enthalpy news

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Making the Right Investment Decisions


Making the Right 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.

What is at issue is that the systematic evaluation processes used, and the definition standards to be  achieved, should ensure the evaluations are complete and to a known quality.

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During the 90’s and even more recently, the media have reported on a number of large projects and acquisitions that could only be described as technical and economic disasters. These well publicised investments destroyed shareholder value and resulted in challenges to Boards and Management of many resource companies.

Capital Investment Systems incorporating defined processes and standards have now evolved to meet
these challenges.

This paper sets out the experiences of Neil Cusworth, Managing Director of Enthalpy, relating to the Best Practices now being used or developed to make Capital Investment decisions.

The costs and efforts needed to define any new capital asset development or acquisition utilise the
resources available from shareholders’ investments. If the intended development or acquisition
proceeds, then the investigation costs add to the costs of the new development or acquisition.
Alternatively, if the intended development or acquisition does not proceed, then the shareholders’ funds
are lost or reduced in value.

Yet to grow or sustain a business, investments must be made. The challenge then is to decide how
much of shareholders’ funds should be put at risk, prior to the investment decision, in seeking to define
the investment. The alternative is to take higher risks during the delivery of the development project or
purchase of the existing business or asset.

Over the past fifteen years too many examples of investment decisions which did not deliver the
promised values have been witnessed in the resource and industrial sectors.

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The Use and Abuse of Feasibility Studies

It is generally accepted that the preparation of a feasibility study is an important element early in the life cycle of a resource development project (eg Laird, 2001; Amos, 2001). It is also widely accepted that the feasibility study process is multi-phased and iterative (eg West, 2006).


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Typically, initial assessments of the development potential of a resource project are aimed at assessing the project’s key technical and economic characteristics, with subsequent assessments designed to confirm assumptions and reduce the uncertainty associated with the development to an acceptable level. References to feasibility studies are often prefaced with ‘order of magnitude’, ‘preliminary’, ‘indicative’, ‘pre’, ‘final’, ‘bankable’, ‘definitive’, ‘detailed’ or other terms to indicate the level of detail investigated in a study. 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 a 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.

Please get in contact with us if you would like to inquire about our feasibility study managers.

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The Enthalpy Story Told: do the project right

For the past 25 years, Enthalpy has been working quietly in both the board rooms and on the shop floor for many of the world’s largest and newest companies. We are well known to our many clients but recognised by few outsiders. Today, we have decided to pull back the curtain and let the rest of the world know how we have been assisting our clients to select the right project, and do the project right. Today, we have released our new website detailing a snapshot of our 25 years of experience in multiple industries across multiple continents. We look forward to our next 25 years and becoming better known to many more.

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Brisbane Mining Conference 2013

On the 23-25th October Enthalpy staff will be attending the Mining 2013 Conference at the Brisbane Convention and Exhibition Centre, Southbank, Queensland. Please contact enquiries@enthalpy.com.au for more information.

Mining 2013 Conference

For more information about the conference, please visit:

With back-to-back presentations across two auditoria from key resource industry experts and participants, this three-day event has previously secured delegations in excess of 1,500, 140+ booths within its bustling exhibition area and ample networking opportunities at its attendant’s finger tips.

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Enthalpy at the Mines and Money Conference, London 2015

Mines and Money

Enthalpy staff will be attending the Mines and Money 2015 Conference November 30th – 4th December, London. Please contact enquiries@enthalpy.com.au for more information.

For more information about the conference, please visit:

Mines and Money is the leading international event series for capital-raising and mining investment, where investors and developers come together to network, hear market analysis, compare investment options and share knowledge.

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Project Evaluation 2016

Neil Cusworth and Don Hunter


Recent project failures have put into question the use and relevance of benchmarking and also independent reviews, forcing a rethink of traditional processes and procedures.

With cost estimates and schedules dramatically varying from lows seen around the global financial crises, to peaks experienced in the recent mining boom, benchmarking has ranged between essential to misleading.
Profound shifts are now underway in future project delivery strategies, which will need to be addressed in terms of changes to cost plus “EPCM” strategies and their market drivers.

Peer reviews performed over the last decade have, in hindsight, ranged from failures in not preventing wrong projects proceeding to, in some cases, successfully ensuring Owners did not proceed with doomed investments.
It has been recognised by Owners and Engineers that neither the traditional benchmarking, nor independent reviews, or a combination of both, are now absolutely assured of producing reliable forecasts of project outcomes.

To be of value, benchmarking now needs to recognise highly volatile responses of the engineering and construction industry to the current and future markets for their services. A cost model is proposed of the capital costs and schedules of projects, able to be used to reflect changes in market forces over the life of a project.

Independent peer reviews need to become both realistic of past and current outcomes and more aware of predicting impacts of future dynamic markets, if the conclusions are to be of value.

By around mid-2015 the commodity cycle is forecast to be at the bottom, so ensuring benchmarking and independent reviews evolve into reliable and transparent processes becomes even more important. This can only be achieved with more transparent and analytical benchmarking, and business orientated independent peer reviews, that both recognise and can calculate the impacts of dynamic markets.

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Neil Cusworth | Non-Executive Chairman & Senior Associate

Neil Cusworth

Neil Cusworth | Non-Executive Chairman & Senior Associate

As Founder and Non-Executive Chairman, Neil has a Project Management Engineering career spanning almost 40 years. As a result of his extensive experience, Neil Cusworth is often called in to conduct specialist reviews of studies and projects for Australian and international mining companies.

Neil has worked extensively and globally on assignments as a Project Manager – Director and has undertaken a variety of specialist advisory assignments since 1996 providing ‘best practice’ systems and procedures for multinational corporations. BHP Minerals, Falconbridge, Billiton Plc and BHP Billiton, Codelco, Stanwell Corporation and Barrick Gold have incorporated these systems into their corporate processes, and continue to utilise them.

Neil is an experienced Project Manager in the resource sector with exposure in minerals, oil and gas and industrial building sectors.

Significant projects worked on have included: the Moline Gold Mine, Gordonstone Coal Mine, Queensland Magnesia, Sale of the Gladstone Power Station, Magnesium Metal Projects, Alumbrera Copper Gold Project in Argentina, Anaconda Nickel Project, and the Tenke Fungurume Copper Cobalt Project.

A Mechanical Engineer by training, with multi-discipline skills and an orientation towards commercial and project control aspects of the mining, resource and industrial sectors, Neil is a Fellow of the Australasian Institute of Mining & Metallurgy and a Member of the Institution of Engineers.

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Where have projects gone horribly wrong?

As part of the London Mines and Money conference at Enthalpy’s UK launch Neil Cusworth presented “Why, for the last decade, did the international Mining sector deliver so many bad projects – and importantly how can we stop history repeating itself”.

This article explores project mistakes and how to prevent them.

Since the boom in commodity prices and the rush to develop and construct new mining projects to meet demands for products, many projects have been analysed and stated to be failures.

Enthalpy has been involved in delivering a range of mining projects or conducting reviews of studies and projects over the last 25 years. We have also been involved in conducting many post project reviews.

Most of the public dialogue and particularly “Management consultants” point to cost and schedule overruns as indicators of project mistakes. But is this dialogue correct?

And what are the causes of the project failures?

Can these failures be prevented or do investors have to learn to live with the reality of risks in the mining industry?

So if a project fails to be robust enough to withstand swings in commodity prices or cannot deliver the product tonnages forecast, or suffers exchange rate changes then capital costs overrunning and schedule delays will be just minor issues.

Click on the link below to download a copy

Presentation – Goodenough College – EEU – Dec2015 Rev D