Metallurgical Testwork for Feasibility Studies: What Bankers & Decision Makers Should Know

Introduction:

Adequate metallurgical testwork is an essential part in the preparation of a feasibility study, which is used as the technical basis for a mining project financing. There are many examples of mineral deposits that were deemed to be economic in their feasibility study and were subsequently realized as uneconomic due to inadequate metallurgical testing. Many metallurgical processes are simple in concept and are well known for the processing of specific metal-bearing ores. However, a high degree of economic risk will arise if an inadequate metallurgical test program was used in the preparation of a feasibility study.

Design of Metallurgical Test Program

The design of the metallurgical test program is dependent on a number of variables including:

  • Stage or status of the mining property
  • Amount of testing necessary to determine and optimize economic parameters and flow sheet development for the given ore deposit
  • Financial commitment and project timing for cash flow

Consideration should also be given to the stage or status of the property, and testing should be planned accordingly.

Mining Property Status

  • New “greenfield” property development in a new geologic setting
  • New “greenfield” property development in an existing or known geologic setting or mining district
  • Expansion of an existing mining operation using the same technology
  • Expansion of an existing mining operating using new technology
  • Restart of a closed mining operation
  • Acquisition of an existing or new property

An extensive metallurgical testwork program is required for a new “greenfield” property development in a new geologic setting, since the only available data or information would be from the exploration program. Somewhat less testing would be necessary for a new “greenfield” property development in an existing or known geologic setting/mining district, since certain data would be available and duplicate testwork may not be required. Testwork for the expansion of an existing mining property using the same technology typically does not require an extensive test program since significant amounts of metallurgical and operating data already exist.

At an existing operation where new technologies are being considered, the level of metallurgical testing can vary significantly depending on the type of new technology that is being planned in relation to the existing flow sheet; obviously, the larger the difference, the larger the amount of testwork required. Similar to an expansion using new technology, the amount of testwork necessary for the restart of a closed mining operation can vary depending on a number of factors such as:

  1. Characteristics of the remaining ore reserves for processing in the existing processing facility (if still operable, upgrade processing circuits using new technologies)
  2. Availability and suitability of previous testwork and/or previous operating data.

Financial Requirements

The financial commitment of specific mining companies for metallurgical test programs is often a function of the size of the company. Larger companies tend to have larger, well-defined requirements for metallurgical test programs in order to meet internal reporting requirements for the production of a feasibility study for project financing. This may also reflect the fact that large mining companies are usually looking at larger projects that will require a significant capital investment from a banking syndicate. In contrast, junior mining companies are typically looking at the development of smaller deposits; often small, heap leach or flotation projects that require less than $30 million in capital investment.

In addition, junior companies are often looking at the development of their first and only property, and the project timing for the generation of cash flow for the company is often an overriding consideration when designing a metallurgical test program. In summary, it is very easy to “over test” or “under test” when developing a strategy for the metallurgical program for process development.

Common Problems Reviewed in Testwork

Many problems can be resolved in a metallurgical test program if time is spent prior to the commencement of the program in planning, and attention is paid to the details.

Common pit falls in the metallurgical test design are:

Communication

Insufficient communication exists between the metallurgical engineer and the exploration geologist, mining engineer, environmental engineer, and the project hydrologist. In many cases these engineers are consultants and the project owner needs to make sure communication exists between these parties. This communication is essential to obtain not only representative metallurgical samples but also to better understand production requirements, the types of ores being encountered, compositing and blending requirements, lithological variations, specific gravity and hardness information, as well as tonnages of various ore types and their potential impact on the project.

Sampling

Everyone knows how important it is to take and test representative samples. However, once the samples are taken and shipped for testing, how are they composited? Too often, the composites are made without consideration of the ultimate pit limits, mining sequence, ore type, and dilution material. Were the samples taken from older oxidized materials or from recently drilled program (fresh samples)?

Laboratory Selection

What are the criteria for Laboratory Selection? The emphasis should be placed on the laboratory’s experience and the equipment available at the lab. Can the lab duplicate, or at least simulate, the equipment envisioned in the flowsheet? Does the laboratory, and particularly the project manager, not just the lab manager or owner, have experience working with the processes and chemicals required? Is the chosen analytical laboratory well versed in the assay techniques required for mass balances of the system? Examples include the assaying of high-grade concentrates from gravity or flotation tests. Does the laboratory permit on-site tests by outside experts, such as for crushing, grinding, thickening and filtering phases?

Other areas of investigation should include:

  1. What are the environmental procedures associated with the handling of samples and as a sponsor are you ready to accept sample returns?
  2. What are the QA/QC procedures for the laboratory? Do they state a certain reconciliation or mass balance percentage for lock-cycle testing or metal balances within leach tests?
  3. What other projects have they worked on and what is their track record? Were they on time and on budget? Did the sponsor have to wait for the report?

Reporting Requirements For Metallurgical Testwork

The evaluation of a mining project from exploration through the development and production stages is a lengthy and complicated process. At each stage of development, additional engineering data is required. There are three levels of engineering studies that are commonly acknowledged by the mining industry:

  1. Conceptual or scoping study
  2. Pre-feasibility study
  3. Feasibility study

Conceptual or Scoping Study

The conceptual study, also referred to as a scoping study, is the first level study in the preliminary evaluation of a mining project. The principal parameters for a conceptual study are mostly assumed and/or factored. Accordingly, the level of accuracy is low at only +40/-50 percent. In general, no or minimal metallurgical testwork has been performed for the determination of equipment sizing, consumables or power allocation. The metal recoveries are based on similar operations in the same mining district or geologic setting, and/or the assumed processing flow sheet. This is the minimal engineering basis for assumed processing methods and parameters. A simple, block diagram is the flow sheet with no material balance. Capital and operating cost estimates are factored from the assumed production rate and from the processing flow sheet. A conceptual study is a useful tool to determine if subsequent engineering studies are warranted. However, a conceptual study is not valid as the basis for economic decision-making.

Pre-feasibility Study

The pre-feasibility study represents the intermediate step in the engineering process for evaluating a mining project. The principal parameters for a pre-feasibility study are based on a preliminary engineering basis. The level of accuracy at +20/-30 percent, is higher than that of the scoping study. Sufficient metallurgical testwork has been completed to develop processing parameters for equipment selection, consumables, flow sheet, production, and a development schedule. Capital and operating cost estimates are derived from preliminary testwork, assumed factors, and some vendor quotes. The economic analysis derived from a pre-feasibility study is of sufficient accuracy to be able to assess various development options, as well as the overall project viability. However, these cost estimates and engineering parameters are not considered of sufficient accuracy for the final decision-making or for bank financing.

Feasibility Study

The feasibility study represents the last step in the engineering process for evaluating a mining project for a “go/no go” decision and for financing purposes. The principal parameters for a feasibility study are based on sound and complete engineering and metallurgical testwork. The level of accuracy is higher at +10/-20 percent than that of the pre-feasibility study. Detailed metallurgical testwork must have been completed to be able to develop all the processing parameters for the flow sheet development, equipment sizing and selection, consumables, power consumption, material balance, general arrangement drawings, production and development schedules, and capital and operating cost estimates. Capital and operating cost estimates are derived from the metallurgical testwork and vendor quotes.

Final Word

Think about the issues and risks when developing a mine, especially in terms of metallurgical testwork when developing a test plan. Appropriate interpretation of testwork results is vital as many mining projects have failed as a consequence of ignoring these first principle rules.

If you would like to know more, attend OreVenture’s “Metallurgical Testwork: Development, Interpretation & Process Design” training short course.