Some junior mining companies select their mining study consultant based on the assumption that they need a “big name” firm to give credibility to their study. This creates an interesting dilemma for many smaller mining companies since they the larger firms can cost more. Its also a dilemma for smaller engineering firms trying to win jobs. While large consultants may cost more due to higher overheads; their brand name on a study may bring some 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 internal project management and costing systems to manage the 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 will pay for all of these people, albeit they may be a critical part in successfully completing the study.
A feasibility study is more rigorous than a pre-feasibility study, which in turn is more rigorous than a PEA or scoping study.
Sub-contracting Parts
For certain aspects of a feasibility study, one may get better technical expertise by subcontracting to smaller highly specialized engineering firms. However too much subcontracting may become 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 highly uneconomic).
I have seen instances where larger firms, protecting themselves from limited data, were only willing to use very conservative design assumptions in early stage mining studies. This may not be helpful to a small mining company trying to decide how to advance such a project.
Conclusion
My recollection is that many years ago larger consulting firms would offer to do an entire study in-house. They would have the in-house team to cover almost the entire study. That approach seems to have changed and now the multi-company path is the norm.
The Study Manager must ensure that everyone understands what their deliverables are. Generally this is done using a “Responsibility Matrix”, but these can sometimes be too general.
Some of the models I have reviewed will build the entire operating cost (mining, processing, G&A) in one grand file. They will build in the capital cost too and finally provide the economic model… all in one spreadsheet!