feasibility studies in gold mining

feasibility studies for mining projects amc consultants

Investment in new mines has declined in Canada and Australia but is still quite active in some areas, including parts of South America. Feasibility studies are required throughout the pre-production stage of every mining project to justify continued investment in the subsequent phase. Usually a concept study or scoping study is followed by one or more pre-feasibility studies that reflect the increasing level of technical and economic knowledge gained at the various earlier stages. These culminate in a final feasibility study that demonstrates the economic feasibility of the project with sufficient certainty to allow a decision to develop a mine. There is no international agreement on the terminology for each stage of feasibility study and there is no agreed standard for quality or accuracy. The AusIMMs Monograph 27, Cost Estimation Handbook (second edition 2012) provides a set of standards that may become more widely used.

The level of engineering that has been attained in a feasibility study is usually well short of that required for construction, so a further period of detailed engineering design follows after the project has been approved. This usually continues during construction and only tapers off when production is imminent. The first evaluations of the property occur well before the scoping study, and form the basis of a decision to commence exploration. These may involve considering likely costs and revenues for conceptual targets, or sometimes examine the economics of discovering and developing a similar ore body to one that was mined in the past.

This procedure sets minimum targets for grade and tonnage against which the progress of exploration can be measured. If the initial drill intercepts give some indication of the potential tonnage and grade, a scoping study is carried out to justify further exploration. Exploration including preliminary metallurgical assessment, geotechnical investigations and so on will continue until sufficient data has been gathered to permit a pre-feasibility study to be carried out.

The pre-feasibility study usually considers a range of mining and processing alternatives and varying production rates, with the options narrowed down to one or two in each area. At this stage it is possible to detail the additional work including further definition drilling, sterilization drilling, metallurgical test work, pilot plant work and other site investigations that will be needed to support a feasibility study. The results of the pre-feasibility study are used to justify expenditure on gathering this additional information and the considerable expenditure needed to carry out the final feasibility study on a substantial project. The final feasibility study provides a basis for a commitment to proceed with project development, detailed design and construction. While it is convenient to refer to scoping studies, pre-feasibility studies, and final feasibility studies, in reality the study process is iterative and several increasingly detailed pre-feasibility studies may be undertaken before committing to the final feasibility study.

A scoping study may be carried out very early in the exploration phase, as a basis for acquiring exploration areas or making a commitment for exploration funding. At this stage the investment risk may be relatively small but it is obviously undesirable to expend further funds on something that has no chance of being economic.

The major risk is that a viable mining project is relinquished due to an inadequate assessment. As there is a very low probability of an exploration project proceeding to become a mine it is evident that this risk is quite a serious one at the scoping study stage. For this reason it is essential that experienced people are involved in the scoping study. Estimation accuracy may be 30 to 35%. It is acceptable for scoping studies to be based on very limited information or speculative assumptions in the absence of hard data. The study is directed at the potential of the property rather than a conservative view based on limited information.

The results of a pre-feasibility study may be the first hard project information that is seen by corporate decision makers. There is a risk that the findings are committed to memory and announced publicly so that it becomes difficult to dislodge them with subsequent information. In such cases, the pre-feasibility study is the real decision point, with the subsequent feasibility study being seen by management as a necessary step along the path that has already been irrevocably committed.

For these reasons the pre-feasibility study must be prepared with great care by experienced people, and its conclusions heavily qualified wherever necessary. Assumptions should be realistic rather than optimistic because it is very difficult to bring management and markets back to reality in the event that the final feasibility study is significantly less favourable. The main features of the pre-feasibility study are:

The final feasibility study is usually based on the most attractive alternative for the project as previously determined. The aim of the study is to remove all significant uncertainties and to present the relevant information with back up material in a concise and accessible way. The final feasibility study has three objectives:

The termBankableis sometimes used in connection with final feasibility studies. This just means that the study achieves a quality and standard that would be acceptable for submission to bankers. Whether a particular bank will actually lend against the project is another question, depending on many matters that are outside the control of the feasibility study team.

economic feasibility of responsible small-scale gold mining - sciencedirect

Artisanal mining (AM) activities are generally seen as a source of concern owing to their illegality and the environmental pollution that they cause, but in recent years it has been demonstrated that gold mining can be performed on a small-scale mining (SSM) in a responsible way outside of the artisanal dimension. A previous study by the same authors demonstrated how mineral resources and reserves can be managed to achieve a sustainable form of SSM, based on the concepts of proving a minimum reserve and working with replication of the operation on subsequent small reserves. It was shown that SSM can be viable with 1/100 of the reserves necessary to prove the feasibility of a large-scale mining business. However, that work made some simplifications in terms of value of money over time and taxation.

The present work continues by undertaking a realistic analysis of economic feasibility through a cash flow analysis (CFA) on various scenarios of investment strategy for the SSM business, considering the minimum reserve approach along with the traditional mining business strategy. The results show that the minimum reserve approach is always more attractive from an economic point of view, in terms of value of the project, rate of return of investment, and payback time. Finally, the most suitable profile for investors in the SSM business is discussed, and it is shown how small-scale investors and large corporations can fit into this approach.

erdene announces feasibility study results for bayan khundii gold project | global mining review

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Save to read list Published by Jessica Casey, Editorial Assistant Global Mining Review, Wednesday, 22 July 2020 09:15

Erdene Resource Development Corp. is pleased to announce the results of an independent Bankable Feasibility Study (BFS) for the 100%-owned, high-grade, opencast Bayan Khundii Gold Project (BK) in southwest Mongolia.

The independent BFS was prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) and has incorporated detailed mine design and scheduling, front-end engineering design for the processing plant and site infrastructure, a hydrogeological assessment, mineral waste facility design, comprehensive capital and operating cost estimation and an updated economic model. These studies have been completed by a consortium of international and Mongolian firms with significant experience operating in Mongolia and internationally. The technical report, prepared by the Roma Group Ltd, pursuant to NI 43-101 guidelines, will be filed on SEDAR within 45 days.

The Bayan Khundii BFS results confirm the high-return nature of this project in its base case, with significant potential upside due to ongoing district-wide exploration and exposure to rising gold prices. The shallow, high grade, opencast Bayan Khundii deposit lends itself to conventional mining and processing techniques, reducing the execution risk in bringing the project into production in an accelerated timeframe, said Peter Akerley, President and CEO. As a low-CAPEX, low-OPEX project with a less than 2-year payback and significant growth potential, Bayan Khundii offers investors and stakeholders exposure and leverage to gold as we move towards first production in early 2022.

Recent exploration results, including intersections of high-grade gold in the Midfield SE and Striker SW zones of the Bayan Khundii deposit, currently classified as sub-grade material, are expected to add to the Projects robust economics, continued Akerley. The Bayan Khundii development is the foundation for growth in our underexplored Khundii Gold District and we see significant potential to expand resources, extending the mine life and creating value for all stakeholders. We will follow up on recent exploration success with additional drilling in 3Q20.

We have recently engaged HCF International Advisers Ltd (HCF) to secure debt financing for the project, concluded Akerley. Their expertise, combined with the support of the European Bank for Reconstruction and Development (EBRD) position us well to secure the funding to commence construction later this year.

The BK BFS is based on an opencast mining operation targeting 600 000 tpy of feed material for the processing plant. The total mineable mineralised plant feed is 3.4 million t at an average diluted head grade of 3.7 g/t gold and average strip ratio of 9.1:1 (waste tonne: plant feed tonne). Mineralisation starts at surface, with the majority of the deposit contained within the top 100 m. The deposit structure, grades and depth suggest selective open cut mining will be utilised. Mining will use hydraulic excavators in backhoe configuration. Drilled and blasted material will be loaded into haul trucks, with waste rock deposited in an engineered Integrated Waste Facility (IWF) adjacent to the mine, and ore hauled to a crusher or run-of-mine (ROM) pad adjacent to the processing plant.

The BK BFS has assumed contract mining based on methodology and costing contained in proposals received from contractors with suitable experience in Mongolia in similar open-pit mining environments. In this scenario the contractor provides the full fleet and personnel to operate the project on a schedule of rates (US$/t material moved) basis. The contractor is proposing a total of 4 x excavators (2 x ore, 2 x waste), 10 x 55 t payload trucks, 3 x blasthole drills and a fleet of ancillary and support equipment to deliver the required material movement. The contractors workforce peaks at approximately 190 personnel to deliver the required schedule of production.

The ore-processing plant will be located adjacent to the Bayan Khundii opencast mine and throughput will target 600 000 tpy of ore, nominally 1800 tpd. Total mineralised material from BK, processed in the plant over the course of the mine life, is 3.4 million t at an average diluted head grade of 3.7 g/t gold. Using an estimated mill recovery of 93.1%, total recovered gold over the life of the Bayan Khundii deposit is 381 700 oz.

Operating costs are based on the mining and processing scenarios outlined above and assumes contract mining. Power for operations will be generated through a hybrid diesel and solar generation solution, provided under a power purchase agreement for the duration of the Project. All other activities are assumed to be owner-operated. The AISC for Bayan Khundii is estimated at US$733/oz.

The Bayan Khundii Resource includes measured and indicated resources of 521 000 oz at an average grade of 3.16 g/t gold,and Inferred Resources of 103 000 oz of gold at a grade of 3.68 g/t gold which could potentially be added to opencast reserves through both additional drilling and rising gold prices.

Recent drilling at the Midfield SE and Striker SW zones of the project area intersected exceptionally high-grade gold, including 1 m of 582 g/t gold within an intersection of 5.5 m grading 126 g/t at Midfield SE, in areas of the resource currently classified as waste or sub-grade material. The areas are expected to provide additional high-grade feed in the early phases of development.

Additionally, very high gold grades observed in drilling in the Striker West portion of the deposit have the potential to provide additional high-grade resources should closer spaced drilling improve continuity.

The reported resource is pit constrained based on multiple parameters including a US$1350 gold price. Multiple high-grade intersections outside the mine provide expansion targets requiring additional drilling in a rising gold price environment.

The Bayan Khundii deposit is situated in a highly prospective region that has received minimal historical exploration. On the Bayan Khundii property, multiple high-grade targets have been established through limited shallow drilling and surface sampling within 4 km of the deposit, including the Khar Mori (Dark Horse) prospect identified in late 2019.

Erdene recently trenched new gold zones at Dark Horse, with assays returning 6 m grading 8.8 g/t gold, including 1 m of 50.8 g/t gold, and 4 m of 14 g/t gold, including 1 m of 45.3 g/t gold. As a large untested prospect, Dark Horse provides significant discovery potential along strike with a well-defined and continuous gold-in-soil anomaly along a NE trending structure for 1.3 km. In addition, there are several isolated but intense gold-in-soil anomalies at or near NE-NW structural intersections. Drilling is planned for 3Q20.

Although a 93% gold recovery has been utilised for the BFS, testing of a recent master composite sample, representative of the BK ore, with a head grade of 3.6 g/t gold, returned recoveries averaging 95% indicating an opportunity for increased recoveries in the plant.

Erdene's deposits are located in the Edren Terrane, within the Central Asian Orogenic Belt, host to some of the worlds largest gold and copper-gold deposits. The company has been a leader in exploration in southwest Mongolia over the past decade and is responsible for the discovery of the Khundii Gold District comprised of multiple high-grade gold and gold/base metal prospects, two of which are being considered for development: the 100%-owned Bayan Khundii and Altan Nar projects. Together, these deposits comprise the Khundii Gold Project.

The Bayan Khundii Gold Resource includes 521 000 oz of 3.16 g/t gold Measured and Indicated (M&I) and 103 000 oz of Inferred resources at 3.68 g/t gold. Within the M&I resource, a proven and probable opencast reserve totals 409 000 oz at 3.7 g/t, providing possible significant growth of reserves with the potential development of the remaining M&I and Inferred resources.

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Mongolian mining news Gold mining news

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the life cycle of a gold mine: resource definition and the feasibility study | inn

After preliminary exploration has been completed, the next step in the life cycle of a gold mine is resource definition. At the end of this process, a feasibility study is published, and the ore deposit may be either deemed uneconomic or economic.

After preliminary exploration has been completed, the next step in the life cycle of a gold mine is resource definition. The processes in reserve definition are similar to preliminary exploration, and there is considerable overlap between the two phases. However, in resource definition, the exploration company has reason to believe thattheirproperty contains a mineral reserve. Therefore, the company will spend more money on intensive and technical exploration techniques. The resource definition phase not only involves further analysis of the size and grade of the mineral reserve, but also uses engineering and geotechnical studies to evaluate the mining method and the estimate how much it will cost to extract the ore, given the geology of the deposit. At the end of this process, afeasibility studyis published, and the ore deposit may be either deemed uneconomic or economic. Are You Investing In Gold Yet? What Happened To Gold In Q1? Which Gold Stocks To Watch In 2021? Exclusive Information You Need To Make An Informed Decision. Grab Your Free Report!

While the feasibility study is the key development in the advanced exploration phase, in regional exploration companies actually collect a great deal of data that is used in the feasibility study. A feasibility study analyzes the sampling, test work, and engineering analysis conducted throughout the exploration phase to determine whether or not a project has the proper economics to be developed into a mine. During the feasibility study how and what a public company communicates (regarding reserve estimates etc.) is governed by the securities exchange commission in the country where the company is listed. The rules are meant to prevent a company from releasing misleading information to the public. In Canada, the National Instrument 43-101 Standards of Disclosure for Mineral Projects dictates the rules. It is recommended that mining companies undergo the feasibility study in a somewhat linear fashion. There are no precise rules governing how a company proceeds in developing a feasibility study, and therefore companies may try and rush through the steps in an attempt to accelerate the process of developing a mine. While data collection is left up to the explorer, the validity of this data is tested by the securities exchange commission guidelines. Miners who rush may find themselves running around in circles collecting data- a waste of time, and money. A proper feasibility study has three key phases: the scoping study, the pre-feasibility study, and the feasibility study. Not all exploration projects make it through all the phases, if at any point it is determined that a project is uneconomical, it should be abandoned.

The scoping study involves analyzing drilling and sampling results to define a resource and analyze the best mining method to extract the resource. Scoping studies are key in the life cycle of a mine because they typically identify technical issues that will require additional examination or test work. Generally, the end result of the study is a description of the general features and parameters of the project and an order of magnitude estimate of capital and operating costs.

Preliminary feasibility involves the use of engineering and geotechnical studies for a more in-depth look at resource extraction. In addition, the company will examine environmental and permitting issues, and preliminary capital and operating cost estimates. A key importance of the preliminary feasibility study is to identify areas of concern that warrant further investigation. Depending on the level of detail in these studies, and the securities exchange that is involved, reserves can in some cases be declared at this point. What's On The Horizon For Precious Metals In 2021? Trends, Forecasts, Expert Interviews and more! All The Answers You Need To Make An Informed Decision. Grab Your Report

The feasibility stage is basically a more comprehensive preliminary feasibility study. However, during the feasibility study, the study into the economics of a potential mine advances to include mine design, production schedule, gold recoveries, plant design, consideration of environmental issues, detailed capital and operating costs estimates, and an economic model of the project. During the feasibility stage gold reserves can be declared. This phase marks the culmination of the years of painstaking research and data collection, where an exploration company will ultimately make the decision whether or not to proceed with mine development.

Often the term bankable precedes the term feasibility study. This term is often misunderstood to mean that a project is feasible. Adding this term simply means that the level of effort that has been incorporated into the study is sufficient for outside financing provided the project is feasible. Typically bankable means an overall accuracy level of plus or minus 15 percent on the feasibility study. Just like feasibility studies, bankable feasibility studies may also determine that a project is unfeasible. It is important to be clear that bankable only describes the level of accuracy of the analysis and has no relation to projects feasibility.

Conducting a thorough feasibility study is essential to a gold mines successful development. Scoping and prefeasibility are important because they identify potential problems; these problems can either be corrected by collecting more data or, in some cases, suspending the development of the mine. Once a company states they are doing a feasibility study there is pressure to pursue the feasibility to the end, even if at an early stage there is evidence it is not worth pursuing. However, companies who abandon projects due to calculations suggesting that the development of a mine would not be economical should not be looked upon unfavourably. If the economics are not there- they are better off pursuing another project. By pursuing a project for too long, a company will not only lose money, they will also lose out on better opportunities. If a company determines a project is feasible the next step is to move forward with the assessment and approval phase. Silver Price Forecast - What Happened And Where Do We Go From Here? Our Jam-Packed FREE Silver Report Highlights Key Insights, Exclusive Interviews And Promising Stock Picks! Grab Your Report! Read the entire Life Cycle of a Gold Mine series.Part I: Staking the ClaimPart II: Regional ExplorationPart IV: Assessment and ApprovalPart V: Mine ConstructionPart VI: Operating the MineThis article was first published on Gold Investing News on August 22, 2011.Dont forget to follow us @INN_Resource for real-time news updates!

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