Project phases and the required level of test work for specialty minerals and metals projects

For mining projects to be accepted by investors and the financial community, they are required to go through a sequence of development stages from resource estimate, Preliminary Economic Assessment, Pre-Feasibility Study, to a Feasibility Study following international reporting codes such as e.g. NI43-101 or JORC. In this article we will present a de-risking approach for specialty projects which is based on the Association for the Advancement of Cost Engineering (AACE) classification scheme presenting the industry standard cost estimate classification system. High level indication on the associated costs at given accuracy and required time will also be discussed.?

Specialty minerals and metals projects differ from those of precious metals, base metals and bulk commodities. In specialty minerals and metals projects there is a wide variety of products and markets in contrast to base metals and bulk commodities. Therefore, test work has to be tailored so specific product requirements for each of those markets can be met. Additionally, the timing of process development for specialty projects will differ from that of a precious metal, base metal or bulk commodity projects as it is critical to test the material with regard to potential applications in early project phases. While for other commodities such as copper or gold, the grade can be relatively easily assessed, and thus the economic potential evaluated, for e.g. lithium, and graphite and high purity quartz this is more tricky. The potential can (in almost all cases) not be assessed by simple chemical analysis of the raw sample alone as a variety of properties such as particle size, optical properties, morphology, crystallinity, speciation of impurities, pay mineral composition (REE) etc. may be equally important. Instead, full processing needs to be applied to uncover the variable potential products (product portfolio) that may be produced. And finally, ultimate product quality will in turn redefine the cut-off grade by potentially improved economics, which again will be used to modify the resource value and reserve estimate.

Test work represents the basis for the engineering and CAPEX and OPEX estimations and has to be matched to the development stage and corresponding required AACE accuracy levels.

Resource Estimate Phase

As each specialty project exhibits a unique mineralogy, both product recovery testing and value determination by quality impacts the resource estimate. These so called modifying factors will define the cut-off grade that determines the grade above which a mineral resource can be techno-economically extracted thus determining the reserve.

Those tests are typically run in parallel with drilling and do not require an extensive amount of capital as shown in the table above.

Preliminary Economic Assessment Phase

As the resource estimate shows that the resource has a reasonable size, the project will move to the Preliminary Economic Assessment (PEA) stage.

Most precious metal and bulk commodity projects apply already established industry standard flowsheets. There is very limited to no test work performed in this project phase.

Instead, specialty projects have to perform a tailored process development test work based on the mineralogical and chemical characteristics of the mineralized body to design a process economically viable to recover the targeted pay mineral(s) and produce product(s) accepted in the market.

For the PEA level project phase, a class 5 engineering estimate should be performed, which indicates a CAPEX and OPEX with an accuracy of typically +50/-30%.

The estimated costs required for the PEA stage would be between 30,000 EUR and 250,000?EUR. Based on the complexity of the resource and the envisaged degree of value addition, this test work phase could require up to 6 months.

?Pre-Feasibility Study Phase

To further de-risk a project following the PEA phase, a more detailed Pre-Feasibility Study (PFS) is required. Additional data will need to be generated through an advanced test work program including process optimization and flow sheet evaluation.

At the PFS phase, studies on alternative processing routes are evaluated.?

Ideally, the favored processes should be capable of producing an in-spec product over the compositional variation of the ore body, which should be demonstrated with variability test work.

Another important aspect we found to be essential at this stage for specialty projects, is that a sample should be generated to start a qualification process with potential off-takers to receive feedback early on.

For the PFS, a class 4 engineering estimate could be performed with an accuracy range of +35% to -20%.

The estimated costs required for the PFS stage would be between 80,000 EUR and 500,000 EUR and the timeline to complete the work would be 4 to 9 months.

Feasibility Study Phase

To later justify the final investment decision a Feasibility Study (FS), Definitive Feasibility Study (DFS) or Bankable Feasibility Study (BFS) is required.

The requirements on the precision of the engineering in a FS should conform to an AACE class 3 estimate, which has an accuracy of around +20/-15%.

In this phase pilot scale test work is essential for generating the level of engineering data required. During the piloting campaign the process is scaled up and reproduced employing equipment as close as possible to the one that will later be used in the final plant. Therefore, the process will be verified in larger scale and data required for engineering such as filtration, transportation or washing and drying behavior will be generated.

In the piloting test work, possible recycling and backstream loops could be closed in order to verify and prove the final process.

Locked cycle tests (LCT) are required to gauge the effect of such loops on the process, verify assumptions and generate a simulation of the process for the AACE class 3 estimate engineering. The LCT test work will gather reliable data on recycling streams and generate data for the engineering which could be used for scale up and study the effects of recycling on product quality as well as build ups of deleterious elements in the system.

In this project stage piloting test work and variability tests are substantial and need to generate detailed inputs for the FS level engineering. Approximately one year should be planned for generating the required information and final product. Depending on the complexity of the project/flowsheet, 250,000 USD to 5?million USD should be planned as a budget.

In essence, at all stages of the project test work generates the essential inputs for financial models, engineering and mining and therefore plays an essential role in de-risking specialty projects.