Page 270 - Introduction to Mineral Exploration

11

Project Evaluation

Barry C. Scott and Michael K.G. Whateley

11.1 INTRODUCTION tion, evaluation, and management of signific-
ant risks to a company. In a mining company
It is said that mineralisation is found, orebodies this requirement includes technical issues such
are defined, and mines are made. Previous as determination of the ore reserves, selection
chapters have outlined how mineralized rock of appropriate mining and processing methods,
is located by a correct application of geology, as well as financial, social, environmental, and
geophysics, and geochemistry. Having located reclamation aspects of the project. Similarly
such mineralisation its definition follows and there is a range of business issues to be add-
this leads to a calculation of mineral resources ressed, such as the project’s ownership struc-
where a grade and tonnage is demonstrated at ture, permitting, marketing, and government
an appropriate level of accuracy and precision relations and their interactions. The value
(see Chapters 3 and 10). The question now be- of mineralisation is a function of these aspects
comes how does a volume of mineralized rock and several other factors, which are listed
become designated as a resource and by what below.
process is this resource selected to become an
ore reserve (see section 10.4) for a producing 11.2.1 Mine life and production rate
mine? What steps need to be taken to ensure
that there is a logical progression that moves Mine life
the project with the initial unconnected ex-
ploration data to a final reserve estimate that Other things being equal the greater the ton-
meets the requirements of potential investors nage of mineable mineralisation the longer the
and bankers? A mine will come into existence mine life and the greater its value. It follows
if it produces and sells something of value. that:
What value does a certain tonnage of mineral-
ized rock have? What is meant by value in this Mine life in years = total ore reserve
context? How is this value calculated and average annual production
evaluated? These questions are considered in
this chapter. Factors relating to mine life include the
following:

11.2 VALUE OF MINERALISATION Legal limitations
Exploitation of the mineralisation may be
Legislation in a number of countries now re- under the constraints of a lease granted by its
quires directors of listed companies to comply former owner such as the government of the
with a corporate governance code. In the UK, state concerned. If the lease has an expiry date
the Turnbull report (Turnbull 1999) recom- then the probability of obtaining an extension
mends a systematic approach to the identifica- has to be seriously considered.