Before committing capital, a company should independently test eight areas: technical study maturity, resource and reserve quality, project economics, permits and infrastructure, environmental and social impacts, community relationships, governance and integrity, and market access and financing. The checklist must be tailored to the mineral, project stage, country, transaction structure and investor mandate. A feasibility study can support an investment decision, but it is not a guarantee of cost, schedule, permitting or returns.
1. Establish what the technical study actually proves
Do not treat a project name, investor presentation or headline feasibility claim as evidence of bankability. Obtain the complete technical reports, appendices, data tables, expert certificates and assumptions, then have independent mining, geological, metallurgical and engineering specialists test them.
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Distinguish the study stages
The JORC Code describes a pre-feasibility study (PFS) as a comprehensive evaluation of options after a preferred mining method or pit configuration and an effective processing method have been identified. A feasibility study (FS) is a higher-confidence study that would normally include mining, infrastructure and process designs completed with enough rigour to support an investment decision or project financing. Read the official definitions in the JORC Code 2012.
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| Study | What it generally establishes | What an investor must still verify |
|---|---|---|
| Preliminary economic assessment (PEA) | Early economic and development concepts, often using a less mature technical and resource basis. | Whether inferred resources, untested designs or broad cost allowances make the economics too uncertain for the proposed transaction. |
| Pre-feasibility study | A preferred mining and processing concept with more developed engineering and economic analysis. | Design completeness, test work, schedule realism, infrastructure commitments and the work needed to reach a financeable FS. |
| Feasibility study | Higher-confidence mining, infrastructure and process designs normally intended to support an investment decision or project financing. | Underlying data, independent review, effective date, unresolved risks, permitting status and changes since publication. |
Study labels are maturity guides, not promises. Check the report’s effective date, the qualifications and independence of its authors, the scope of peer review, subsequent drilling and metallurgical results, and every material change since the study was issued.
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Use the applicable disclosure standard
NI 43-101 technical reports provide a useful disclosure checklist even where another reporting code applies. Review mining methods; energy, water and process-material requirements; roads, rail, ports, tailings and other infrastructure; capital and operating costs; and confirmation that qualified-person review supports the assumptions. Read the applicable requirements in NI 43-101. Confirm which standard governs the issuer and project rather than assuming JORC or NI 43-101 is legally controlling in every jurisdiction.
2. Rebuild the economics instead of accepting a headline NPV
Ask the investment team to reproduce the model from source data or commission an independent model review. A promotional net present value (NPV) or internal rate of return (IRR) is meaningful only when its price deck, schedule, costs, taxes, financing and product assumptions are transparent.
Test the mineral inventory and mine plan
- Reconcile exploration results with the stated mineral resource and reserve categories, cut-off grades, modifying factors and conversion assumptions.
- Check geotechnical, hydrological and geometallurgical information supporting pit walls, underground development, dilution, mining recovery and production sequencing.
- Confirm that the mine plan matches equipment productivity, workforce availability, shift patterns, ventilation, ore loss, stockpiles and ramp-up constraints.
Verify processing performance
- Review laboratory, pilot and demonstration-scale test work, including sample representativeness and variability across the orebody.
- Challenge recovery, throughput, reagent consumption, concentrate or chemical quality, impurity penalties, treatment and refining charges, and payable metal assumptions.
- Check whether water, power, fuel, process materials, spare parts and skilled operators are available at the assumed scale.
Audit capital, operating and closure costs
Separate initial capital, sustaining capital, working capital, owner costs, contingency and financing costs. Test the basis of quantity estimates, escalation, foreign exchange, construction productivity, transport, commissioning and replacement schedules. Include royalties, taxes, duties, reclamation, closure, post-closure monitoring and financial assurance. A cost estimate that omits closure or sustaining capital can materially overstate returns.
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Run decision-grade downside cases
At minimum, model lower commodity and product prices, reduced recoveries and throughput, higher energy and labor costs, construction overruns, delayed first production, weaker foreign exchange, higher royalties or taxes, and additional sustaining or closure capital. Identify which assumption causes the project to fall below the company’s investment threshold. Do not substitute a single “haircut” for a risk-specific analysis: a two-year delay affects interest, escalation, debt drawdown, working capital and revenue timing differently from a permanent price decline.
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| Case | Change to test | Decision question |
|---|---|---|
| Base case | Management’s documented schedule, prices, recoveries, costs and financing. | Does the project meet the mandate using assumptions that can be evidenced? |
| Price downside | Lower realized product prices and any quality or payability penalties. | Does debt service and equity return remain acceptable? |
| Cost and recovery downside | Higher capital and operating costs with lower recovery or throughput. | Which technical variable destroys value first? |
| Delay case | Late permits, construction slippage or commissioning problems. | Can the project fund itself through a delayed start? |
| Combined stress | Several adverse but plausible changes together. | What additional equity, covenant waiver or redesign would be required? |
Check revenue quality and market access
Critical-mineral revenue can be volatile because demand and supply both fluctuate. The OECD analysis of development finance and critical-minerals value chains identifies the size and predictability of revenue streams, as well as environmental, social, governance and financial-integrity risk, as investment parameters.
Verify product specifications, qualification requirements, customer concentration, benchmark or formula pricing, offtake volume, take-or-pay terms, penalties, termination rights, prepayments and creditworthiness. Confirm that intended buyers can accept the product in the proposed jurisdiction and that transport, storage, insurance, export controls and processing capacity support the sales plan. No universal price forecast or return hurdle applies to every mineral or company.
Scrutinize the financing plan
Distinguish signed commitments from indicative interest. Check conditions precedent, drawdown timing, currency and tenor mismatches, interest-rate exposure, security, covenants, refinancing assumptions, sponsor support, guarantees and remedies if construction or commissioning is late. The International Finance Corporation’s metals and minerals page describes equity, quasi-equity, corporate and project debt, and capital mobilized from third parties; those are financing forms, not a commitment to fund a particular project. The page reports around $5.3 billion invested and mobilized over the decade it describes, which is portfolio activity rather than a project-return benchmark.
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Build a permit register from the local legal regime rather than relying on a consultant’s summary. For every approval, record the application and decision status, responsible authority, statutory consultation, dependencies, appeal exposure, renewal conditions, expiry date and accountable owner. Mark which permit gates construction, water abstraction, mining, processing, tailings, waste transport, export or operations.
Confirm rights and physical capacity
- Verify mineral tenure, surface access, easements, community or Indigenous land interests and the ability to renew or transfer each right.
- Document water source, allocation, seasonal reliability, treatment, discharge limits and competing users; a nearby river or aquifer is not proof of legal or dependable supply.
- Confirm grid connection, generation, fuel logistics, telecommunications and backup capacity under realistic operating conditions.
- Check the ownership, capacity, tariffs and construction schedule for roads, rail, bridges, ports, pipelines, concentrators, refineries, waste-rock areas and tailings facilities.
The International Energy Agency notes that permitting can extend lead times and that streamlining should not weaken environmental or social standards. Treat every external infrastructure assumption as a dependency requiring a contract, capacity study or government confirmation.
4. Test environmental and social viability through the full life cycle
Environmental and social performance is part of project viability, not a separate public-relations exercise. Establish baseline conditions and assess construction, operation, closure and post-closure effects.
Environmental questions
- Is the water balance credible in wet, dry and extreme-weather years, and are quality, treatment and discharge controls funded?
- How will the project manage biodiversity, protected areas, greenhouse-gas emissions, air quality, noise, waste rock, hazardous materials and tailings?
- Has the tailings design been independently reviewed, with clear governance, monitoring, emergency response and closure funding?
- Are reclamation security, closure costs, post-closure monitoring and liability allocation legally enforceable?
The OECD Handbook on Environmental Due Diligence in Mineral Supply Chains recommends a risk-based process to identify, assess, prevent or mitigate, track, communicate and provide for remediation of adverse impacts. It is relevant to upstream and downstream companies but does not replace local legal advice or site-specific studies.
People, labor and human rights
- Review worker health and safety systems, contractor controls, emergency response, labor conditions and grievance statistics.
- Assess community health and safety, traffic, housing, livelihoods, resettlement, cultural heritage and security arrangements.
- Identify Indigenous Peoples and other affected groups, applicable rights, consultation duties, benefit agreements and consent requirements where relevant.
- Check whether engagement started early, information is accessible, dissent can be expressed safely, and grievance and remedy mechanisms have staff, budgets and escalation routes.
The World Bank Environmental and Social Framework contains ten Environmental and Social Standards covering labor, inclusion, gender, climate, biodiversity, community health and safety and stakeholder engagement. It applies to World Bank investment project financing initiated on or after October 1, 2018; it is not automatically the governing standard for a private project.
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Community opposition can result in protests, litigation, permit denials or disruption of existing operations, while corruption can create liability, permitting delays and instability, according to the IEA’s review of sustainable and responsible critical-mineral supply chains. Examine documented incidents, agreements, complaints and remediation rather than labelling a project socially accepted or opposed without evidence.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.5. Investigate governance, integrity and traceability
Ownership and legal control
Verify the chain of title, beneficial owners, politically exposed persons, mineral and surface licenses, joint-venture rights, royalties, streaming or royalty agreements, encumbrances, litigation and change-of-control clauses. Review procurement, related-party transactions, tax arrangements, payment disclosures and the authority of each counterparty to sign.
Integrity and sanctions exposure
Test anti-bribery controls, third-party screening, gifts and facilitation-payment policies, whistleblower channels, investigations and audit findings. Screen owners, agents, traders, transporters, customers and lenders for sanctions, conflict exposure, money laundering and forced-labor risks. A clean corporate policy is not evidence that site-level controls operate effectively.
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Map material from extraction through traders, processors, refiners and intended buyers. Reconcile production volumes, origin records, transport documents, custody transfers and product claims where feasible. An OECD 2026 responsible-minerals case study says traceability can provide a platform for adding environmental, social and governance data, while recommending a measured approach that supports inclusion and market access. Use the OECD due-diligence essentials for responsible minerals as a reference.
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6. Compare candidate projects on a common basis
When choosing among projects, normalize the analysis before ranking anything. Use the same price deck, currency, inflation convention, discount-rate method, tax treatment, schedule convention, contingency policy and risk categories. Record differences that cannot be normalized rather than hiding them in a score.
| Comparison area | Evidence to place side by side |
|---|---|
| Technical maturity | Study stage, effective date, resource and reserve confidence, independent review and material changes. |
| Operating performance | Mining method, recoveries, throughput, ramp-up, product quality and sustaining capital. |
| Cost and resilience | Initial and sustaining capital, operating cost, closure liability and price, cost and delay sensitivities. |
| Infrastructure and permits | Water, power, transport, processing and tailings rights, capacity, approvals and critical-path dependencies. |
| Environmental and social risk | Water and biodiversity exposure, tailings, safety record, Indigenous and community engagement, grievances and remedy. |
| Governance and market | Ownership, integrity controls, sanctions and conflict exposure, traceability, offtake quality and buyer concentration. |
| Financing and strategic fit | Committed capital, terms, funding gap, refinancing risk, supply-chain value and fit with the investor’s mandate. |
Weighting depends on the company’s mandate and the project’s context. A strategic buyer, infrastructure lender and diversified equity investor may rationally rank the same risks differently. Preserve an issues register that labels each unresolved item as a condition to closing, a funded mitigation, a monitoring covenant or a reason not to invest.
7. Turn diligence into an investment decision
- Define the mandate. Set target geography, mineral, ownership role, risk appetite, return hurdle, strategic objectives, prohibited exposures and decision authority.
- Request the evidence room. Obtain current technical reports, raw data, permits, land and water documents, environmental and social studies, contracts, models, financing term sheets and litigation records.
- Assign independent reviewers. Use qualified geological, mining, processing, engineering, environmental, social, legal, tax, sanctions and insurance specialists; require written scopes and conflict disclosures.
- Reconcile the model. Tie production, recovery, pricing, costs, taxes, capital, working capital, closure and financing assumptions to source documents and test downside cases.
- Build the critical path. Link permits, land, water, power, infrastructure, construction, commissioning, offtake and financing conditions in one schedule with responsible owners.
- Engage affected stakeholders. Review consultation records, meet communities and authorities where appropriate, and test whether grievance and remedy systems function in practice.
- Set conditions and walk-away triggers. Specify evidence required before signing, mitigation budgets, covenants, reporting rights, independent monitoring and the facts that would stop the transaction.
- Monitor after approval. Keep the same risk register through construction, commissioning, operations and closure; approval is not the end of diligence.
What should stop or pause an investment?
- A study’s effective date predates material drilling, metallurgical, permitting or cost changes and has not been updated.
- Resource-to-reserve conversion, recovery, product quality or cost assumptions cannot be reproduced from underlying data.
- Water, land, power, tailings or export rights are described as intentions rather than legally secured access with verified capacity.
- The schedule depends on permits or infrastructure with no documented decision path, appeal allowance or contingency.
- Community, Indigenous, labor, human-rights or safety concerns are unresolved, suppressed or excluded from the financial model.
- Ownership, beneficial control, sanctions exposure, related-party payments or offtake counterparties cannot be verified.
- The project fails the investor’s threshold under plausible price, cost, recovery or delay scenarios and requires an unsupported rescue assumption.
Bottom line for the investment committee
A critical raw-materials project is investable only when its technical case, economics, permits, infrastructure, environmental and social performance, governance and market pathway withstand independent scrutiny together. Use the maturity of the study to calibrate confidence, not to replace diligence. Compare alternatives on identical assumptions, make unresolved risks explicit, and commit capital only against evidence that is current, legally enforceable and resilient to downside conditions.
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