Delivering Smarter Solutions
2000-1
FEASIBILITY STUDIES
MINIMUM REPORTING REQUIREMENTS
INTRODUCTION
Since its founding in 1968, Pincock, Allen & Holt (PAH)
has been closely involved in the development and review
of feasibility studies for mining projects. Over that
period, reporting standards and requirements have
evolved to keep pace with the development of new
technologies and other project concerns. In 1968, for
example, environmental considerations were rarely, if
ever, addressed as part of project feasibility. In addition,
it has become apparent that there is continuing confusion
over the term “feasibility study”; i.e., what are the
differences among conceptual, prefeasibility and
feasibility studies?
PAH has attempted to adapt its internal standards to the
changing needs of the mining and financial communities.
Recent internal discussions coupled with review by
outside experts have led to the development of the
reporting guidelines presented in the enclosed table. PAH
will follow these as minimum standards for the
completion of its feasibility studies. As part of a due
diligence review, PAH is frequently requested as a third-
party to review feasibility studies, and will insure that all
of the major elements are included before accepting
such reports.
TYPES OF STUDIES
The evaluation of a mining project from exploration
through development and production is a lengthy and
complicated process. It requires an increasing level of
engineering input to facilitate the decision-making
process. Essentially, PAH works with three types of
studies: conceptual, prefeasibility and feasibility.
Depending on the context, each of these types of study
is sometimes generally referenced as a “feasibility study.”
Technical Bulletin No.
Only the final feasibility study is considered to have
sufficient detail to allow a definitive “go” decision for
corporate and financial purposes.
Conceptual Study
A conceptual study is a preliminary evaluation of a
mining project. Although the level of drilling and
sampling must be sufficient to define a resource (by
Internationally Accepted Standards–see page 3 ),
flowsheet development, cost estimation and production
scheduling are often based on limited testwork and
engineering design. This study is useful as a tool to define
subsequent engineering input and evaluation. It is not
valid for economic decision making.
Prefeasibility Study
The prefeasibility study represents an intermediate step
between conceptual study and final feasibility. It requires
a higher level of testwork and engineering design. Cost
estimates are of the order of ± 30 percent accuracy.
Economic evaluation is used for assessing various
development options and overall project viability. Cost
estimates and engineering parameters are not considered
of sufficient accuracy for final decision making.
Feasibility Study
The feasibility study is of sufficient detail and accuracy to
be used for positive “go” decisions and financing
purposes. This, and only this, is considered the “bankable
document.” Cost estimates are equal to ± 20 percent
accuracy or better. Mine plans show material movements
and ore grades on an annual basis. These plans would be
based on measured and indicated geologic resource
which would become proven and probable reserves.
Feasibility Studies

Minimum Report Contents

Conceptual Prefeasibility Feasibility

Study Study Study
SUMMARY AND RECOMMENDATIONS
Principal parameters including: Mostly assumed and Some engineering basis Sound engineering basis
factored
Ore reserves Yes Yes Yes
Mining and processing rates Yes Yes Yes
Environmental Issues & Permitting Requirements Yes Yes Yes
Dev. period and mine life Yes Yes Yes
Metal recoveries Yes, assumed Yes Yes
Capital cost estimate Yes Yes Yes
Operating cost estimate Yes Yes Yes
NPV, IRR and ROI No Yes Yes

INTRODUCTION
Location, topography, and climate
Site location map Yes Yes Yes
Detailed topography map Yes Yes Yes
Ownership and royalties
Claims list No No Yes
Claim map No Yes Yes
Current status and history
Historical chronology No Yes Yes
Past production, if any No Yes Yes

GEOLOGY AND RESOURCES

Geologic description
Geologic map Yes Yes Yes
Geologic cross-sections No Yes Yes
Drilling, sampling, and assaying
Parameters Yes Yes Yes
Drill hole location map Yes Yes Yes
Sampling/Assaying flow diagram No Yes Yes
Assay check graph No Yes Yes
Mineral resource estimate
Geologic model physical limits Yes Yes Yes
Lithology/tonnage factors/code No Yes Yes
Basic statistics No Yes Yes
Cum. freq. of samples vs. grade No Yes Yes
Variograms No Yes Yes
Resource estimate Internationally Accepted Internationally Accepted Internationally Accepted
Standards* Standards* Standards*

MINING
Ore reserve estimate
Reserve calculation parameters Assumed values Test-based values Test-based values
Cutoff grade equations No Yes Yes
Reserve estimate Internationally Accepted Internationally Accepted Internationally Accepted
Standards* Standards* Standards*
Mining method and plans
Mining parameters Yes, minimal eng. basis Yes, some geotech data Yes
Hydrology/geotechnical parameters No Yes Yes
Equipment list No Yes Yes
Consumables list No Yes Yes
Personnel list No Yes Yes
Surface mining:
Final pit and dump outlines Yes, simple outline Yes Yes
Annual pit and dump outlines No Yes Yes
Underground mining:
General mine development Yes, simple outline Yes Yes
Stoping system No Yes Yes
Production schedule
Annual ore and waste tonnage and grade Yes, simple division of total Yes Yes
Mining capital and operating cost estimates
Capital and operating cost estimates Yes, factored Yes, from est. manuals, ~+/- Yes, from vendor quotes
30% and take-offs, ~+/- 20%

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 Minimum Reporting Requirements

Minimum Report Contents (Cont.)

Conceptual Prefeasibility Feasibility

Study Study Study

PROCESSING
Ore sampling and testwork
Testwork data No, assumed values Yes, preliminary data Yes, detailed data
Processing method and plans
Processing parameters Yes, minimal eng. basis Yes Yes
Equipment list No Yes Yes
Consumables list No No Yes
Flow diagram Yes, simple, block diagram Yes Yes
Personnel list No Yes Yes
Material balance No No Yes
Site plan No Yes Yes
General arrangement drawings No No Yes
Processing capital and op. cost estimates
Capital and operating cost estimates Yes, factored Yes, from est. manuals, ~+/- Yes, from vendor quotes
20-30% and take-offs, ~+/- 10-20%
FSR costs Yes Yes Yes

INFRASTRUCTURE AND ADMINISTRATION

Infrastructure facilities
Facilities list Yes, with minimal detail Yes Yes
Power and water parameters Yes, preliminary Yes Yes
Full site plan No Yes Yes
Infr. cap. and admin. op. cost estimates
Personnel list No Yes Yes
Capital and operating cost estimates Yes, factored Yes, from est. manuals, ~+/- Yes, from vendor quotes
30% and take-offs, ~+/- 20%
(including working capital and
owner's pre-production expenses)

ENVIRONMENTAL/PERMITTING STATUS
Environmental management system
Permit/regulatory framework Yes, preliminary Yes Yes
Environmental Impact Analysis Yes, preliminary Yes Yes, well defined
Impact mitigation plans Yes, preliminary Yes, preliminary Yes
Mine waste management plan No Yes, preliminary Yes
Solid & hazardous materials handling No Yes, preliminary Yes
Spill prevention & emergency response plan No No Yes
Environmental cost estimates
Capital and operating cost estimates Yes, conceptual Yes, ~+/- 30% Yes, ~+/- 20%
Closure costs & accounting method Yes, minimal detail Yes, ~+/- 30% Yes, ~+/- 20%

DEVELOPMENT SCHEDULE
Schedule chart No Yes Yes
Schedule calendar No No Yes

ECONOMICS
Principal economic parameters Yes, preliminary Yes Yes
assessment
Royalties and taxes No Yes Yes
Cash flows Yes, preliminary Yes Yes
assessment
Sensitivities No Yes Yes

* Internationally Recognized Standards include:

1. Canadian National Instrument 43-101 and 43-101 CP
2. Australasian Code for Reporting of Mineral Resources and Ore Reserves - Prepared by the Joint Ore Reserve Committee (JORC)
3. U.S. Securities & Exchange Commission Industry Guide 7
4. SME Guide for Reporting Exploration Information, Mineral Resources and Mineral Reserves

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Feasibility Studies
Flowsheet development is based on extensive testwork,
material balances and general arrangement drawings.
Economic evaluation is based on annual cash-flow
calculations for the life of the defined reserve.
RECENT OBSERVATIONS AND CHANGES
Since PAH’s first publication of this bulletin in 1994,
additional emphasis has been placed on three specific
areas of these studies. These areas are the “robustness”
of the project to withstand changes in the metal price, the
actual capital costs associated with project construction
and startup, and the costs associated with reclamation and
closure.
With regard to “robustness,” this has been traditionally
handled by running sensitivities on the ore tons, grades,
operating costs, and the capital costs in the cash flow
analysis; however, these sensitivities are rarely tested
against the model in order to determine their relative
impacts on the potentially mineable reserve. With the
mining of lower grade deposits, PAH sees an increasing
need for this additional step of analysis.
With regard to the capital cost estimates associated with
project construction, it has been PAH’s experience that
these are typically 15 to 25 percent too low when
compared to actual costs of construction and startup.
The most common places where these estimates are
incorrect are:
• Availability of local craftsman such as millwrights and
construction engineers.
• Availability of local bulk suppliers such as steel or
cement.
• Underestimation of logistical support and
transportation
• Underestimation of construction time and startup
requirements.
Pincock, Allen & Holt, a division of Hart Crowser, Inc., is a consulting and engineering firm serving the international mineral resource industry. Your comments and
suggestions are always welcome. Contact Pincock, Allen & Holt • 274 Union Blvd., Ste. 200, Lakewood, Colorado 80228 • TEL 303.986.6950 • FAX
303.987.8907 • www.pincock.com
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Minimum Reporting Requirements
With regard to the determination of reclamation and
closure costs, it has been PAH’s experience that mines that
are in the process of closing and/or are closed have
experienced costs for closure which are three to five
times the budgeted costs. Historically, companies
assumed that the salvage value of the equipment and
physical facilities would cover these costs; however, this
assumption has proved incorrect principally as a result of
more stringent mitigation requirements, higher
reclamation costs, and longer post-closure monitoring
times.
PRESENTATION
The guidelines presented are based on the experience of
PAH engineers, leading industry experts, and the needs of
our clients in both the mining and financial communities.
They are presented within the format of a typical PAH
report and are limited to the tables and illustrations
included in the reports.
PAH does not believe basic engineering studies (± 15%
accuracy) are required to demonstrate project feasibility.
Although they are excellent for feasibility assessment, they
are part of the design and construction phase.
Any project will continue to evolve during its life. This is
a natural response to constantly changing conditions. In
contrast, the reporting requirements change only
marginally, except in regard to the accuracy level of the
study. PAH, by defining reporting requirements, is hoping
to help standardize, within a rational framework, the
definition of feasibility studies.