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The reliable way to read a gold-mine feasibility study is to treat it as an evidence chain, not as a collection of headline numbers. Start by identifying the reporting rules, study date, selected development case and qualified persons. Then trace the chain from geology and resource classification through mine design, metallurgical recovery, processing capacity, infrastructure, costs, permits and the financial model. A project is credible only when those links support one another.
There is no standard “good” recovery percentage, gold price, discount rate, net present value (NPV), internal rate of return (IRR) or mine life. Those figures are meaningful only with the project, effective date, currency, assumptions and sensitivity cases attached. The guide below shows exactly what to verify and how to detect an attractive-looking case that is not yet demonstrated.
What a feasibility study is—and what it is not
Under U.S. Securities and Exchange Commission Regulation S-K 1300, a feasibility study is a comprehensive technical and economic study of a selected development option. It includes detailed assessments of applicable modifying factors and financial analysis needed to demonstrate, at the time of reporting, that extraction is economically viable. Canadian technical reports prepared under NI 43-101 use a similar discipline: mining, metallurgical, infrastructure, permitting and other factors must be considered when estimating reserves.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallThe document is not a guarantee that a mine will be built or earn its forecast return. It is a dated assessment based on a particular mine plan, processing route, price deck, cost basis, permits and assumptions. Changes in geology, construction cost, schedule, metallurgy, taxes, royalties, water, power or gold price can change the result.
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Step 1: Establish the document’s identity and scope
Before reading a table, write down the context that controls every number in it.
- Reporting regime: identify whether the disclosure follows NI 43-101, SEC S-K 1300 or another named code. Definitions and required disclosures are not interchangeable.
- Study type: confirm that it is a feasibility study rather than an earlier-level assessment or a later operating update.
- Effective date: record the date at which resources, reserves, prices, costs, exchange rates and permits were assessed.
- Property and ownership: note the location, legal interests, royalties, streaming or offtake obligations and any joint-venture interests.
- Qualified persons: list each author, discipline, employer, professional designation and certificate. Their areas of responsibility should cover geology, mining, metallurgy, processing, infrastructure and economics.
- Selected case: distinguish the selected development option from alternatives, expansion cases or upside scenarios.
Keep this identity page beside you. A number without its date, currency, ownership basis and selected case cannot be compared safely with another study.
Step 2: Use the executive summary as an index, not as proof
Capture the summary’s production target, mine life, initial capital, sustaining capital, operating cost, recovery, payable gold, NPV, IRR and payback. Next to every figure, write the section and table where the supporting calculation appears. The summary should lead you into the evidence, not replace it.
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|---|---|
| Annual or life-of-mine production | Mine schedule, head grade, dilution, mining recovery, plant throughput, recovery, ramp-up and payable-metal assumptions |
| Mine life | Reserve tonnes, production rate, stockpile treatment, closure timing and any material inferred or unclassified material included |
| Initial capital | Estimate class, price date, currency, escalation, contingency, owner’s costs, indirects, pre-stripping, infrastructure and construction schedule |
| Sustaining capital | Replacement equipment, tailings raises, underground development, plant rebuilds, closure and timing by year |
| Operating cost | Mining, processing, general and administrative, site services, reagents, power, transport, treatment and refining charges, royalties and currency |
| NPV, IRR and payback | Gold-price deck, discount rate, taxes, royalties, payable metal, working capital, closure cost, financing treatment and sensitivity cases |
When a summary number differs from a detailed table, do not silently choose one. Determine whether the difference comes from rounding, a different case, a revision date or an error, and record which value the financial model actually uses.
Step 3: Read geology, resources and reserves in the right order
Check the geological evidence
Look for the drill database, sampling methods, assay quality controls, laboratory checks, geological interpretation, estimation domains and bulk-density measurements. Ask whether spacing and data quality support the stated confidence category. A dense, well-controlled dataset in one ore type may support a different conclusion from sparse drilling across several geologically distinct zones.
Understand resource categories
| Category | How to read it |
|---|---|
| Measured resource | Highest resource-level geological confidence, subject to the stated cut-off and estimation assumptions |
| Indicated resource | Reasonable confidence for mine planning at an appropriate level, but not equivalent to a reserve |
| Inferred resource | Lowest geological confidence; under SEC S-K 1300 it cannot support a feasibility demonstration of economic viability |
Resource tonnes and grade are not mineable inventory by themselves. The estimate depends on a cut-off grade, density, metallurgical assumptions and the model’s treatment of waste, continuity and uncertainty.
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Follow the conversion to reserves
Proven and probable reserves are the economically mineable portions of measured and indicated resources after applying modifying factors. Trace the reconciliation from resource blocks to reserve tonnes and grade. Look for the mine shape or stope design, dilution, mining recovery, geotechnical limits, processing recovery, costs, prices, taxes, royalties, permitting status and other constraints used in that conversion.
Be especially cautious if the production schedule relies on inferred material, presents resources and reserves together, or reports a reserve grade that cannot be reconciled to the resource model. Under NI 43-101, the report should discuss how mining, metallurgical, infrastructure, permitting and other factors could materially affect the reserve estimate.
Test the cut-off grade
Find the cut-off formula and its inputs. It may include mining, processing and general and administrative costs, recovery, payable metal, treatment and refining charges, royalties and the selected metal price. A small change in cut-off can materially change tonnes, grade, strip ratio, mine life and plant feed. Compare the cut-off with the price and cost assumptions used in the economic model; they must be on a consistent basis.
Step 4: Audit the mining method and schedule
Identify the physical mine plan
For an open pit, review pit limits, phases, bench and berm geometry, slope design, strip ratio, pre-stripping, haul distances, mining recovery, dilution, equipment fleet and stockpile strategy. For an underground mine, review the method, stope or mining-unit dimensions, development metres, access, ground support, ventilation, backfill, ore handling and planned extraction sequence.
Reconcile the schedule
- Check that scheduled ore tonnes and grades come from the stated reserve inventory, with any stockpile movement shown separately.
- Compare planned production rates with fleet capacity, shift pattern, availability, maintenance and development requirements.
- Look for a realistic ramp-up rather than immediate operation at nameplate capacity.
- Verify that dilution and mining recovery are applied consistently in tonnes, grade and contained metal.
- Check whether waste movement, tailings capacity, water management and seasonal access can support the same schedule.
- Confirm that closure and rehabilitation activities appear in the final years and in the cash-flow model.
NI 43-101 disclosures commonly include production rates, expected mine life, mining-unit dimensions and dilution factors. If those details are missing or cannot reproduce the schedule, the production forecast is not independently checkable.
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Step 5: Read the processing plan as a mass-and-water balance
Start at run-of-mine feed and follow every stream to doré, concentrate, tailings, water reclaim and waste. The flowsheet should identify crushing, grinding, gravity concentration, flotation, leaching, carbon or other recovery steps where applicable, as well as reagent addition, detoxification, tailings deposition and water recycle. Do not assume that a familiar flowsheet works for every ore type.
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Evaluate metallurgical testwork
- Representativity: determine whether samples cover the deposit’s major ore types, grades, alteration, oxidation state, hardness and expected mine sequence.
- Variability: look for results by ore type and grade range, not only a composite sample.
- Methods: identify comminution, gravity, flotation, leach, settling, filtration and environmental tests, including their scale and duration.
- Deleterious elements: check for elements that affect recovery, concentrate quality, reagent consumption, worker safety, tailings or treatment charges.
- Scale-up: confirm how laboratory or pilot results became design recovery, throughput, equipment size and operating conditions.
- Operating evidence: where available, compare test results with comparable operating data and explain differences.
Walk through the key processing checks
| Flowsheet point | Questions to ask |
|---|---|
| Feed and crushing | Are feed size, moisture, hardness, crusher duty and standby arrangements consistent with mine delivery? |
| Grinding | Do testwork and power calculations support the design grind size and throughput for each ore type? |
| Concentration or leaching | Are residence time, reagent consumption, oxygen or other process requirements demonstrated across variability samples? |
| Recovery | Is the design recovery tied to test results, ore-type proportions and a stated ramp-up or operating factor? |
| Tailings and water | Do solids, water balance, storage capacity, reclaim, seepage controls and wet-season conditions reconcile? |
| Product and sales | Is doré or concentrate quality defined, including payable metal, penalties, treatment and refining charges and transport? |
A single optimistic recovery percentage without variability, testwork basis or deleterious-element discussion is a warning sign. The recovery used in the financial model should be traceable to the same ore mix and schedule that feed the plant.
Check throughput, availability and ramp-up
Design throughput is not the same as tonnes processed in year one. Verify mechanical availability, planned maintenance, commissioning losses, feed interruptions, water constraints and the time required to reach stable operation. The schedule, equipment list, power supply, tailings system and workforce must all support the same operating hours.
Step 6: Verify infrastructure, environmental and social modifying factors
Read the infrastructure section against the mine and plant schedule. Confirm the source, capacity and reliability of power and water; road, rail, port or air access; camp and workforce arrangements; communications; fuel and reagent logistics; workshops; tailings and waste facilities; and seasonal or extreme-weather allowances.
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Then examine environmental and social commitments. The economic case should identify permitting steps and timing, land access, water rights, waste-rock and tailings management, reclamation and closure obligations, taxes, royalties, community agreements and political assumptions. A project can have attractive geology and still fail its reserve test if a permit, water supply, tailings facility or land right is unavailable on the schedule assumed.
Step 7: Rebuild the capital and operating-cost basis
Capital estimate
Separate initial capital from sustaining capital and record when each amount is spent. Check the estimate’s currency, price date, escalation convention, contingency, owner’s costs, indirect costs, engineering and construction management, pre-stripping, mine development, process plant, power, water, roads, tailings and closure. A credible study makes those categories visible instead of presenting one unexplained total.
Operating costs
Trace mining, processing, site general and administrative, maintenance, power, fuel, reagents, labour, water, transport, refining, treatment, royalties and other charges to physical drivers such as tonnes mined, tonnes milled or ounces payable. Confirm whether costs are real or nominal, which exchange rates are used and whether inflation is applied consistently.
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Financial model
Follow the cash flow from production to revenue, deductions and taxes. Confirm payable gold, concentrate terms or doré assumptions, treatment and refining charges, royalties, working capital, sustaining capital, reclamation and closure costs. Identify the gold-price deck and discount rate, and check whether financing costs or debt are included in the stated project metrics.
| Metric | Meaning depends on |
|---|---|
| NPV | Cash-flow timing, discount rate, price deck, taxes, royalties, capital, closure and the chosen valuation date |
| IRR | The same cash-flow definitions and the initial investment timing; it should not be read without NPV and scale |
| Payback | Whether undiscounted or discounted cash flow is used and whether sustaining capital and closure are included |
| Unit cost | The denominator used, such as tonnes mined, tonnes milled or payable ounce, plus treatment, refining, royalties and by-product credits |
There is no universal discount rate or economic threshold established by the cited reporting standards. The important question is whether the selected rate and assumptions are disclosed, internally consistent and tested in downside cases.
Read sensitivity and scenario analysis
Look for one-way and combined sensitivities to gold price, head grade, recovery, throughput, operating cost, initial capital, sustaining capital and schedule delay. A useful downside case changes assumptions that could realistically move together—for example, lower grade with lower recovery and higher processing cost—not only a mild change in one variable. Record the break-even price or assumption where the project’s value becomes zero if the study provides it.
Step 8: Read risks, limitations and certificates before accepting the conclusion
Risk sections often contain the qualifications that the summary leaves out. Review water availability, tailings stability, slope or ground conditions, metallurgical uncertainty, reagent supply, power reliability, permitting, community relations, political exposure, construction schedule, inflation, financing needs and closure liabilities. For each risk, ask whether it has a quantified allowance, a schedule action, a sensitivity case or merely a narrative statement.
Read every qualified person’s certificate and reliance statement. Confirm that the person responsible for each technical section had the relevant experience and that the certificate covers the effective date and property. Forward-looking language is not evidence that a risk has been solved; it signals that outcomes can differ from estimates.
How to decide whether the economics are realistic
Use a cross-check rather than a single metric. The following tests connect independent parts of the study:
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- Metal balance: multiply scheduled feed tonnes by grade, apply dilution and mining recovery, then compare contained metal, process recovery and payable metal with the production table.
- Capacity check: compare mine delivery, stockpile draw, plant throughput, availability and ramp-up. Any one of these can limit annual output.
- Reserve check: ensure the economic schedule is based on proven and probable reserves as defined by the stated code, with any lower-confidence material clearly identified.
- Cost-driver check: test whether unit costs move logically with strip ratio, depth, haul distance, hardness, reagent demand, power intensity and labour requirements.
- Infrastructure check: match water, power, roads, tailings and waste capacity to the peak production year, not only the average.
- Cash-flow check: verify that construction spending precedes revenue, working capital is funded, sustaining capital is timed correctly and closure is charged.
- Downside check: examine sensitivities and identify which assumption most quickly destroys value.
If one section cannot reconcile to another, treat the inconsistency as a material uncertainty until the study explains it.
How to compare two feasibility studies
Normalize the comparison before ranking projects. Use the same currency convention, price date, valuation date and whether figures are real or nominal. Then compare the underlying drivers, not just NPV.
| Comparison axis | Why it matters |
|---|---|
| Reserve confidence and cut-off | A larger reserve with weaker confidence or a more permissive cut-off may not be the stronger base. |
| Grade, dilution and mining recovery | These determine how much payable metal reaches the plant. |
| Throughput and ramp-up | Higher nameplate capacity is not an advantage if equipment, power, water or maintenance cannot support it. |
| Metallurgical recovery and variability | A tested, stable recovery can be more valuable than a higher untested assumption. |
| Initial and sustaining capital | Capital timing affects funding risk and NPV; deferred sustaining work can make a case look artificially strong. |
| Operating cost | Check the denominator, currency, inflation, royalties, treatment and refining charges and by-product credits. |
| Mine life and production profile | Longer life is not automatically better if early cash generation, grade or closure liabilities differ. |
| NPV, IRR and payback | Interpret them with price deck, discount rate, taxes, royalties and scale. |
| Permitting and infrastructure readiness | A technically sound project can face greater schedule or funding risk when key approvals and facilities are not ready. |
| Sensitivity | Prefer a case that remains understandable and resilient under realistic downside assumptions. |
A higher NPV is not automatically stronger if it depends on a higher gold price, weaker reserve confidence, untested recovery or omitted infrastructure and closure costs.
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- Inferred resources are presented as though they were proven or probable reserves in the feasibility case.
- Recovery is a single optimistic percentage with no ore-type variability, testwork basis or deleterious-element treatment.
- The mine schedule or plant ramp-up does not reconcile with equipment, water, power, tailings, maintenance or development assumptions.
- Capital and operating costs omit currency, price date, escalation, contingency, sustaining capital, closure or sensitivity detail.
- NPV or IRR is shown without the gold-price deck, discount rate, taxes, royalties, payable metal or a downside case.
- Permitting, infrastructure, community, political and closure risks are absent from the economic narrative.
- Resource, reserve, production or recovery figures change between sections without an explanation of case, date or rounding.
- Certificates and limitations are missing, incomplete or inconsistent with the technical responsibilities described.
A practical worksheet for reading any study
Create one page with these fields before forming a view:
- Reporting code, study type, effective date, property, ownership and qualified persons
- Selected mining method, reserve tonnes and grade, cut-off, dilution and mining recovery
- Annual and life-of-mine feed, head grade, throughput, availability, ramp-up and recovery by ore type
- Product form, payable metal, treatment and refining charges and transport terms
- Initial capital, sustaining capital, closure cost, operating-cost basis, currency and escalation
- Gold-price deck, discount rate, taxes, royalties, working capital and valuation date
- NPV, IRR, payback and every sensitivity or scenario supplied
- Permits, water, power, tailings, waste, land, community and schedule dependencies
- Top technical and commercial risks, their mitigations and the evidence supporting each
Mark every field as disclosed, calculated, qualified or missing. Missing information is not proof that the project fails, but it is a reason to lower confidence and request clarification.
When an independent review is worthwhile
Consider an independent mining-engineering, mineral-processing or qualified-person review when the study will support an acquisition, financing, public disclosure, reserve statement or major development decision. The reviewer should be given the complete technical report, appendices, resource model, mine schedule, metallurgical data, capital estimate and financial model—not only the executive summary. Ask for a written reconciliation of tonnes, grade, recovery, production, costs and cash flow, plus a list of assumptions that are unverified or unusually sensitive.
The most defensible reading ends with a traceable chain: the geological model supports the classified resource; modifying factors convert the appropriate resource into reserves; the mine plan delivers that reserve; testwork supports the processing route and recovery; infrastructure and permits support the schedule; and the cost and price assumptions produce the stated economics under disclosed sensitivities. If any link is unsupported, describe the result as conditional rather than demonstrated.
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