Lecture Unit 10

Lecture Unit 10 - Introduction to Mining Lecture Unit 10:...

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Unformatted text preview: Introduction to Mining Lecture Unit 10: Project Feasibility Colorado School of Mines Mining Engineering Department Spring 2007 Classical Definitions Project Evaluation : An assessment of the estimated costs, expected benefits, returns, and risks associated with a single property or investment alternative as well as the process of determining how to maximize the asset’s “value” to the company and stockholders. Project Valuation : The process of determining the perceived “worth” or “value” of a project and/or property at a specific point in time. Classical Definitions Feasibility Study : “An engineering and economic appraisal of whether a property can be made commercially viable” Mine Design : The central component of a mine feasibility study. It is the product and iterative process of optimizing engineered structures, operating systems, facilities/infrastructure, and scheduling for the exploitation of a mineral deposit/resource in order to maximize project value within a given set of social, market, and regulatory constraints. Capital Budgeting : “The process of selecting among alternative investment projects”. Principle Phases of Evaluation (1) Valuation/Feasibility In essence, this phase is comprised of collecting and analyzing data for the expressed purpose of establishing a physical and economic description of the project. Project and/or Property Specific General Objectives: Technical and Economic Analysis of a Singular Project Formal Assessment of Project Variables and their Relationships Identify and/or Clarify Basic Factors that Govern Project Success To Quantify Variables in order to arrive at a Project’s value or Worth Principle Phases of Evaluation (2) Corporate Decision Making The initial component of this phase generally focuses on whether the project is deemed acceptable given a set of internal and external constraints. Does the project meet established company requirements and minimum economic standards (“Hurdles”) Is the project consistent with corporate strategies and stockholder expectations? The second major element of this phase is the process of selecting amongst the best possible project alternatives for investment (Capital Budgeting) For a finite amount of capital, time, and resources, a company must chose which projects it wants to undertake. Most mining companies review 25 or more property submittals per year for possible investment. The process can become extremely complex and usually incorporates elements of operations research. Issues Influencing the Evaluation Process The methodology and approach towards evaluation varies as a function of purpose, mineral commodity, characteristics of the project, and for whom the evaluation is being performed (e.g., intent and motivation) Issues Influencing the Evaluation Process Typical Purposes Solicitation of Project Financing and Investment Project Acquisition (buy)/Market (sell)/Ventures (partnerships)...
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This note was uploaded on 04/08/2008 for the course MNGN 101 taught by Professor Bigguy during the Spring '07 term at Mines.

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Lecture Unit 10 - Introduction to Mining Lecture Unit 10:...

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