Carta Exploration Ltd

Feasibility Studies
The economic viability of a mining project is established by a feasibility study containing engineering and financial models to determine, within the constraints of specified commodity prices and exchange rates, the economic rate of return to be expected from the project. 

If the investment return is sufficient to justify the capital needed to develop the mine, the project may go ahead.  Additional financing or joint venturing may be required to move forward with development.

Types and Costs of Feasibility Studies
The scoping study is the most general level of assessment and may involve not much more than a back-of-the-envelope tally of possible methods and bulk costs.  Cost of such as study is in $100,000's with low accuracy.

The preliminary feasibility (pre-feasibility) study incorporates estimates of the best mine plan; operating and capital costs; bench-scale metallurgical studies; availability of power, water, transportation and infrastructure; environmental issues; future commodity prices and a preliminary financial model.  Costs of pre-feasibility studies can be in the millions with a fair degree of accuracy (plus or minus 30%). 

A key decision point is reached upon the completion of a pre-feasibility study - does the project warrant the expenditure of the tens of millions of dollars it will take to advance to the next level of certainty? 

The feasibility study incorporates field and laboratory tests, improved engineering design and more accurate and detailed financial models to estimate capital and operating costs throughout the life-of-mine, the future stream of cashflows, and the projected return on investment.  Feasibility studies can cost $10 millions to achieve a good level of accuracy (plus or minus 10%). 

Another key decision point is reached upon completing the feasibility study - does the project's return on investment warrant the required capital costs and associated risks?  If so, then the next stage of construction phase design and detailed engineering will start, requiring the expenditure of another $10 million or so.

The Role_of_Feasibility Studies_in_Mining_Ventures
Use and Abuse of Feasibility Studies