PEA, PFS & Feasibility Studies
From an Early Idea to a Detailed Mine Plan
How a project is de-risked on paper before any dirt actually moves.
- Economic studies test whether a proposed mine could work under a given set of assumptions.
- A PEA is an early economic assessment. A PFS and a feasibility study each add progressively more detail.
- A positive study is not a permit, a financing commitment, or an operating mine.
- Metal prices, recovery, costs, timing and the discount rate used can all change the headline result.
- Compare the assumptions and the work still remaining before comparing the reported project values themselves.
Three Levels of Homework
Think of planning a house. An early estimate helps you decide whether the idea is even worth pursuing. A developed design tests the practical choices. Detailed engineering gives builders and lenders a firmer basis to commit.
Read the Inputs Before the Headline
A study is a model of the future, and its answer depends entirely on what goes into it. A project can look attractive at a high metal price and much less attractive at a lower one.
Three Common Measures
- Net present value, or NPV. Translates estimated future cash flows into a single value today, using a discount rate.
- Internal rate of return, or IRR. The discount rate at which the model's NPV hits zero.
- Payback. How long the model takes to recover the initial investment.
Beginner Benchmark
What a "good" IRR looks like. There is no universal IRR that guarantees financing or makes a mining project attractive. Compare after-tax results on consistent assumptions, and read the discount rate, capital estimate, price assumptions and sensitivity analysis. An IRR above the chosen discount rate is one model result, not proof of adequate funding, construction readiness or acceptable risk.Make a Fair Comparison
Compare after-tax figures with after-tax figures, use consistent currencies and ownership interests, and note the discount rate each study used. A project valued at $500 million under one set of assumptions isn't automatically better than a $400 million project modelled more conservatively.
Read the sensitivity analysis too. What happens if prices fall, costs rise, or production comes in below plan? A study can reduce uncertainty. It doesn't remove it.Want more mining news explained this way?
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Mining Project Milestones
The catalysts that move a stock from discovery toward production.
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