A credible gold-mine construction decision requires more than a large resource, a high projected gold price, or a report labelled “bankable.” You must verify that the study converts an appropriate resource into an economically mineable reserve, that the mine and processing designs are supported by representative engineering and testwork, that the cash-flow model survives realistic downside cases, and that permits, land, water, infrastructure, financing and closure obligations are sufficiently advanced.
This framework is jurisdiction-neutral. Canadian NI 43-101 and the U.S. Securities and Exchange Commission’s mining-property rules provide useful examples of disclosure and study-stage requirements, but the law governing the property controls. A technically complete report can still describe a project with weak economics or unacceptable execution risk.
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Start by identifying exactly what the study proves
Record the report title, study type, effective date, property jurisdiction, ownership, project description, selected development option and the qualified professionals responsible for the work. A technical report describes material information as of its effective date. It does not guarantee that prices, costs, permits, engineering, ownership or financing remain current.
Check whether the document is an initial assessment, pre-feasibility study or feasibility study. The label alone is not enough; read the contents and the assumptions behind the selected case.
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| Study stage | What it should do | How to use it in a construction decision |
|---|---|---|
| Initial assessment or preliminary economic assessment | Explore development concepts and provide an early economic indication, usually with greater uncertainty and less engineering definition. | Use it to identify opportunities and information gaps, not as the sole basis for committing construction capital. |
| Pre-feasibility study | Evaluate a range of options with more developed mining, processing, infrastructure and financial assumptions. Under SEC definitions, it requires reasonable financial analysis based on appropriate testing of modifying factors. | Use it to narrow the project configuration and decide what must be resolved before a final investment decision. |
| Feasibility study | Provide a more comprehensive, higher-confidence design and economic analysis intended to support an investment decision or project financing. | Test whether the selected case is actually financeable and executable; do not treat “feasibility” as a guarantee of profitability. |
British Columbia’s NI 43-101 text defines a preliminary feasibility study as a comprehensive study in which the underground mining method or open-pit configuration has been established, an effective processing method has been determined, and financial analysis is based on reasonable technical, engineering, legal, operating, economic, social and environmental assumptions. That definition describes the level of analysis expected; it does not establish a universal return threshold.
Trace the resource-to-reserve conversion
The central geological question is not “How many ounces are in the ground?” It is “How much material can be shown to be economically mineable under the study’s assumptions?” A mineral reserve is the economically mineable portion of a measured or indicated mineral resource after applying relevant modifying factors. Those factors include mining, processing, metallurgy, infrastructure, economics, marketing, legal, environmental, community and governmental considerations.
Check resource categories and reserve categories
- Confirm the resource estimate’s effective date, drilling basis, geological model, estimation method, cut-off assumptions and classification criteria.
- Verify that proven reserves derive from measured resources and probable reserves derive from indicated resources, subject to the governing code or regulation.
- Do not treat inferred resources as reserves. Inferred material may help identify exploration upside, but it is not equivalent to mineable inventory in the reserve case.
- Reconcile the resource table with the reserve table. Differences should be explainable through cut-off grade, pit limits, underground shapes, dilution, mining losses, recovery, economic assumptions and other modifying factors.
Test the mine-plan assumptions
Read how the study selected the cut-off grade and how that cut-off changes over the mine life. Follow the reserve tonnes and grade into the production schedule. Look for assumptions on dilution, ore loss, stockpiling, blending, development metres, stripping, fleet productivity, ventilation, backfill and mine access.
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1Scan for outdated or missing drivers - takes under a minute2Clear out junk files and repair common Windows errors3Fix the driver behind crashes, sound loss and screen glitchesFor an open pit, examine pit optimization, slope angles, geotechnical domains, haul distances, pushbacks, ramp geometry, waste-storage capacity and water inflows. For an underground mine, examine mining method selection, stope dimensions, dilution, recovery, ground support, ventilation, dewatering, paste or rock fill, development sequencing and access constraints.
Ask what could invalidate the reserve
Identify the assumptions most likely to change the reserve: geotechnical conditions, groundwater, metallurgical variability, permitting conditions, access to land or infrastructure, community agreements, commodity prices, royalties, taxes and operating costs. A reserve is conditional on these assumptions remaining reasonable; it is not a fixed geological fact.
Audit mining, geotechnical and water engineering
A production schedule is credible only when the physical design can deliver it. Check whether the mine plan is supported by site-specific data rather than generic productivity factors.
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Mining method and schedule
- Compare planned production rates with equipment capacity, shift schedules, availability, utilization and maintenance allowances.
- Check whether development, stripping or preproduction mining is completed early enough to expose the scheduled ore.
- Review grade-control drilling, ore tracking, stockpile management and blending rules.
- Test whether ramp-up assumptions distinguish nameplate capacity from achievable commissioning and operating performance.
- Look for explicit treatment of dilution, ore loss, unplanned dilution, geotechnical exclusions and weather disruptions.
Geotechnical basis
Review the investigation density and whether rock-mass domains, structural controls, slope angles, stope stability, ground support and monitoring systems are appropriate to the deposit. Ask how uncertainty is handled in areas with limited drilling. A design that depends on optimistic slope angles or unsupported ground conditions can reduce reserves and increase capital after construction begins.
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Hydrology and water balance
Follow the site water balance through construction, operations, extreme rainfall, snowmelt, pit dewatering, underground inflows, process make-up water, reclaim water, evaporation and closure. Check the location and capacity of ponds, diversion channels, pumps, pipelines and treatment systems. Confirm that the design addresses both routine operations and credible high-flow events.
Verify metallurgy and the process plant
Headline recovery is meaningful only when it is supported by representative testwork and a process design that can handle the ore actually scheduled for treatment.
Representative testwork
- Determine which ore types, alteration domains, hardness ranges, grades and deleterious elements were tested.
- Check sample selection, compositing, variability testing, laboratory methods, scale-up assumptions and quality assurance.
- Compare testwork coverage with the mine schedule. A recovery result from a narrow high-grade sample may not represent low-grade, transitional, weathered or refractory material.
- Look for treatment of recovery changes over time, blending requirements, preg-robbing, arsenic or other deleterious constituents, concentrate penalties and water chemistry.
Flowsheet and equipment
Read the process flow sheet from run-of-mine feed to payable product and tailings. Confirm crushing, grinding, gravity, leaching, flotation, pressure oxidation or other unit operations, as applicable to the deposit. Check equipment sizing, duty and standby philosophy, maintenance access, reagent storage, laboratory capacity, availability assumptions and commissioning sequence.
Review energy demand, fuel or power source, water consumption, reagent supply, tailings transport and deposition. A process route that works in a laboratory may still be impractical if power, water, consumables, residence time, maintenance or waste handling are inadequately designed.
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Map the physical mine plan into a cash-flow model. The model should show how tonnes, grade, recovery, payable gold, price, costs, taxes and closure obligations produce cash over time.
Revenue assumptions
- Check the gold-price deck, price basis, escalation treatment, exchange rates, refining charges, payability, concentrate terms and hedging assumptions.
- Distinguish study prices from current market prices. A dated feasibility price is an assumption, not a forecast or a guaranteed sale price.
- Reconcile contained gold, recovered gold, payable gold and sales timing. Differences should be visible rather than hidden in a single “revenue” line.
Capital and operating costs
Review initial capital by major component: mine development, processing plant, infrastructure, power, water, tailings, owner’s costs, indirect costs, mobile equipment, engineering, procurement and construction management. Examine sustaining capital for fleet replacement, underground development, tailings expansions, plant renewal, closure works and other recurring requirements.
For operating costs, separate mining, processing, general and administrative, logistics, water treatment, reclamation accruals, royalties and other government charges. Check the estimate date, escalation, currency, labour rates, energy prices, contractor quotations, allowances for temporary works and the treatment of contingency. A contingency is not the same as an allowance for every unpriced risk.
Taxes, royalties, financing and closure
Confirm the fiscal regime used in the model, including corporate income tax, mining taxes, royalties, duties, depreciation, loss carry-forwards and withholding taxes where relevant. Check whether financing costs, interest during construction, working capital and debt-service requirements are included consistently with the stated valuation basis.
Closure, reclamation, monitoring and post-closure water treatment belong in the economic model. Determine when those costs occur, whether financial assurance or reclamation bonds are required, and whether the model includes residual liabilities after production ends.
Use sensitivities and scenarios
Run or inspect sensitivities for lower gold prices, lower recovery, lower head grade, higher capital, higher operating costs, slower ramp-up, schedule delay, exchange-rate changes, higher energy costs, additional water treatment and financing constraints. Identify which variables cause the largest change in value and which are correlated. A project that remains viable only under one optimistic combination is materially different from one that tolerates several adverse changes.
Compare pre-tax and after-tax results when both are provided. NPV and IRR are useful outputs, but neither is a universal construction test. The cited mining rules require disclosure of assumptions and cost-estimate bases; they do not prescribe one gold price, discount rate, minimum NPV or minimum IRR for every project.
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Check permits, environmental liabilities and community conditions
Separate approvals already granted from applications submitted, approvals expected, permits subject to conditions and matters still requiring consultation or negotiation. Build a permit register with the responsible authority, submission date, decision date, conditions, appeal rights and construction or operating dependency.
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Environmental and water obligations
- Review the environmental impact assessment, baseline studies, impact predictions, mitigation commitments and monitoring plans.
- Check water licences, discharge limits, treatment requirements, diversion works, groundwater effects and tailings seepage controls.
- Confirm the design and financial basis for waste-rock storage, acid-rock drainage, metal leaching, tailings deposition and emergency response.
- Read closure and reclamation plans together with their cost estimate and schedule, not as a separate administrative appendix.
Community, land and legal rights
Verify mineral tenure, surface rights, easements, access roads, power corridors, water rights and agreements required for construction and operation. Identify the status of community engagement, negotiated agreements, consultation duties, cultural-heritage protections and benefit commitments. A project can have attractive economics and still be unable to build on schedule if access or social conditions remain unresolved.
Test infrastructure and supply-chain readiness
List every dependency outside the mine fence: roads, rail, port or airport capacity, grid connection, diesel supply, telecommunications, camps, water sources, pipelines, laboratories, explosives, reagents, spare parts and concentrate transport. For each dependency, identify the owner, required capacity, construction scope, cost responsibility, schedule interface and fallback option.
Review long-lead equipment, procurement assumptions, vendor quotations, fabrication capacity, import requirements, customs exposure and transport seasonality. Check whether the schedule allows time for detailed engineering, permitting, land acquisition, fabrication, shipping, installation, commissioning and performance testing.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Assess whether the project is ready to execute
Construction readiness is a separate decision from technical feasibility. A study may describe a workable design while the project still lacks financing, permits, land access, contracts or an executable delivery plan.
Execution checks
- Confirm the selected contracting strategy, engineering-procurement-construction scope, owner’s team and responsibilities at interfaces.
- Check whether the schedule includes design maturity, procurement, construction, commissioning, ramp-up and contingency for weather or logistics.
- Verify workforce assumptions, accommodation, training, industrial relations and availability of specialist skills.
- Review commissioning logic, first ore, first gold, ramp-up, operating acceptance tests and spare-parts strategy.
- Identify conditions precedent to construction funding, including permits, equity, debt commitments, offtake arrangements, land rights and board approvals.
Ask which assumptions are supported by signed contracts or permits and which rely on management intention. Treat unsupported intentions as risks requiring evidence, not as completed milestones.
Best Value
Compare development options on equal terms
When a study presents multiple mine methods, plant sizes, development phases or infrastructure routes, compare them using the same price deck, fiscal assumptions, valuation date and treatment of closure. A larger project may have a higher absolute NPV but also greater capital exposure and execution risk.
| Comparison axis | Questions to answer |
|---|---|
| Reserve and resource support | Which option relies on measured and indicated material, and which depends on inferred or less-tested zones? |
| Mine method and schedule | Which case has achievable development, stripping, access, dilution and production assumptions? |
| Recovery and process | Does the flowsheet match ore variability, deleterious elements, water chemistry and testwork evidence? |
| Capital and operating exposure | What drives initial capital, sustaining capital, unit costs and contingency, and how do those drivers behave in downside cases? |
| Infrastructure and water | Which option has fewer external dependencies, lower water demand or more resilient power and logistics? |
| Permitting and community | Which option has the clearest approval path, land access and negotiated commitments? |
| Financing and marketability | Can the product be sold under realistic terms, and can the capital requirement be financed without excessive dilution or leverage? |
| Closure liability | How do tailings, water treatment, reclamation and post-closure monitoring differ? |
| Downside resilience | Which case remains workable when price, grade, recovery, cost or schedule assumptions deteriorate? |
Use a staged construction decision
Do not force a binary “build or reject” answer when decisive evidence is missing. A disciplined decision can be conditional.
- Define the selected case. Freeze the mine plan, process route, infrastructure scope, valuation date and economic assumptions being approved.
- List unresolved risks. Rank geological, geotechnical, metallurgical, permitting, community, financing, procurement and schedule risks by potential effect on reserve, cost or first production.
- Assign evidence requirements. Specify the permit, contract, test, drilling, geotechnical investigation, financing commitment or engineering package needed to close each material gap.
- Set decision gates. Make construction, detailed engineering, major procurement and financing conditional on measurable deliverables rather than optimistic dates.
- Approve contingencies. Ensure contingency, schedule float, working capital and emergency capacity reflect identified risks and are not merely arbitrary percentages.
- Revalue after material changes. Update the model when prices, designs, permits, ownership, fiscal terms or major costs change. The original effective date remains important context.
A practical review checklist
- Report type, effective date, jurisdiction, ownership and qualified-person sign-off are recorded.
- Resource categories reconcile to reserves, with dilution, losses and modifying factors explained.
- Inferred resources are excluded from reserve claims and are clearly identified in economic discussion.
- Mining method, pit or underground design, geotechnical inputs, hydrology and schedule are internally consistent.
- Metallurgical samples represent the ore types and variability in the mine plan.
- Flowsheet, equipment, power, water, reagents, tailings and waste facilities are sized for the planned operation.
- Capital, sustaining capital, operating costs, taxes, royalties, financing, closure and contingency have documented bases.
- Sensitivity cases show the effects of adverse price, grade, recovery, cost and schedule changes.
- Permits, water rights, land access, community matters and closure obligations are verified from current records.
- Infrastructure, procurement, workforce, contractors, long-lead equipment and commissioning plans are executable.
- Financing commitments and conditions precedent match the capital schedule.
- The recommendation states what evidence would change the decision and what must be completed before construction.
What the governing disclosure frameworks do—and do not—tell you
NI 43-101 and Form 43-101F1 require discussion of reserve assumptions and methods; mining methods and relevant geotechnical and hydrological parameters; recovery methods and test or operating results; infrastructure; market studies and contracts; environmental, permitting, water, tailings, community and closure matters; capital and operating estimates; and economic analysis. U.S. SEC rules similarly define modifying factors, resource-to-reserve conversion and study stages.
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These frameworks help you test completeness and consistency. They do not certify that a project is a good investment, guarantee construction on schedule, establish a universal hurdle rate or replace project-specific legal, engineering, environmental and financial due diligence. Confirm the current rule text and local requirements before relying on a regulatory interpretation.
Decision standard
Approve construction only when the selected mine plan is supported by an appropriate reserve, the engineering and metallurgy are representative, the economic model is transparent and resilient, and the non-financial conditions are sufficiently advanced to execute. If a material assumption remains unverified, describe the project as conditional and identify the work required to reach the next decision gate rather than calling it construction-ready.
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