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The Use and Abuse of Feasibility Studies

feasibility study managers

The development of a resource project inevitably requires the investigation of a vast range of issues across most engineering disciplines
– mining, metallurgical, chemical, civil, electrical, mechanical and environmental – as well as the geosciences.

It is also a characteristic feature of the resource industry that no two orebodies – and hence no two development projects – are the same. So these technical issues have to be addressed to a greater or lesser extent in evaluating any resource project’s development potential.

Not surprisingly then, technical issues tend to predominate when assessing the development potential of a project in the process typically
referred to as ‘doing a feasibility study’. But the principal purpose of a ‘feasibility study’ is to determine whether a development opportunity makes good business sense, not just whether it is technically possible.

Resolution of technical issues is often seen as the primary focus of a feasibility study, whereas in reality, these technical issues are the basis upon which an asset delivery and business plan is built. This is not to say that technical issues are unimportant – they are a prerequisite to the demonstration of a project’s viability.

The feasibility study process must therefore demonstrate that not only have the technical issues been satisfactorily addressed, but also that the broader commercial, economic and social issues have been considered in the development of a comprehensive business plan, which includes an assessment of the risk-reward profile of the proposed development.

This paper will present a framework for the conduct of ‘feasibility studies’ and provide guidance to minimum standards and best practice.

Making the Right Investment Decisions

MAKING THE RIGHT INVESTMENT DECISIONS

The Capital Investment System and Processes used by a Company are critical to the competitive edge of any business. Every year, the demands for greater effectiveness from shareholder funds will increase as this is a natural evolution found in business.

Investment decisions to develop or acquire new capital assets should be made on complete information
evaluated via a feasibility process. By necessity the information is never final, hence due to this
uncertainty, no investment decision is without risk.

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