Pre-feasibility study

Author: John Wright

Contents
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 1 Introduction

 2 Purpose of study

 3 Study content

 4 See also

Introduction
The characteristics of the pre-feasibility study include:

 5% - 15% of the engineering tasks are complete

 Cost estimate accuracy is in the order of ±30%

 Bottom line contingency is in the order of ±20%

 Normal time required for submission of draft report is in the order of 6-12 months Report
reviews and final approval can add significant time to the overall project schedule

 Normal cost range (includes supporting studies and test work – geotechnical, mineralogical,
metallurgical, environmental, etc., but not exploration geology) will be in the order of 0.5% -
2.0% of the total project value ($1.0 - $4.0 million for a $200 million project)

Purpose of study

The purpose of a pre-feasibility study is to select the preferred option (Base Case) for the project
development (including mine access, mining method, process method, etc). This base case option is then
developed in sufficient detail to support decisions to commit the additional funds (typically several million
dollars) required in order to collect additional information, carry out a final project feasibility study, and
successfully complete the required project permitting efforts.

By the time a decision is made to proceed with a pre-feasibility study, a preliminary resource/reserve report
(usually NI 43.101 compliant) has been completed and an orebody model showing the orebody shape,
tonnes, and grade is available. Initial geotechnical, mineralogical, and metallurgical assessments may also
have been carried out. The confidence in the accuracy of this data will reflect directly in the confidence in
the completed pre-feasibility study.

Study content

By the time a project has progressed to the pre-feasibility study stage, there will be some level of
expectation that the project will proceed through to construction and operation. At this level of review, the
scope of information collection expands into several parallel efforts including:
  Completion of the orebody geological model. This model will continue to be further updated
and refined, but is “frozen” at some set date for the purposes of the pre-feasibility study.

 Collection and analysis of geotechnical and hydrogeological data.

 Collection and analysis of mineralogical data for ore and surrounding waste rock.

 Metallurgical test work on multiple ore samples in order to determine process methods and
parameters, and to allow prediction of metal recoveries, concentrate quality, etc.

 Mine design, mine production schedule, process plant design, and related infrastructure and
facilities designs. These designs are generally conceptual in nature.

 Environmental baseline data collection and reviews of mineralogical information to determine

possible elements of concern with respect to water discharge, tailings disposal, and waste
rock disposal (such as acid rock drainage, ability to meet discharge water quality standards,
etc.).

 Begin the community consultation process to identify any issues that may impact on the final
project design and to gain public support throughout the permitting process.

A pre-feasibility level of study provides:

 A continuation of work from a favourable scoping study decision. Typically, the first activity
will be to carry out a review of the various trade-off options presented in the scoping
study. This may include basic schematic designs, scope descriptions, a comparative
schedule and cost estimate, and a table of advantages and disadvantages for each of the
options. Various options for each topic (for example, mine access) are compared and a
recommendation of the preferred option is then provided. In some cases, a ranking table will
be used to help the decision-making process. This table will list key factors for the various
options being compared (e.g. safety, schedule, capital cost, operating cost, project risk) with a
relative weighting (normally 1 – 3) assigned for this factor under each option. As well, each
factor itself will have an importance weighting value assigned (again, normally 1 – 3). The sum
of the option ranking and the factor weighting is entered under each option, and the option
with the highest combined total for all factors will normally be the preferred option.

After all trade-off studies are completed, the preferred options are combined into a Base Case option for
the project design, which is developed in more detail during the second phase of the pre-feasibility study.

 A suitable level of design effort to fully describe the selected pre-feasibility Base Case option,
and to allow completion of a project schedule and cost estimate. This will include:

 A complete breakdown of the project work scope and defined project battery limits. This
breakdown is presented in a work breakdown structure (WBS) format that will be used in both
the schedule and the estimate for the pre-feasibility study, and will be carried through into the
feasibility study and detailed engineering design phases.
  Work descriptions and general arrangement drawings/sketches sufficient to provide accurate
estimates of facilities required, services required, quantities of work, major equipment
requirements, etc.

 A mine production plan identified in sufficient detail to confirm mining method(s), backfill
requirements, mining equipment requirements, production rates and production ore grades by
year over the life of the mine. This also provides overall resource recovery and dilution
information.

 Mine development layouts including lateral and raise development provided in sufficient detail
in order to determine overall development meters required.

 A plant process flowsheet with preliminary equipment sizing and preliminary mass balance.

 General arrangement drawings and quantity requirements for services to the site (compressed
air, electric power, water supply, communications, diesel fuel, etc.).

 Mobile and fixed equipment list and sizes/capacities.

 Productivities calculated from first principles, vendor information, benchmark studies, industry
standards, etc.

 Project capital costs based on quantities obtained from general arrangement drawings, vendor
budget quotes for major items, current data base information, current labour cost information,
information supplied by the Owner and/or gained at other similar sites, industry standards, etc.

 Project operating cost and sustaining capital cost estimates based on the life-of-mine
production plan.

 Initial environmental baseline studies completed and environmental areas of concern

identified with preliminary designs for waste dumps, discharge water control and water
treatment, noise and dust abatement, etc.

 At this stage, the environmental impact assessment, permitting process, and community
relations work can truly begin as enough is known about the project to be able to reliably
assess the impacts and to describe the planned project scope and benefits.

 An assessment of project risks and opportunities identified to date (including financial,

schedule, health and safety, political, etc.). Identify if there are any fatal project risks.

The study will also include plans and estimated costs for the next stage of the project (feasibility study),
including:

 An assessment of additional information requirements to support a feasibility study in the

areas of:

 geological/geotechnical/hydrogeological studies

 mineralogical studies

 metallurgical studies

 environmental studies and data collection/monitoring

  permitting (permit application filing/reviews, ongoing community consultation)

 health and safety

 staffing/training

 A plan covering schedule and estimated cost to address these areas is included:

 A plan, schedule, and cost for the completion of the feasibility study engineering design.

 A preliminary plan, schedule, and cost for the project execution and for the ongoing mine
operation.

 A procurement plan, schedule and cost if the project is fast-track and/or requires the
purchase of significant major long-lead equipment items (such as a shaft hoist, SAG mill,
major electrical switchgear, or other specialty equipment) during the feasibility study
stage or prior to the start of site construction.

The pre-feasibility study is often considered to be the key stage in the project design as it lays the
foundation for the project work scope carried forward into the feasibility study.