Page 281 - Introduction to Mineral Exploration

264 B. SCOTT & M.K.G. WHATELEY

former, is it for an operational or an administr- environmental sensitivities will need to be
ative group? External readers could be a gov- identified. The project should indicate its
ernment department, prospective investors, or potential to produce enhanced value (NPV, see
banks that may loan money for the project. section 11.4.3) when compared to other poten-
tial investments.
11.4.1 Conceptual study
11.4.2 Order-of-magnitude study
Most successful exploration programs start at
this study level. A conceptual study establishes An order-of-magnitude study is normally a
the likely presence of a resource. This estimate fairly low cost assessment. However, the cost
may be only preliminary, but is the first step to of order-of magnitude studies is increasing over
defining an inferred resource as classified by the years, as companies have to address risks
the JORC code. It is based upon the interpreta- earlier in the process. The study is based upon
tion of the size, shape and grade of the potential limited drilling and other sample collection
resource and the possible mining and process- to establish whether there could be a viable
ing methods. The resource estimate may only project that would justify the cost of progress-
be based upon reference to deposits of similar ing to a pre-feasibility study. The results define
genesis and size and may only be an office- the presence of sufficient inferred resources to
based evaluation. There might be sufficient warrant further work. Mineralogical studies at
indications of tonnage and grade to encourage this stage will identify undesirable elements
further work. It is important to identify poten- and other possible metallurgical issues. These
tial issues, such as access, topographical, or resources should define sufficient tonnage
mining lease constraints. above a given cut-off grade to enable engineers
During the study similar deposits elsewhere to determine possible mining options and pro-
will be used as the basis to establish whether duction rates and thus the preliminary size of
their mining or processing methods are tech- mining and processing equipment. Social and
nically feasible on your deposit. Infrastructure environmental baseline studies will be initi-
and engineering requirements will be costed ated. Preliminary capital and operating costs
to ±35%, although estimates will be too unreli- can be established to somewhere in the region
able to attach confidence limits. Estimates can of ±30%. Financial modeling of options and
be calculated from empirical factors and com- sensitivities will be undertaken.
parison with similar operations, or in a mine
extension, current and historical statistics and
costs are immediately relevant and the accu- 11.4.3 Pre-feasibility study
racy of such estimates may be within ±10%. The aim of the pre-feasibility study is to evalu-
Such projects also follow the study definitions ate the various options and possible combina-
process. tions of technical and business issues, to assess
For evaluation of exploration projects, much the sensitivity of the project to changes in the
information is taken from sources such as the individual parameters, and to rank various
publications of state and national bureaux of scenarios prior to selecting the most likely for
mines and from reports of projects in the min- further, more detailed study.
ing literature. Such examples and much useful The pre-feasibility study incorporates major
data are included in O’Hara (1980), Mular sampling and test work programs. Upon com-
(1982), Bureau of Mines (USA) Cost Estimating pletion of a pre-feasibility study, geological
System Handbook (1987), Camm (1991), Goode confidence is such that it should be possible to
et al. (1991), Smith (1991), Craig Smith (1992), publicly declare ore reserves (from measured
and references such as the Annual Review and indicated resources), and any other mineral
Reference Manual and Buyers Guide of the Ca- resources that may become mineable in the
nadian Mining Journal. Websites that provide future with further study. Similarly, the min-
current information include that of Minecost ing method and production rate will have been
(Minecost 2004) and Western Mine Engineer- selected. Extensive mineral processing and
ing (Westernmine 2004). Major social and/or metallurgical test work, possibly using a pilot