techno-feasibility studies & project planning · techno-feasibility studies & project...

Technical Meeting on

Uranium Production Cycle

Techno-Feasibility Studies & Project Planning

Henry SCHNELL

Vienna – October 7-11, 2013

HA SCHNELL Consulting Inc. hatschnell@xplornet.com

Project Cycle

Study Definitions

Study Phases

Study Content

Rules of Thumb

The EIS

Project Planning

Techno-Feasibility Studies & Project Planning – Vienna, October 7-11, 2013

Actual monthly

Forecast monthly

Baseline monthly

Actual cumul

Baseline cumul

Forecast cumul

Project Cycle

Uranium Production Cycle

Value Chain within a Mining Project

Study Definitions

Study?

Mining Feasibility Study

From Hard Rock Miners Handbook* by Jack de la Vergne

A mining feasibility study is an evaluation of a proposed mining

project to determine whether the mineral resource can be mined

economically. There are three types of feasibility study used in

mining, order of magnitude, preliminary feasibility and detailed

feasibility.

1. Order of magnitude

2. Preliminary feasibility

3. Detailed feasibility

*The Hard Rock Miner’s Handbook, Edition 2

Limited, 2000

Study definitions

Project Management

Project Influence

Study Phase Parameters

Order of Magnitude

Order of magnitude feasibility studies (sometimes referred to as

"scoping studies") are an initial financial appraisal of an indicated

mineral resource. Depending on the size of the project an order of

magnitude study may be carried out by a single individual. It will

involve a preliminary mine plan, and are the basis for determining

whether to proceed forward with an exploration program, and

more detailed engineering work. Order of magnitude studies are

developed copying plans and factoring known costs from existing

projects completed elsewhere and are accurate to within 40-50%.

Preliminary Feasibility

Preliminary feasibility studies or "pre-feasibility studies" are more

detailed than order of magnitude studies. A preliminary feasibility

study is used in due diligence work, determining whether to

proceed with a detailed feasibility study and as a "reality check" to

determine areas within the project that require more attention.

Preliminary feasibility studies are done by factoring known unit

costs and by estimating gross dimensions or quantities once

conceptual or preliminary engineering and mine design has been

completed. Preliminary feasibility studies are completed by a small

group of multi-disciplined technical individuals and have an

accuracy within 20-30%.[

Detailed Feasibility

Detailed feasibility studies are the most detailed and will determine

definitively whether to proceed with the project. A detailed

feasibility study will be the basis for capital appropriation, and will

provide the budget figures for the project. Detailed feasibility

studies require a significant amount of formal engineering work,

are accurate to within 10-15% and can cost between ½-1½% of the

total estimated project cost.[

Often a more thorough study is required – Bankable Feasibility

Study Content

Study Phases(1 of 2)

Study Phases (2 of 2)

Engineering Requirements

ESTIMATE TYPE

Legend: R - minimum requirement, D - desirable 1 2 3 4

PROJECT PRODUCT CAPACITY LOCATION & SITE REQUIREMENTS R

SCOPE- UTILITY & SERVICE REQUIREMENTS: BUILDING & AUXILIARY R

STANDARD REQUIREMENTS: RAW MATERIALS & FINISHED PRODUCT R

PROCESSES HANDLING & STORAGE REQUIREMENTS R

PROCESS ROUGH SKETCHES D

FLOW PRELIMINARY R

SHEET ENGINEERED R R

PRELIMINARY SIZING & MATERIAL SPECIFICATIONS R

EQUIPMENT LIST

ENGINEERED SPECIFICATIONS MAJOR EQUIPMENT R

SPECS & DATASHEETS ALL EQUIPMENT D R

GENERAL ARRANGEMENT (A) PRELIMINARY R

(B) ENGINEERED R

LOCATION D R R R

GENERAL DESCRIPTION D R R

SITE SOIL BEARING D R R

LOCATION & DIMENSIONS R.R. ROADS IMPOUNDS FENCES D R R

WELL-DEVELOPED SITE PLOT PLANT & TOPOGRAPHICAL MAP R R

WELL-DEVELOPED SITE FACILITIES R

BUILDINGS APPROXIMATE SIZES & TYPE OF CONSTRUCTION R

& FOUNDATION SKETCHES R

STRUCTURES ARCHITECTURAL & CONSTRUCTION R R

PRELIMINARY STRUCTURAL DESIGN D R

GENERAL ARRANGEMENTS & ELEVATIONS R R

DETAILED DRAWINGS R

ROUGH QUANTITIES (STEAM WATER, ELECTRICITY, ETC.) D

UTILITY PRELIMINARY HEAT BALANCE D

REQUIREMENTS PRELIMINARY FLOW SHEETS D

ENGINEERED HEAT BALANCE R R

ENGINEERED FLOW SHEETS R R

WELL-DEVELOPED DRAWINGS R

PRELIMINARY FLOW SHEETS & SPECIFICATIONS R

PIPING ENGINEERED FLOW SHEETS AND P & ID's R R

PIPING LAYOUTS & SCHEDULES R

PRELIMINARY INSTRUMENT LIST D R

INSTRUMENTATION ENGINEERED LIST & AND P & ID's D R

WELL-DEVELOPED DRAWINGS D

PRELIMINARY MOTOR LIST - APPROXIMATE SIZES R

ENGINEERED LIST & SIZES R R

ELECTRICAL SUBSTATIONS, NUMBERS & SIZES, SPECIFICATIONS D R R

DISTRIBUTION SPECIFICATIONS R

PRELIMINARY LIGHTING SPECIFICATIONS D

PRELIM. INTERLOCK CONTROL & INSTRUMENT WIRING SPECS. R

ENGINEERED SINGLE-LINE DIAGRAMS WER & LIGHT) R R R

WELL DEVELOPED DRAWINGS R

INSULATION ROUGH SPECIFICATIONS D

& PRELIMINARY LIST OF EQUIPMENT & PIPING TO BE INSULATED R

PAINTING INSULATION & PAINTING SPECIFICATIONS & SCHEDULES D R

WELL-DEVELOPED DRAWINGS OR SPECIFICATIONS D

ENGINEERING & DRAFTING D R R

MANHOURS PROJECT STAFF MANPOWER - HOME OFFICE & FIELD R R

LABOR BY CRAFT D R

SUPERVISION D R

Type Estimates: 1. Conceptual Level Estimate Accuracy . 25% to +40% 2. Preliminary Level Estimate Accuracy - 20% to +25% 3. Feasibility Level Estimate Accuracy- 10% to +15%

4. Detailed Level Estimate Accuracy - 5% to +7%

Project Toll Gate Review - Example

Project Leadership - example

Typical Final Report Outline

Volume 1 Summary Report

Volume 2 Geology and Ore Reserves

Volume 3 Mine Planning

Volume 4 Mine Plant

Volume 5 Design Criteria, Mineral Processing and Metallurgy

Volume 6 Consultants’ Reports

Volume 7 Side Studies

Volume 8 Environmental and Socio-economic

Volume 9 Quotations and Proposals

Volume 10 Project Planning and Execution

Volume 11 Cost Estimates

Appendixes of all background information

Test Work Requirements

See second presentation of

this meeting

Rules of Thumb

Rules of Thumb - Cost

The cost of a detailed feasibility study will be in a range from ½%

to 1½% of the total estimated project cost. Source: Frohling and

The cost of a detailed or “bankable” feasibility study is typically in

the range of 2% to 5% of the project, if the costs of additional (in-

fill) drilling, assaying, metallurgical testing, geotechnical

investigations, environmental scrutiny, etc. are added to the direct

and indirect costs of the study itself. Source: R. S. Frew

Six-tenth Rule

Rules of Thumb - Time

The definitive feasibility study for a small, simple mining project

may be completed in as little as 6-8 weeks. For a medium-sized

venture it may take 3-4 months, and a large mining project will take

6-9 months. A world-scale mining project may require more than

one year. Source: Bob Rappolt and Mike Gray

Rules of Thumb - Accuracy

±15% accuracy of capital costs in a detailed feasibility study may

be obtained with 15% of the formal engineering completed; ±10%

accuracy with 50% completed and ±5% accuracy may be obtained

only after formal engineering is complete. Source: Frohling, Lewis

and others

Study Accuracy

Rules of Thumb – Production Rate

Production Rate

The production rate (scale of operations) proposed in a feasibility

study should be approximately equal to that given by applying

Taylor’s Law

Taylor’s Law (Taylor, H.K. Rates of Working of Mines - A Simple Rule of Thumb, IMM Transactions, Oct, 1986)

The optimum extraction rate = 5 × (expected reserves)3/4 / (days per year)

In which “Expected reserves” are generally interpreted to mean proven + probable reserves.

Example:

Facts: 1. Expected reserves = 3,500,000 short tons

2. Mine five days per week = 250 days/year

3. Mill seven days per week = 350 days/year

Solution: 1. Mining rate = 1,618 short tpd

2. Milling rate = 1,156 short tpd

The EIS (Environmental Impact Study)

The EIS

Project Management

Project Leadership - example

Contingency

Use of Monte Carlo simulation is today common practice.

Change Management Procedure

Risk Management

Mining Risk

Corporate

Performance

Exploration

Performance

Development

Performance

Mining

Performance

Processing

Performance

Marketing

Performance

Location

Uncertainty

Mining

Complexity

Social &

Environmental

Uncertainty

Construction

Uncertainty

Mining

Uncertainty

Metallurgical

Uncertainty

Market &

Commodity

Pricing

Uncertainty

Financial &

Economic

Uncertainty

Geological

Uncertainty

Science &

Technology

Uncertainty

Mining is a risky business and each stage is impacted by uncertainties

Investor

Uncertainty

Social &

Environmental

Uncertainty

Social &

Environmental

Uncertainty

Social &

Environmental

Uncertainty

Social &

Environmental

Uncertainty

Social &

Environmental

Uncertainty

Political

Uncertainty

Political

Uncertainty

Investor

Uncertainty

Pervasive,

Largely

Uncontrollable

Poorly Defined

and somewhat

Controllable

Direct

Controllable

Global Financial &

Economic Risks

“Risk Categories”

Conclusion

Operational Timeline for Mine Life Cycle

Reference

IAEA Publication

PMI – www.pmi.org

NI 43-101 Standard

COMPANION POLICY 43-101CP

TO NATIONAL INSTRUMENT 43-101

STANDARDS OF DISCLOSURE FOR MINERAL

PROJECTS

TABLE OF CONTENTS

PART TITLE

PART 1 APPLICATION AND TERMINOLOGY

PART 2 DISCLOSURE

PART 3 AUTHOR OF THE TECHNICAL REPORT

PART 4 PREPARATION OF TECHNICAL REPORT

PART 5 USE OF INFORMATION

PART 6 PERSONAL INSPECTION

PART 7 REGULATORY REVIEW

Questions?

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