Author: John Wright
The Concept, or Scoping study, has the following characteristics:
- 2% - 5% engineering is complete
- Cost estimate accuracy is in the order of ±50%
- Bottom line contingency is in the order of ±30%
- Time required for submission of draft report is typically 3 - 6 months. Report reviews and final approval can add significant time to the overall project schedule.
- Normal cost range (includes early supporting studies – geotechnical, metallurgical, etc., but not including exploration geology) – is approximately 0.2% of the total project value (±$400k for a $200 million project).
Purpose of study
This is the first real level of project assessment. The purpose of the study is to determine if the property or facility has the potential to become a viable project, present a broad range of possible options for the project development, provide an assessment of the current status of project knowledge/issues/concerns, and identify particular areas of concern that will require further detailed study. It provides an outline of the level of effort required in order to carry the project through construction, and includes an initial order-of-magnitude cost/economic analysis of the project.
The concept or scoping level of study addresses basic project information including:
- The general features and parameters of the proposed project.
- A basic outline of the required project scope and anticipated benefits.
- The status of technical issues. The study will identify what areas require further detailed study (geotechnical, hydrogeological, mineralogical, metallurgical, environmental, etc.) and will provide an assessment of the completeness and level of confidence in existing data.
- Preliminary project schedule as well as order-of-magnitude capital and operating costs. Using this information, an initial project economic analysis is provided. Assumptions made in completing the schedules and estimates must be clearly identified.
- Project risks and opportunities in the areas of technical, environmental, permitting, social, and other concern. These must be identified and analyzed.
All significant assumptions must be clearly stated in the report. As the project moves forward to more detailed levels of study, each of these assumptions will need to be tested and confirmed or modified.
The study will assess the possible alternatives for project development, including “outside-the-box” alternatives. The alternatives are reviewed at a high level and the result of these reviews will include a listing of potential trade-off studies to be carried out during the next stage of study. These trade-offs studies may include methods of mine access, mining methods, ore handling, ore processing, alternatives for mine ventilation systems, alternatives for mine dewatering, and so on. For example, options for ore handling may include ramp haulage, shaft hoisting, conveyor, hydraulic hoisting, transport of crushed/uncrushed ore, etc.
Based on a review of the options, one alternative (“proven” method) is selected and a more detailed project scope definition, a first generation of a project schedule, and order of magnitude capital/operating costs are generated to allow an initial economic assessment to be carried out.
The project team
Depending on the resources and expertise available within the company, portions of the project team may be provided internally or through experienced third party consultants. Generally, the selection of the project group is made on the assumption that the project will proceed further and continuity of personnel is desirable.
The project team for this level of study will normally consist of a small number of experienced personnel including:
- A project manager (Owner’s employee) who is responsible for the successful completion of the work.
- An experienced project engineer (or engineers) who has (or has access to) general expertise in specialized areas (geology, mine and facilities design, mine and plant construction, mineral processing, environmental issues, permitting, etc.).
- Scheduling and estimating support.
Level of accuracy
This level of study is based on incomplete information including:
- Resource identified to an inferred level of accuracy.
- Minimal or no mineralogical and metallurgical information.
- Limited geotechnical and hydrological information.
- Minimal mine, plant, and infrastructure design (schematic general layouts only)
- Little environmental/permitting or community relations work completed.
Designs produced at this level of study will be conceptual in nature, with a limited number of schematic mine and facilities layouts being generated. A simplistic mine production schedule will also be generated. These schematic designs and the production schedule will be used to better determine the scope of the work and to provide an overall project schedule. Based on the project scope and the schedule, an overall costs estimate will be generated. At this stage, there will be many project “unknowns” and the cost estimates will contain significant assumptions. The estimate will be based on factors, industry standards, and experience at other locations, as well as on costs generated from first principles. As a result, a relatively large bottom line contingency allowance is applied.
Any significant risks and opportunities identified during the course of the project study are listed in the report, along with plans of action for the collection of data required in order to better define and address the issues and/or assess the potential impacts more accurately. Normally there is no formal detailed risk assessment undertaken at this stage of study.
The concept or scoping study can result in one of three possible decisions:
- Go decision: Proceed to fill-in data gaps and collect additional data:
- Geology – Continue collection of information to improve confidence in ore resource and better define orebody limits
- Mineralogical studies – Collect information to ensure a complete understanding of the ore and waste rock
- Geotechnical/hydrogeological – Collect detailed information (linked with ongoing geological information collection)
- Metallurgical studies – Identify testwork to be carried out and begin collection of information.
- Environmental – begin baseline studies and data collection
- Initiate pre-feasibility study
- Wait or revisit: Wait for market conditions to improve before further action
- Collect additional data (e.g. better orebody definition in hopes of adding additional ore tonnage and/or improving ore grades)
- Look for other (less expensive) options for project development and production at a scoping study level
- No-go decision: Abandon the project as being un-economic
Comments and suggestions
1. Present options
Identify as many realistic options for the project as possible, including any “outside the box” alternatives that appear to have any merit.
2. Indicate level of confidence in available information
Clearly identify the level of confidence in the mineral resource, mineralogical, geotechnical, hydrogeological, and metallurgy information available. Identify programs to be followed in order to gain more detailed knowledge during subsequent studies.
3. Discuss assumptions
Clearly identify any significant assumptions made with respect to the project scope, costs, and schedule.
4. Anticipate and prepare for the next stage
Provide a detailed plan (scope of work, how it will be accomplished, how long it will take), and estimated cost for the next stage of study (the prefeasibility study). Funding for this next stage of the work (typical costs are in the order of $1 million to $5 million for a mid-sized project) is what will be requested through the approvals process.
5. Ensure that decision-makers understand your analysis
Make use of tables and figures in order to ensure that presentation is more readable and concise.
The next stage in the mine design process is the Pre-feasibility study.