy: Front-end loading

Permitting

Can take 3-5 years

Early assessment necessary!!!! Understanding the country and lending

requirements Understanding the stakeholders

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Strategy: Front-end Loading

Why we should complete these studies

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• Logical, tried and tested development process

• Proven and established path over thousands of man years of engineering experience

• Omission of one of these phases equates to increased risk and additional costs

[email protected]@TetraTech.com

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