Feasibility studies
We specialise in delivering integrated multi-disciplinary mining and infrastructure projects that are both constructable and bankable. We have a successful track record of developing mining projects from identification to implementation. In most cases this involves the feasibility process, culminating in a bankable feasibility study to secure external or internal funding and/or get implementation approval.
The mining feasibility process involves a staged approach to evaluate the techno-economic viability of mining projects. This process allows for technical trade-offs to deliver the best configuration on a mine to market basis. A successful feasibility process delivers a study that fits the strategic objectives of the mine owner while achieving implementation requirements and funding approvals.
What we offer
We have a successful track record of developing mining projects from identification to fruition. In most cases this involves the feasibility process, including concept, prefeasibility and definitive feasibility studies, culminating in a bankable feasibility study to secure external or internal funding and/or get implementation approval.
Our extensive experience in the approval life cycle has helped guide many projects through our clients’ internal investment stage gate processes. We also support clients in their interactions with lenders and investors providing finance to these projects.
The process could span up to 15 years or more, from initial mining site identification to project implementation, varying based on project size, location, and complexity. In recent years, there has been a trend among mine owners and investors to expedite this process by skipping certain development phases. While this approach can offer economic benefits, it also introduces associated risks.
A clear understanding of the associated risks and methods of mitigating these risks are important to allow for faster, yet successful project development processes.
At Ukwazi, we provide strategic guidance to clients considering modified project development approaches.
When the project and client risk profile align with this strategy, we collaborate closely to develop tailored solutions that effectively manage and mitigate these challenges.
Feasibility Studies
A well-developed feasibility study based on internationally accepted guidelines ensures that all relevant factors are considered in the decision-making process and provides a solid foundation for informed project decisions. It helps organisations make informed choices about the allocation of resources and minimises the risk of investing in projects with limited potential for success.
There are numerous codes and standards that serve as a guideline for project development and public reporting of the technical parameters and estimated value of mining projects at various development stages. One such a guideline was set out by the American Association for the Advancement of Cost Engineering International (“AACE”) in the 1970’s for project development and cost estimate classification. This methodology has been accepted world-wide to control the development of complex projects. Mining projects certainly fall within the complex, multi-disciplinary category.
The guideline starts at a Class 5 opportunity identification, then progresses to potentially fundable estimates in the interim, and then to a Class 1 execution estimate. The first stages (Class 5 and Class 4) are the scope development phases. Here, the intension is to investigate WHAT to design. In the design and engineering development stages, you design WHEN and HOW these components will interact and integrate as a cohesive solution to achieve the project objective. The levels of estimate accuracy continuously improve through the development stages, and stage gates regulate progress to the next stage of development. This process represents international best practice.
In addition, various international reporting codes were developed specifically for the mining sector. The development of the South African code for the Reporting of Exploration results, Mineral Resources and Mineral Reserves (SAMREC) started in 1992, and was first issued in 2000, and adopted by the Johannesburg Stock Exchange (JSE) in their Listing Requirements. Today it (and other nternational codes such as JORC or NI 43-101) forms the basis of reporting public estimates and should be adopted, even if the estimates are not intended for publication. These Public reports must contain the information that a reasonable investor would expect to find and use as a basis for making an informed decision regarding a project. The same principles apply to reports that may find their way into the public domain. We strive to ensure that all estimates and reports comply with the relevant Codes, irrespective of the intended audience.
As part of the 2016 SAMREC edition, Table 2 was added to provide further guidance on the project development process, focussing on Class 5, Class 3 and Class 2 estimates, as the Codes provide guidelines on public disclosure. It compares well with the AACE guidelines and is clearer on aspects specifically associated with the mining sector. Please refer to the South African Codes include SAMVAL and the SAMESG guidelines for further details.
Comprehensive international Codes and Guidelines are available to not only provide structure to the project development process, but to provide guidance in terms of the public reporting of the project outcomes. These are well structured, clear and appropriate. Non-compliance with these Codes and Guidelines results in difficulty in determining project fundability. Competent and Qualified Persons are encouraged to report and disclose projects results in line with the Codes and Guidelines, irrespective of the intended audience.
Compliance with the reporting codes ensures that the project owner develops the project on an appropriate techno-economic basis. It also empowers the project owner to trigger funding at the appropriate stages of the project and to implement it into a safe and sustainable operation.