♦In cases where critical
infrastructure such as power or
roads rely on investment or
construction by other companies
or government agencies, very well
defined agreements with specific
cost and schedule commitments
Project Implementation Plan
♦Detailed and up-to-date project
schedule for design, construction,
commissioning and start-up,
performance test period, ramp-up
and steady-state production.
♦Plan and schedule for integration
of operations people into design
and construction process, prior to
♦Staffing plan and key persons for
each phase and the transition
• Owner’s Engineering,
Construction and Operations
• Engineering, Procurement, and
(EPCM) Contractor’s Team; as
EPCM contractor is usually
selected at the time the duediligence
review is completed.
♦Construction phase cashflow to
support schedule for loan draws.
♦Operating and Capital costs
estimated from the engineering
design to +/-15 percent accuracy.
Some companies are setting a
higher level of completeness,
often reaching 5 percent of final
design with +/- 10 percent
♦Capital costs are based on
vendor quotes for major
Prefeasibility and Feasibility studies.
This was first prepared in 1994 and
has been updated several times
since. The most recent was
presented in our Pincock
Perspectives Issue No. 95, March
2009 – “Minimum Engineering Study
Requirements Update” which is
available through our website:
Relative to the requirements of a
BFS for Lender’s evaluation of a
project, it is important to remember
the study is the basis for evaluating
the risk associated with the project.
This risk can be associated with
estimation of reserves, with the
efficiency of mining and process
plant operations, with economic
performance (capital and/or operating
costs), with the country, or with
meeting environmental, health and
safety regulations or other
standards. The BFS must provide
sufficient information and detail to
allow the Lender’s due-diligence
team to make an assessment of
these risks relative to the proposed
The following summarizes observations
of key points, based on our
experience with various projects
going through a due-diligence review.
♦Resources are estimated and
classified by international
standards (JORC, SME, CIM).
♦Industry accepted procedures are
used for all assaying and sample
♦Third-party audit of database and
resource estimation prior to the
due-diligence is a good idea.
♦Mine plans and production
schedules on annual basis for
pre-production and at least first
5 years of production, and then
5 year intervals for Life of Mine.
♦Geotechnical and hydrogeologic
analyses to support mine design.
♦Proven reserves make up a
significant part of the production
for the first period of operation
(that is, the loan period) and
production does not include any
♦Costs are estimated to the
appropriate level of accuracy (+/-
♦Metallurgical samples are
representative of the ore and were
taken from within the portion of the
deposit to be mined.
substantiates the project flowsheet
and assumed recoveries and
♦Process flowsheet is accepted
and proven technology. Lenders
typically do not want to finance
research and development
♦Has detailed flowsheet, major
equipment list, consumables and
power demand estimate, and
water and material balances.
♦Process plant design is to a
minimum of 1 to 2 percent of
♦Power, water, site access,
communication and product
shipping is well defined.
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