Development and Application of a Tool Kit for the appraisal of the Economics of Mineral Resource Projects
Country / Region: World
Begin of project: April 1, 2015
End of project: March 31, 2018
Status of project: May 10, 2016
Delivery of a Training Workshop in Tajikistan
Feasibility studies are produced by mining companies once the exploration of a deposit has revealed a successful outcome. The principal purpose of the study is to determine the economic viability of mining the deposit, taking into account the costs arising for mining operations, processing and environmental and social measures. The mining company uses the results of the study to decide whether or not to exploit the deposit.
If the results confirm that extraction can be economically viable, as a rule the mining company submits the feasibility study to the responsible mining supervisory authority in order to obtain a mining licence. Mining supervisory authorities have licensing procedures in which they examine whether the resource extraction described in the feasibility study complies with mining and environmental legislation and with the implementing regulations, and whether the economic viability calculations for the resource extraction project are correct. To do this they need knowledge of legal frameworks and fundamental law, and in particular they need to know how to interpret geological, technical and economic information.
In many developing countries, however, the mining supervisory authorities do not have sufficient expert and technical capacity to carry out comprehensive checking of feasibility studies. Assessing the economics of a resource extraction project is often a particularly difficult task for mining supervisory authorities, owing to the complexity of the evaluation method.
In order to help the mining supervisory authorities better assess the plausibility of the economic viability calculations for a mining project that form part of a feasibility study, the authorities’ expertise and technical capacities have to be strengthened. This is where the Tool Kit comes in.
The Tool Kit is intended to be a simple procedure for mining supervisory authorities to use for the economic appraisal of resource extraction projects. Training is provided to enable the authorities to develop their own independent evaluations and assessments. The authorities will then be better able to understand and judge the plausibility of the feasibility studies submitted to them. The Tool Kit can thus also be seen as a control tool for reviewing the technical and in particular economic results of a feasibility study.
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