Ongoing demand for commodities and depletion of mining assets drives the continued need for new mining projects and expansions, each of which requires a preliminary assessment or feasibility study to demonstrate its economic viability. This module examines the various components and inputs to the financial appraisal of mines and discusses the key drivers behind metal prices, input costs and production trends.

In parallel, the module provides training on leading industry mine design software (Deswik); simulating the mine planning and design processes required to provide engineering data for production schedules and cost estimates. 

This module aims to help you to understand both the macro-economic and the industry specific economic environment in which mines and projects operate and are evaluated. Although strong demand for commodities and high metal prices has significantly boosted sales revenue; at the same time the industry finds itself struggling with significant cost inflation and other operational pressures. This module provides an understanding of how technical and operational parameters influence the revenue stream and cost structure at mines.

The various types and stages of Feasibility Studies are discussed and selected aspects of such studies are investigated in more detail, notably resource/reserve estimation, computerised mine design, cost estimation and financial analysis.

Design experience with software tools such as Deswik/Datamine/Micromine is seen by industry as a key skill for new mining engineering graduates, and the training provided will enhance student employability.

The module builds on practical elements learnt throughout the programme and prepares you for the three week long Feasibility Study module (CSM3332), conducted after the second semester examination period.

On successful completion of this module you should be able to:

Module Specific Skills and Knowledge

Discipline Specific Skills and Knowledge

Personal and Key Transferable / Employment Skills and Knowledge

Mine Design Software.

You will undertake mining software training using one of a range of packages, most typically Deswik or Micromine. At the end of the module you will complete an individual coursework assignment based on the training and using the software tools. 

Basic training: This part of the course will familiarise you with the main elements of the software, introducing core tools, data types and file/database management. Computer aided design (CAD) tools will be covered in detail, along with drillhole visualisation, basic triangulation/block modelling and plotting.

Open Pit Design: The open pit design element of the course will show you how to create, visualise and modify open pit benches, haul roads, leach pads, dumps, and stockpiles within the software. Creation of ramps and haul roads and triangulation manipulation will be covered. Pit optimisation software will be demonstrated, which provides initial shells for detailed mine design.

Underground Design: The objectives of the underground design course are to introduce methods for creating shafts, drifts, cross-cuts, ramps, and stopes within a given orebody model; leading to a conceptual mine design suitable for planning/scheduling purposes. More detailed underground modelling tools will allow refinement of designs and the labelling and dimensioning of development ready for level plans to be plotted. Volumes and reserves of the underground features will be run for reports.

Mine Feasibility Studies. The main factors that control mineral investment - capital intensity, long pre-production periods, high risks, infrastructure, environmental constraints and non-renewable resources. The types of feasibility studies (scoping, preliminary, definitive); their objectives, contents and the level of accuracy of estimates compared to the engineering work actually completed.

Mineral Economics. Industry fundamentals and macro-economic environment.  The effects of supply and demand in perfect markets and the real world, key price drivers that effect mineral commodity prices.  Development of price forecasts and metal market studies. Introduction to capital expenditure, operating  costs and unit/cash cost curves.

Resource/reserve estimation. Introduction, data collection/manipulation, traditional estimation techniques. Variography and local estimation techniques, block modelling. Resource classification, conversion of resources to reserves.

Production and Revenue Forecasts. Tonnage, grade and recovery calculations and the development of production schedules. Smelter contracts, Net Smelter Revenue calculations and hedging.

Cost Estimation. Capital costs - the methods available for estimating both fixed and working capital costs, depending on the type of study being carried out. Cost indices, and a description of various approaches to cost estimation. Development of pre-production and sustaining/ongoing capital cost requirements. Operating cost estimations: methods, analysis and key data inputs and cost drivers. Cost trends and pressures in the mining industry.

Financial Analysis. Role of cash flow modelling & detailed financial analysis/valuation of mining projects and operations. Coverage of the main technical and engineering components of such an analysis. General production rate optimisation methods for mineral ventures. General coverage of risk/sensitivity  analysis, the main factors considered and the techniques used in mineral project evaluation and feasibility studies.

Basic reading:

ELE: http://vle.exeter.ac.uk/

Web based and Electronic Resources:

Available as e-books through Electronic Library (Knovel database)

Web based and electronic resources; including supervised access to CostMine, Mining Cost Service (InfoMine USA Inc.)

Other Resources:

Reading list for this module: