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Mining projects are developed in stages, and each stage is supported by a technical-economic study of increasing detail. Three terms appear again and again in company announcements and investor presentations: scoping study, pre-feasibility study and feasibility study. They are often used loosely, yet they mean quite different things in terms of data quality, accuracy, cost and the decisions they support.
This article explains what each study is for, how they differ, and how they relate to mineral resources and ore reserves.
Why Studies Are Staged
Developing a mine can cost hundreds of millions of dollars. It would be wasteful to carry out a full engineering study for a deposit that has no realistic chance of being profitable. Staging studies allows a project owner to test the concept cheaply first, then invest progressively more in the options that survive. Each study acts as a gate: if the economics or risks are unacceptable, the project is redesigned, paused or abandoned before larger sums are committed.
The Scoping Study
A scoping study, known in some jurisdictions as a preliminary economic assessment, is the first and least detailed evaluation of a project. Its main purpose is to determine whether the project has enough potential to justify further spending and to identify the key issues and options that should be examined next.
Typical inputs. A scoping study uses the existing geological model and resource estimate, which at this stage may include a large proportion of lower-confidence material. Mining methods, processing routes and infrastructure are based on benchmarks, comparison with similar operations, and limited testwork.
Typical accuracy. Capital and operating cost estimates are conceptual, with accuracy often in the range of plus or minus 30 to 50 percent.
Typical outputs. The study usually provides an order-of-magnitude production profile, rough capital and operating costs, a preliminary financial model, a list of risks and a recommended work programme for the next stage.
Important caution. Reporting codes allow scoping studies to include lower-confidence Inferred resources in the economic analysis, but they require prominent cautionary statements, because there is no certainty that those resources will ever be upgraded. Investors should read such results with care. A scoping study cannot support the declaration of an ore reserve.
The Pre-Feasibility Study
A pre-feasibility study, or PFS, goes much further. It evaluates alternative mining methods, plant capacities and processing routes, and selects the preferred development option on technical and economic grounds. The PFS is where many key decisions are made.
Typical inputs. A PFS draws on a resource estimate with a substantial proportion of Indicated material, supported by systematic drilling and sampling. Metallurgical testwork is carried out on representative samples. Geotechnical and hydrogeological data are collected, preliminary environmental and social baselines are established, and infrastructure options are analysed in more detail.
Typical accuracy. Cost estimates are generally accurate to about plus or minus 20 to 30 percent, depending on the company’s standards and the maturity of engineering.
Typical outputs. The PFS produces a mine plan, a process flowsheet, capital and operating cost estimates, a detailed financial model with sensitivity analysis, preliminary permitting and environmental strategy, and an initial ore reserve if the modifying factors have been adequately considered.
Relation to reserves. Under major reporting codes, an ore reserve must be based on at least a pre-feasibility study. This is why many companies announce their first reserves at the PFS stage.
The Feasibility Study
A feasibility study, or FS, is the definitive evaluation of the project. It is often called a definitive feasibility study or bankable feasibility study when prepared to the standard lenders require. It defines a single development case in enough detail to support a final investment decision, project finance and permitting.
Typical inputs. The FS relies on a resource model with a high proportion of Measured and Indicated material over the planned mining period, detailed geotechnical designs, extensive metallurgical testwork that may include pilot-scale work, completed environmental and social impact assessments, firm infrastructure arrangements and budget quotations from suppliers.
Typical accuracy. Cost estimates are usually accurate to about plus or minus 10 to 15 percent.
Typical outputs. The FS delivers detailed designs, execution plans, final capital and operating cost estimates, a full financial model, risk registers and a proven ore reserve. It is the basis for lenders’ technical due diligence, for regulatory approvals such as a mining licence and for the board’s decision to build.
Side-by-Side Comparison
| Feature | Scoping study | Pre-feasibility study | Feasibility study |
|---|---|---|---|
| Main purpose | Test whether the project is worth studying further | Select the preferred development option | Support financing and a decision to build |
| Level of engineering | Conceptual | Preliminary, with options compared | Detailed, one defined case |
| Resource confidence | Can include a high share of Inferred | Mostly Indicated, some Measured | Mostly Measured and Indicated |
| Cost accuracy (indicative) | About plus or minus 30 to 50 percent | About plus or minus 20 to 30 percent | About plus or minus 10 to 15 percent |
| Metallurgical testwork | Limited or benchmark-based | Representative laboratory testwork | Comprehensive, sometimes pilot scale |
| Environmental and social work | Desktop screening | Baseline and strategy | Full impact assessment and management plans |
| Can support an ore reserve? | No | Yes | Yes, at the highest confidence |
| Indicative cost | Low | Medium | High |
| Typical duration | Weeks to a few months | Several months to a year | About one to two years |
The accuracy ranges are indicative. Companies, engineering firms and cost classification systems define them differently, so it is best to read the definitions in each report.
How Studies Relate to Resources and Reserves
A mineral resource describes the geological confidence and reasonable prospects of eventual economic extraction. An ore reserve is the economically mineable part of the resource after applying modifying factors such as mining, metallurgical, economic, marketing, legal, environmental, social and governmental considerations.
- Scoping studies work with resources and conceptual assumptions.
- Pre-feasibility and feasibility studies apply modifying factors in increasing detail and can produce Probable and Proved reserves.
- Inferred resources cannot be converted to reserves.
This relationship explains why a rise in resource classification from Inferred to Indicated, through additional drilling, is a key step before a pre-feasibility study can be taken seriously.
Choosing the Right Study for Your Stage
A project should generally follow these principles.
- Do a scoping study when you have a first resource estimate. This is the right time to test whether the project is worth pursuing and which questions drive its value.
- Move to a PFS when the concept is promising. Commit to a PFS when the scoping study shows positive economics under realistic assumptions, and when you are ready to invest in infill drilling, metallurgical testwork and baseline studies.
- Move to a feasibility study when the preferred option is clear. Do this when you are ready to secure finance, obtain permits and prepare for construction.
Skipping stages is tempting but risky. Jumping from a scoping study to a feasibility study without selecting among options can lead to expensive engineering of the wrong design.
Reading Study Announcements Critically
Investors and partners should ask several questions when they see study results.
- What categories of resource support the study, and what percentage is Inferred?
- What level of study is it, and what accuracy range is stated?
- What commodity prices, exchange rates and discount rates were used, and are they reasonable?
- What recovery rates were assumed, and are they supported by testwork?
- Have environmental, social and permitting risks been addressed?
- Who prepared the study, and who is the Competent Person or Qualified Person?
- How would results change if grade, price or cost assumptions were less favourable?
Headlines about net present value can be misleading without answers to these questions.
Regional Considerations for East Africa
In Kenya and elsewhere in East Africa, studies must consider the local fiscal and regulatory framework, including royalties, state participation under the Mining Act, 2016, local content requirements and community development agreements. Infrastructure such as grid power, water supply and road or rail access can strongly affect capital cost. Seasonal rainfall influences geotechnical, hydrological and logistics assumptions. Studies that include these realities early are more credible to lenders and regulators.
Conclusion
Scoping, pre-feasibility and feasibility studies are three steps on the same ladder, each reducing uncertainty and increasing the cost and effort required. A scoping study asks whether a project is worth studying. A pre-feasibility study chooses the best way to develop it. A feasibility study proves that it can be built and financed. Understanding these distinctions helps explorers plan budgets and timelines, and helps investors judge how much weight to place on a study’s conclusions.
