Question

10. In your own words, and in complete sentences, explain what the purpose of a feasibility study and list in point form, 10 different factors that can affect the feasibility of a mining project moving forward? (7 marks)

Answer 1

1. Purpose of feasibility study:

• The main purpose of feasibility study is to determine whether the economic viability of the proposed project. Whether it is justifiable to put the time and resources in the project given the outcomes obtained therefrom.  
• To understand and identify the operations to be carried out, cost involved, human resources, technology and time required in the project and tax obligations etc.

There are 5 areas of project feasibity:

a. Technical feasibility:- To identify the technical requirements of the project and the availability and capacity of such resources with the firm.

b. Economic feasibility: - It involves carrying out the cost benefit analysis of the project. It helps to understand whether the organization will generate positive economic outcomes from the project.

c. Legal feasibility:- To understand legality of the project given that part or whole of the project may be carried out in foreign lands. It s done to understand the legal compliance of the project in home country and abroad. It requires understanding various laws and legal permits to be taken and complied with.   

d. Operational feasibility:- it involves identifying what processes are required to be carried out and capacity requirements for completing the project and quality standards to be met.

e. Scheduling feasibity:- It involved identifying the time frame within which the project needs to be completed. Otherwise there may be a risk of project failure.

Factors that can affect the feasibility of a mining project:

1. Cost involved in feasibility study:

• The cost involved in conducting feasibility study may vary substantially, depending on the size and nature of the project.
• common examples are Scoping study , Prefeasibility study, Full feasibility study, these costs are commonly expressed as a percentage of capital cost of project.

2. Sequencing the mine feasibility

It requires reviewing each discipline in the evaluation process. The scope of work to be carried out in each phase of the project. It is essentially the same for any phase of the evaluation process. However, the detail and quantity of work required for the appropriate level of accuracy will vary considerably

3. Geographics of the project

Understanding Geographical data and evaluating the same form the basis of the entire evaluation process by describing the minerals, it provides the essential information for the mine, resource estimation and processing design.

The risk is that the real resource is not as good as the estimated, if done incorrectly, it can have disastrous effects on the mine design and ultimately on the investment decision.

4. Resource requirements

It is conducted by the geologist, sampling consultant and geostatistician who will build the geological model, quantify the accuracy of the data collected and develop the resource estimate.

5. Estimated reserves

it helps in estimation of the viability of the mineral resource. Calculation of the reserves will depend on the mining method, including an estimate on dilution and extraction, mineral processing concepts, including cut off grade, overall recovery and expected capital and operating costs.

6. Mine design

It will vary depending upon the nature of the study.

It will be necessary for the engineers involved in the study to understand the level and deposition of the ore, and structure of the mine. The scale of the operation and the mining method will largely be influenced by the size of the resource.

7. Technology

A decision must be made about latest technology usage. There are opportunities for new projects to incorporate latest equipment or processes. However, one needs to understand the associated risk.

8. Logistics requirements and Process design

Processing engineers should become involved during the late stages of exploration as mineral processing will influence ore reserve estimations. Since it is both time consuming and expensive to obtain a representative bulk sample, it is ideal to identify the need for pilot plant work as soon as possible.

9. Environmental

The development of any mine will require an environmental impact assessment (EIA). The EIA consists of mitigation, management, monitoring and institutional measures to be taken to eliminate adverse environmental and social impacts.

Areas that should be reviewed include:

•Implementation of baseline studies.

• Implementation of general flora and fauna baseline surveys.

• Monitoring of local water wells, dams and other drill holes to determine seasonal variations in the water table

• Establishment of a weather station capable of measuring rainfall, wind direction, wind velocity and temperature.

10 . Infrastructure

Infrastructure requirements will need to be assessed and designed to a level in keeping with the study accuracy.

It usually addresses the following: - Power supply, Water supply, Internal roads , Plant infrastructure, Permitting and authorities.