We have a deposit that we believe is economically viable. Through the exploration program, we’ve defined the size and quality of the deposit. Are we ready to start excavating ore and collecting revenue for our hard work? Not quite! We still have a good amount of work in front of us before we buy our first shovel.
A significant amount of capital must be available to open a mine. In many cases, this money must be raised from investors; whereas, in other cases, the company will have its own capital to invest in the project. In either case, additional engineering studies will be conducted to establish the feasibility of opening a mine. A company with its own capital will have many competing projects for that money, and they will want to allocate it to the project that bests meets their criteria for a return on their capital. Investors, on the other hand, will also want to understand the income potential of their investment. And in either scenario, both will want to understand the risks associated with the project. Consequently, we will have to perform a prefeasibility study to satisfy either potential investors or the company’s board of directors, that we have a deposit with good potential to provide a return on the investment of their money.
In this module, we will focus on the decision criteria for determining whether or not we want to go forward and turn this deposit into a profitable mining operation.
I should mention, for completeness, that the development stage also includes the work necessary to access the ore body and prepare for mining. Clearing the land for a surface mine, sinking a shaft for an underground mine, or building the mineral processing plant are examples of development activities. We will talk about all of those things, but we will do so in future modules.
Mine Development (5:03)
Transcript: Mine Development (5:03)
Hello and welcome to another module of Introduction to Mining Engineering. My name is Dr. Shekhar Bhattacharyya, and I am your instructor.
Today, we will focus on the development phase of mining. In previous modules, we explored how mineral resources are discovered and estimated. Now, we will learn how those resources are transformed into viable mining operations.
Let's explore the critical steps in the mine development process, from feasibility evaluation to selecting the appropriate mining method. This module will help you understand:
What drives the decision to build a mine
The different types and purposes of feasibility studies
The criteria for selecting surface versus underground mining methods
Reporting standards such as NI 43-101 and SK 1300 that guide project evaluation and disclosure
Simply discovering a mineral deposit does not guarantee that a mine will be built. A mining company must consider many factors, including access to infrastructure, availability of skilled labor, permitting requirements, environmental sensitivities, community acceptance, and project economics.
If these challenges outweigh the potential benefits, a company may decide not to proceed with development despite promising geology. As a result, mine development is a high-stakes decision-making process involving engineers, economists, financiers, regulators, and community stakeholders.
Feasibility studies guide decisions involving investments that may range from millions to billions of dollars. These studies are typically conducted in stages:
Scoping Study
The scoping study is a preliminary assessment. It is relatively low cost and provides a low level of confidence. Its purpose is to determine whether a project warrants further evaluation.
Pre-Feasibility Study
The pre-feasibility study provides a greater level of detail and more refined cost estimates. It narrows the range of viable development options and helps identify the most promising path forward.
Feasibility Study
The feasibility study provides a high level of confidence and includes detailed engineering, permitting plans, cost models, and operational considerations.
Definitive Feasibility Study
The definitive feasibility study, sometimes called a bankable feasibility study, is used to support final investment decisions and lender financing. It provides the highest level of confidence and detail.
As a project progresses through these stages, confidence increases, costs increase, and uncertainty decreases.
Different jurisdictions have established reporting standards for mineral project disclosure.
One of the most widely recognized standards is NI 43-101, which is mandatory in Canada. This standard was established following the Bre-X scandal and was designed to ensure full, fair, and transparent disclosure of mineral project information.
Another important standard is SK 1300, which was introduced by the U.S. Securities and Exchange Commission (SEC) in 2021. SK 1300 replaced the former Industry Guide 7 and modernized mineral disclosure requirements in the United States.
Both NI 43-101 and SK 1300 require:
Classification of mineral resources and reserves
Qualified or competent professionals to sign technical reports
Transparent economic assumptions and supporting documentation
While the terminology used in the two systems is similar, SK 1300 generally offers more flexibility than NI 43-101 in how technical summaries are structured.
Once feasibility studies are completed, the appropriate mining method can be selected.
Common surface mining methods include:
Open-pit mining
Strip mining
Quarrying
Other specialized surface methods
Common underground mining methods include:
Room-and-pillar mining
Cut-and-fill mining
Sublevel stoping
Block caving
Other specialized underground methods
The choice of mining method depends on several factors, including ore depth, orebody geometry, grade distribution, safety considerations, geotechnical conditions, and overall project economics.
To summarize, mine development is a complex, multidisciplinary decision-making process. Feasibility studies evolve from scoping studies to definitive feasibility studies, with each stage adding precision and reducing uncertainty.
Global reporting standards such as NI 43-101 and SK 1300 help ensure responsible and transparent project disclosure. The selection of mining methods—whether surface or underground—is based on a combination of technical, geotechnical, safety, and economic factors.
Thank you for joining this module. Please review the course notes and complete the assigned activities.
I will see you again soon with another module in Introduction to Mining Engineering. Until then, keep learning and stay safe.
Learning Outcomes
At the successful completion of this module, you should be able to:
- demonstrate a basic understanding of the process to move from a measured resource to a proved reserve, i.e., to establish the extent to which the deposit is economically mineable with today’s technology;
- demonstrate an understanding of the broad categories of factors, i.e., locational, natural & geologic, and socio-economic-political, that will be considered prior to a more detailed feasibility study;
- explain the need for legal standards for reporting on mineral projects; and the three overarching goals of these standards;
- demonstrate knowledge of NI 43-101 and Form 43-101F1, and a familiarity with a “typical” 43-101 report for coal, metal, or industrial mineral projects;
- demonstrate an introductory knowledge of how mining methods are classified, and describe in a few sentences the characteristics of each of the methods:
- surface
- mechanical
- open pit
- open cast
- quarrying
- auger
- aqueous
- hydraulic
- dredging
- solution
- heap leaching
- mechanical
- underground
- unsupported
- room and pillar
- shrinkage stoping
- open stoping
- supported
- cut & fill
- caving
- block caving
- sublevel caving
- longwall
- unsupported
- surface
- demonstrate an understanding of the seven groups of factors affecting the choice of a mining method;
- identify the specific factors that will have the greatest impact on the selection of a mining method, and explain how each has this significant impact on the selection.
What is due for Module 4?
This module will take us two weeks to complete. Please refer to the Course Syllabus for specific time frames and due dates. Specific directions for the assignment below can be found within this lesson.
| Activity | Location | Submitting Your Work |
|---|---|---|
| Read | Pages 96-118 in the course textbook | No Submission |
| Complete | Quiz 3 - Module 4 | Canvas |
Questions?
Each week an announcement is sent out in which you will have the opportunity to contribute questions about the topics you are learning about in this course. You are encouraged to engage in these discussions. The more we talk about these ideas and share our thoughts, the more we can learn from each other.