Some junior mining companies have selected their engineering consultant on the assumption that they need a “big name” firm to give credibility to their feasibility study. This creates an interesting dilemma for many smaller mining companies. Its also a dilemma for smaller engineering firms trying to win jobs. While large consultants may be higher cost due to their overheads; their name on a study may bring some intangible value.
In my personal experience I find that larger consultants are best suited for managing the large scale feasibility studies. This isn’t because they necessarily provide better technical expertise. Its because they generally have the project management and costing systems to manage the inherent complexities of such larger studies.
The larger firms are normally able to draw in more management resources; for example, project schedulers, cost estimators, and document control personnel.
Ultimately one does pay for all of these people, albeit they may be a critical part in successfully completing a study. However there is a cost to this.
For certain aspects of a feasibility study, one may get better technical expertise from smaller specialized engineering firms. However the overall coordination of heavily sub-contracted studies can be an onerous task. Often the larger firms may be better positioned to do this.
In my view, likely the best result will come from a combination of a large firm managing the feasibility study but undertaking only the technical aspects for which they are deemed to be experts.
The large lead firm would be supported by smaller firms for the specialized aspects, as per a previous article “Multi-Company Engineering Studies Can Work Well..Or Not”.
What about smaller studies?
For smaller studies, like scoping studies (i.e. PEA’s), which can be based on limited amounts of technical data, I don’t see the need to award these studies to large engineering firms. The credibility of such early studies will be linked to the amount of data used to support the study. For example, there may be limited metallurgical testing, or limited geotechnical investigations; or the resource is largely inferred. Not all PEA’s are equal (see “PEA’s – Not All PEA’s Are Created Equal”). A large firm’s application of limited data may be no more accurate or defensible than a small firm’s use of the same data.
One of the purposes of an early stage study is to see if the project has economic merit and would therefore warrant further expenditures in the future. An early stage study is (hopefully) not used to defend a production decision. The objective of an early stage study is not necessarily to terminate a project (unless it is obviously uneconomic).
I have seen instances where larger firms protecting themselves from limited data, were only willing to use very conservative design assumptions. This may not be helpful to a small mining company trying to decide how to advance an earlier stage project.
The bottom line is that for early stage studies like a PEA, smaller engineering firms can do as good a job as larger firms. However one must select the right firm. Review some of their more recent 43-101 reports to gauge their quality of work. Don’t hesitate to check with previous client references.
For the more advanced feasibility level studies, be wary if a smaller firm indicates they can do the entire study. Perhaps they can be responsible for some parts of the feasibility study as a sub-contractor to a larger firm. Managing these large study may be beyond their experience and internal capabilities.
Whether you are considering a small or large engineering firm, know their strengths and weaknesses as they will relate to the specific’s of your study.
I think the resource evaluation is the heart of any technical report and should be a key requirement for selecting any consultant. Usually the estimates boil down to one person’s opinion, so it pays to know if that person has a good track record on resource definition. Slapping some PhD degrees on the report is for me like putting up a Beware of Dog sign. I would far sooner see a track record of years of doing estimates on deposits similar to the one I am working on.
If you can find a good resource estimation team the rest of the study is easy to build around that piece.
I agree, and some of the large firms tend to not have the best resource modelling people. This is where specialized firms can have the advantage. Often owners will sub-contract and manage the resource study themselves and leave it out of the feasibility scope of work.