Computer Assisted Feasibility Studies of Mining Projects

By

M, A. Elwageeh* and A. M. AI- Attas**

* Professor of Mining Engineering, Faculty of Engineering, Cairo University, Giza, Egypt.

** TQM Manager, Saudi Geological Survey, Jeddah, Saudi Arabia

ABSTRACT

The feasibility study is the base for investors to make the right decision for the investment. Because of the unique and challenging features and characteristics of the mining industry, the financial analysis of the mining projects and the mining investment decision making has become a highly specialized field. The purpose of the present paper is to present a package of a computer-assisted mineral appraisal and feasibility programs. The package is based on the evaluation flow sheet developed by Barnes for the appraisal and feasibility of mineral deposits. MIND is the name assigned to the software package as an abbreviation of Mine Investment Decision" The developed system of programs could be used for the economic evaluation of any mineral deposit provided that the relevant technical, economical and financial data are input to the system. The system computes the annual cash flows of the mining project along its life time and calculates the different indices and profitability criteria such as the present worth of the project, the pay back period and the discounted cash flow internal rate of return (DCF - IRR). Different imagined scenarios to study the effect of critical parameters changes upon IRR could be simulated using the developed system to study the sensitivity of the project.

To verify the validity of the system it was successfully applied to economically analyze Zalim gold deposit at Saudi Arabia. Economic analysis of the deposit using the currently available data showed that the project is economically feasible. The IRR profitability index of the project for the basic scenario is 17.3 %. Sensitivity analysis of the project showed that IRR is sensitive to gold price operating cost, capital investment and grade.