Feasibility Studies

A feasibility study is an analysis of the viability of an idea.  The feasibility study focuses on helping answer the essential question of “should we proceed with the proposed project idea?”  All activities of the study are directed toward helping answer this question.

KEMWorks can provide Technical and Financial Feasibility Studies, including Preliminary Economic Assessments, Preliminary Feasibility or Pre-Feasibility Studies (PFS), and Bankable (or Full) Feasibility Studies (FS).

Preliminary Economic Assessment

A staged approach to a project is important because it minimizes the cost, allows the owner to identify the technical issues and risks early in the project, provides a forum for evaluating alternatives before proceeding with the next phase, and provides the owner with an early estimate of the required capital investment (Class 5 estimate).  A scoping study will provide an early indication whether the proposed business idea is or is not feasible, and this will save you time and money.  However, if the findings lead you to proceed with the Pre-Feasibility Study, the scoping study may have resolved some basic issues. A typical scope may include:

  • Geological summary and resources estimate
  • Mining methods (preliminary)
  • Beneficiation studies (characterization and bench scale tests). 
  • Economic evaluation
  • Market Analysis
  • NI 43-101 Technical Report

Pre-Feasibility Study

If the potential project passes the first gate a Pre-Feasibility Study may follow would contain some or all of the following:

  • Additional drilling and geological studies, resources calculations
  • Determination of mining methods and preliminary mine planning
  • Additional sampling, composite, characterization and bench scale beneficiation studies
  • Additional bench scale and pilot plant processing studies
  • Pilot plant beneficiation tests
  •  Selection and determination of location of the beneficiation and processing facilities (preliminary layout)
  • Preliminary Flowsheets and P&IDs
  • CAPEX and OPEX estimates
  • NI 43-101 Technical Report

Bankable (or Full) Feasibility Study

Bankable Feasibility Studies may contain all the elements of a Pre-Feasibility study but in much greater detail. Typically, a Bankable Feasibility Study is a comprehensive forward analysis of a project’s economics (+15% / -10% accuracy) to be used by financial institutions to assess the credit-worthiness for project financing and would include:

  • Final drilling, geological studies, resources calculations and sampling
  • Resource evaluation and quantification
  • Final mining method selection and mine planning
  • Additional sampling, composite, characterization and bench scale beneficiation tests
  • Pilot plant beneficiation tests
  • Additional bench scale and pilot plant processing tests
  • Permit requirements
  • Hydrological studies
  • Soils testing and geotechnical analysis
  • Final layout of facilities. 
  • Flowsheets and P&IDs
  • CAPEX and OPEX
  • Financial Model 
  • Environmental impact assessment (EIA)
  • Marketing studies: commercialization, distribution, and product samples evaluation by potential customers
  • Product and raw materials transportation logistics
  • Risk assessments
  • NI 43-101 Technical Report. 

An important component of any feasibility study is the estimation of capital and operating costs.  The quality of the cost estimate required for a project increases as the project becomes better defined and the costs to continue the project become greater.  The quality of the estimate can define the type of study as follows:

Type of Study
Type of Estimate
Study Classes
Derived From
Engineering Completed
Accuracy
Preliminary Economic  Assessment (PEA) Order-Of-Magnitude Estimate 5 Cost/capacity curves or Ratios 0% – 5% +40% to -25%
Pre-Feasibility Study (PFS) Preliminary (Factored) Estimate 4 Factored from Equipment Costs 3% – 15% +25% to -15%
Full (or Bankable) or  Feasibility Study (FS) Budget (Control) Estimate 3 Semi-detailed unit cost with some detailed material take-off, equipment quotes and MTO’s for Bulks. 10% – 40% +15% to -10%

The feasibility study is guided by a set of assumptions, a strategy, development conditions and a planned outcome. The actual outcome is uncertain and targets and objectives may not be achievable.

The bankable part of the feasibility study relates to the basis and conditions for a future financial agreement to collateralize assets for a project loan, to set a premium and a repayment schedule, with appropriate risk/reward factors.

Whether there is any difference between a Full Feasibility Study and a Bankable Feasibility Study is a debatable point. However, one can say that a bankable study is generally subjected to a full independent audit, while a FFS may or may not be if the project is to be funded in-house. Preparing for a full independent audit may affect the amount of detail presented in the study, and possibly the degree to which various risks have been addressed.

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