The Feasibility Study Process and Selecting the Best Option

The Feasibility Study Process and Selecting the Best Option

John Elkington General Manager – UK

From Idea to Production • Develop corporate plan and strategy • The path to production is complex • When is a project feasible? • Preparation is the key to success • Break the process into logical steps • Save time – Save money

The feasibility study process A Snowden perspective

Collection and analysis Understanding the project Selection

Confirmation and increased confidence

Knowledge

Pre-feasibility (Selection) Scoping (Viability) Concept (Ideas) Level of study

Feasibility (Definition)

Concept Study • Objective            

Identify a potential project (the idea) Identify options that should be considered SWOT analysis Review the corporate strategy Decision to proceed to next stage Develop work plan and budget for the next stage

Scoping Study (preliminary economic assessment)

• Objective                    

Identify potentially technically and economically viable options Demonstrate potential viability of one option Risk analysis, fatal flaws and major risks identified Indicated and inferred resource Simple cashflow model Discard unviable options if possible Technical peer review Review strategy Identify decisions that need to be made at the next level of study Develop work plan and budget for the next stage

Pre-feasibility Study (Options study)

• Objective                  

Investigate viable options from the scoping study Risk analysis, fatal flaws and major risks identified Detailed cashflow model for all options Determine a single option to take forward to feasibility Review strategy Identify data requirements for the next stage Measured/Indicated Mineral Resource; Probable Ore Reserve Technical peer review and independent due diligence Develop work plan and budget for the next stage

Feasibility Study • Objective                    

Determine feasibility Detail a single viable option from the pre-feasibility study Capex, Opex and mining schedules(+/-10% to 15%) Measured/Indicated Resource; Proved/Probable Reserve Detailed cashflow model with financial analysis Compare with PFS and review strategy Project Execution Plan Risk Analysis with mitigation strategies Technical reviews completed No outstanding issues

Consequences USDbn Capex ∆% Alaska ∆%

Mexico PFS FS Post

Year

Cu Co Zn

2007

0.54 0.57 1.03

2007 2010

El Boleo Baja Mining

Year

Au Ag

Australia Year

∆% Iron ore

2.56 5% 2009 5.28 107% 2007 1.71 82% 2011 6.68 26% 2011 2.57 Donlin Creek Karara NovaGold Barrick JV Gindalbie 2006

51%

Capital USDbn Capex ∆% Alaska ∆%

Mexico PFS FS Post

Year

Cu Co Zn

2007

0.54 0.57 1.03

2007 2010

El Boleo Baja Mining

Year

Au Ag

Australia Year

∆% Iron ore

2.56 5% 2009 5.28 107% 2007 1.71 82% 2011 6.68 26% 2011 2.57 Donlin Creek Karara NovaGold Barrick JV Gindalbie

Source: Public information, August 2012

2006

51%

Markets

Risk

Sustainability Randgold Resources Market Cap 2012 USD 8.9 bn