We have talked a lot about the need for feasibility studies to set the record straight, move resources into reserves and give you some confidence that your brother-in-law is really onto something this time. So let’s look at the deep questions (that’s mining humour by the way) that define feasibility - technical and economic. 

There are really only three issues that need to be settled in a feasibility study; 

1. Does the technology exist to accomplish the goals established for a given project? There is no sense in establishing a project to mine gold on the moon just because you got chased off the earth by excited environmentalists if there isn’t a cab to take you there. Some projects are almost that weird.
2. Will the project generate revenues that pay back all the capital and operating costs plus generate a return for the investors? This can be a bit tricky for mining properties and often the details are kind of skipped over. For example, if a project has been explored for 8 years before a decision is made to conduct a feasibility study when is year 0 for the economic evaluation? 
3. Does anyone in the world want to buy what is going to be produced and will they sign a marketing letter of intent? This is a very big issue for lots of industrial minerals and much less so for a gold mine. Gold seems to always find a market.
4. Will the government grant a permit to develop the project? Think Windy Craggy in British Columbia or Tambo Grande in Peru. This question involves environmental and social development sensitivities which rightly have to be addressed in a way which improves the life of the general population in the area of the project as much as it does the company executives living in relative luxury thousands of miles away.

A little plug here for dumb engineers…. Engineering at the feasibility stage is the cheapest form of project insurance available - without apology I will re-state this quite often from here on. Lots of studies have shown that the most common cause of project cost over runs and project failure is due to insufficient feasibility work. So when you ask your brother-in-law who has done the feasibility study and he replies, “Hey this stuff is simple. We did it ourselves!” be very afraid.  Project development is not difficult to understand and, given the right conditions, is not that difficult to do. But this is also true of flying an airplane, taking out a gall bladder or castrating your dog. We hire experts for those jobs and so should we for developing complicated mining projects. I know this because I once castrated my dog and it wasn’t pretty - for either of us.

So that is the role and purpose of the feasibility study. It seems simple enough but these studies typically involve teams of up to 100 specialists, months of time and millions of dollars. I was once involved in the granddaddy of all feasibility studies in the Canadian tarsands. The total budget was C$120 million and it kept 150 people involved for three years. This was an unusual project in that a lot of new technology was developed which, by the way, contributed significantly to the success of today’s oil sand mines. This is what is called a “technical success if economic failure”. Whatever it was, it was a lot of fun - as projects can be.

Feasibility studies are generally required for any significant commercial venture and mining is no different. What follows then is a description of the elements of a mining feasibility study. We have found the gold - now what? Let’s look into the concept of feasibility a bit deeper.