Feasibility - A Banker's Perspective
CIM Vancouver 2016
Mr Warren Flannery (Executive Director - CIBC - Global Mining)
Successful execution of a mining project requires good planning in a number of interrelated areas. Foundations of a feasible project include positive geological, technological, and technical factors, combined with stakeholder engagement and development of the social license to operate. Upon success with these items, cost, schedule, and production considerations then tend to drive the economic investment decisions, based on work completed in the Feasibility Study.
Of these considerations, initial Project Capex typically dominates the analysis, and tends to be a major focus of the engineering work. Detailed construction schedules are produced which end at the start of mining and plant and infrastructure commissioning. Mining plans are prepared based on mining methods selected through detailed trade-off studies. Operating cost estimates are based on prior experience, comparable projects, and/or first principles. Equally significant are commissioning, ramp-up, and sustaining capital. Whereas the financing requirements are largely defined by the initial capital, the early years of operation are critical to the loan repayment, which is perhaps even more significant to the lender.
This presentation examines these issues from a banker's point of view.