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 Scoping Studies, Preliminary Feasibility or Pre-Feasibility Studies (PFS), and Bankable (or Full) Feasibility Studies (BFS).

One of the most important components 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
Scoping Study Order-Of-Magnitude Estimate 5 Cost/capacity curves or Ratios 0% – 5% +40% to -25%
Pre-Feasibility Study Preliminary (Factored) Estimate 4 Factored from Equipment Costs 3% – 15% +25% to -15%
Bankable Feasibility Study 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%

Scoping study

A staged approach to a project is important because it minimizes the cost, allows the owner to indentify 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:

  • Mineral characterization
  • Process flow diagrams
  • Plot plan
  • Order-of-Magnitude capital and operating cost estimates
  • Market Analysis.

Pre-Feasibility Study

A Pre-Feasibility Study may follow a Scoping Study and could contain some or all of the following:

  • Preliminary resource evaluation and quantification
  • Conceptual mine planning
  • Preliminary Environmental Impact Assessment
  • Permit requirements
  • Hydrological studies
  • Soils testing and geotechnical analysis
  • Process development (bench and pilot plant testing)
  • Process flow sheet development
  • Development of estimates of capital (Class 4) and operating costs
  • Raw material cost and availability
  • Risk analysis
  • Level 1  – Project Master Schedule
  • Product and raw materials transportation
  • Marketing analysis.

Bankable (or Final) 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.

  • Resource evaluation and quantification
  • Conceptual mine planning
  • Environmental impact assessment (EIA)
  • Permit requirements
  • Hydrological studies
  • Soils testing and geotechnical analysis
  • Process development (bench and pilot plant testing)
  • Process flow sheet development and optimization
  • Development of estimates of capital (Class 3) and operating costs
  • Financial Model (often by the client)
  • Raw material cost and availability
  • Risk analysis
  • Level 2 – Summary Master Schedule
  • Product and raw materials transportation logistics
  • Marketing analysis.

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 Final 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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