Back to basics: the feasibility study

CIM Bulletin, Vol. 84, No. 953, 1991

J.R. Goode, M.J. Davie, L.D. Smith, Kilborn Inc., and C.R. Lattanzi, Micon International Limited

The feasibility study determines the technical and economic viability of a project at the level of accuracy required by the owner to make an investment decision. The economic analysis usually includes calculation of the discounted cash flow. Key components of the cashflow include the project capital cost, the operating costs, construction schedule, production rate, product prices and financial details. This paper examines the feasibility study for a typical mining project. The paper discusses acceptable methods for the determination of the geological and mineable ore reserves. The prerequisites for the development of suitable designs, and the calculation of capital and operating costs for the mine, processing plant, and infrastructure are reviewed. Important features of the cash flow analysis and its interpretation are presented.

Keywords: Mineral economics, Feasibilty studies, Economic analysis.