Mineral Feasibility Study costs?

A mineral feasibility study is the document on which a mine is financed, permitted and built. It answers the most important question in the life of a project: can this deposit be mined, processed and sold at a profit, with acceptable risk and acceptable impact on people and the environment? Because banks, investors and regulators rely on it, a feasibility study must be rigorous, transparent and based on high-quality data.

This article explains what goes into a feasibility study, how the work is organised, and what drives its cost.

The Purpose of a Feasibility Study

A feasibility study is the final and most detailed in a series of technical-economic studies, which usually runs from scoping to pre-feasibility to feasibility. Its purpose is to define a single, well-engineered development option, to estimate capital and operating costs with enough accuracy to support a final investment decision, and to demonstrate that the project is technically achievable and economically viable.

Costs in a feasibility study are typically estimated to an accuracy of roughly plus or minus 10 to 15 percent, although practice varies between companies and jurisdictions. The study is often described as bankable when it meets the standards that lenders require.

Core Components of a Feasibility Study

Although the structure varies by commodity and project, most feasibility studies include the following building blocks.

1. Geology and mineral resource. The study begins with the geological model and the mineral resource estimate, prepared under a recognised reporting code such as JORC, NI 43-101 or SAMREC. Resources must be classified by confidence, and only the parts of the resource that have enough confidence can be converted to reserves. Drilling density, sampling quality, density measurements and geological interpretation are all scrutinised.

2. Geotechnical and hydrogeological investigations. Engineers need to know how strong the rock is, how steep pit walls or underground openings can safely be, and how much groundwater will have to be managed. These investigations involve geotechnical drilling and logging, laboratory testing, slope stability analysis and groundwater modelling. Poor geotechnical data are among the commonest causes of cost overruns.

3. Mining study. Mining engineers decide whether the deposit will be mined by open pit, underground methods or both, and design the mine accordingly. Work includes pit optimisation, mine design, scheduling, selection of equipment, drilling and blasting design, and estimation of mining dilution and ore loss. The result is the production schedule and the mining capital and operating costs, and, together with other factors, the ore reserve.

4. Metallurgical testwork and process design. Representative samples are tested to find out how the ore responds to crushing, grinding and recovery processes. For gold, this may include gravity recovery, flotation, cyanide leaching and carbon-in-leach tests. For other minerals, it may involve magnetic or flotation separation, or more complex hydrometallurgical routes. Results define recovery, reagent consumption, energy use and product quality. A process plant is then designed with flowsheets, equipment lists and layouts.

5. Infrastructure, power and water. A mine needs roads, power, water, housing, workshops, tailings storage and sometimes rail or port links. The study must show where these will come from, how much they will cost and what permits they require. In Kenya and elsewhere in East Africa, grid connection, haul distance and water availability can have a large effect on economics.

6. Tailings and waste management. Tailings storage facilities and waste rock dumps need engineered designs that comply with safety standards, including dam stability, water management and closure planning. Failures of tailings facilities worldwide have led to stricter requirements, so this component receives close attention from lenders.

7. Environmental and social studies. An environmental and social impact assessment, baseline studies and management plans are integral. They cover water, air, noise, biodiversity, cultural heritage, resettlement, community health and safety, and stakeholder engagement. In Kenya, an approved environmental impact assessment is required before a mining licence is granted, and large-scale operations must also develop a community development agreement.

8. Legal, permitting and fiscal framework. The study documents the tenure position, licences, permits, royalties, taxes, state participation and local content requirements. Under Kenya’s Mining Act, 2016, royalties, state participation provisions and local content obligations must be built into the financial model.

9. Capital and operating cost estimates. Capital costs include mine development, plant, infrastructure, owner costs, engineering and procurement, construction management, contingency and working capital. Operating costs include mining, processing, power, labour, maintenance, administration and logistics. Estimates are based on quotations, benchmarks and detailed take-offs, with contingencies explicitly stated.

10. Financial model and sensitivity analysis. The model brings all inputs together to calculate net present value, internal rate of return, payback period and cash flows. Sensitivity analysis shows how results change with commodity prices, grades, recoveries, costs and exchange rates, which helps investors understand risk.

11. Risk assessment and implementation plan. A feasibility study identifies major risks, proposes mitigation, and sets out a schedule for engineering, procurement, construction and commissioning.

12. Ore reserve statement. Finally, the economically mineable portion of the resource is declared as a reserve, supported by the modifying factors considered in the study. A reserve can only be declared on the basis of at least a pre-feasibility study.

Who Does the Work

A feasibility study is a team effort. Typical contributors include resource geologists, geotechnical and hydrogeological engineers, mining engineers, metallurgists, process engineers, civil and structural engineers, electrical engineers, environmental and social specialists, cost estimators, financial modellers and legal advisers. One firm usually acts as study manager and integrates the work of specialists. Each reporting code requires that responsible professionals, called Competent Persons or Qualified Persons, sign off the parts for which they are responsible.

What Does a Feasibility Study Cost?

Costs vary enormously, so any figure is indicative only. They depend on the size and complexity of the project, the commodity, the location and the quality of existing data. As a rough guide drawn from common industry experience:

Study stage	Indicative cost range for a small to mid-size project
Scoping study	Tens of thousands to a few hundred thousand US dollars
Pre-feasibility study	Several hundred thousand to a few million US dollars
Feasibility study	A few million to tens of millions of US dollars

A commonly cited rule of thumb is that a feasibility study costs on the order of one to three percent of the expected project capital cost, though smaller projects often pay proportionally more because many fixed costs do not scale down. The figures above include the study work itself but usually do not include the cost of the drilling that supports the resource, which can be larger than the study.

What Drives the Cost

Several factors have a strong influence.

• Drilling and sampling needs. Infill drilling to upgrade resource confidence, metallurgical drilling, geotechnical drilling and hydrogeological drilling are often the largest single cost.
• Metallurgical complexity. Refractory or complex ores need extensive testwork, pilot plants and sometimes multiple flowsheet options.
• Project size and type. Underground mines and projects with large processing plants require more engineering than small open pits.
• Remoteness and infrastructure. Projects far from power, water and roads need more investigation and design for supporting infrastructure.
• Environmental and social complexity. Sensitive ecosystems, resettlement and community issues add baseline studies and engagement costs. In Kenya, projects near protected forests or culturally significant sites require particular care.
• Standards and audience. A study intended for lenders or a listed exchange needs higher levels of documentation and independent review.
• Quality of earlier work. Poor sampling or inconsistent data from earlier phases must be repeated, adding cost and time.

How Long Does It Take?

A full feasibility study typically takes from about twelve to twenty-four months, depending on the project and the amount of fieldwork required. Metallurgical testwork, environmental baselines that need to cover seasonal cycles and permitting processes often set the pace.

Ways to Control Cost Without Cutting Quality

Cost control should never mean cutting corners on critical data, but there are sensible ways to avoid waste.

1. Do not skip earlier stages. A good scoping and pre-feasibility study identifies the key risks and the best development options, so that the feasibility study does not have to examine every alternative.
2. Define the scope clearly. A precise terms of reference prevents expensive changes later.
3. Collect fit-for-purpose data early. For example, combining resource drilling with geotechnical and metallurgical sampling saves mobilisation costs.
4. Choose experienced specialists. Cheap work that has to be redone is the most expensive kind.
5. Plan the environmental baseline early. Starting baseline monitoring during exploration shortens the critical path.
6. Phase the work. Use decision gates so that expensive activities are triggered only by positive results.

Common Reasons Feasibility Studies Fail

Studies tend to fail when the resource is too small or its grade is too low at realistic prices, when metallurgical recoveries are poor, when infrastructure costs are underestimated, when social or environmental risks cannot be mitigated, or when fiscal terms make the project uneconomic. Detecting such fatal flaws early, at scoping or pre-feasibility level, is far cheaper than discovering them in a full feasibility study.

Conclusion

A mineral feasibility study is a large, multi-disciplinary undertaking that converts a geological discovery into a financeable investment proposal. It combines geology, mining, metallurgy, infrastructure, environment, community engagement, legal analysis and financial modelling. Its cost reflects the quality of evidence required to commit large sums of capital, and money spent on good data and experienced specialists is usually repaid many times over in better decisions. Explorers in Kenya and across East Africa should plan for feasibility work well in advance, starting environmental and metallurgical programmes early and treating each study stage as a decision gate rather than a formality.