Modern mining projects follow a well-defined engineering path to production. In most cases, and Platinum Group is no different, the engineering work of establishing the validity of a resource base and designing the mine is completed by independent engineering groups with direct relevant experience.
Resource & Scoping
The first significant step in developing a mine is an independent Scoping Study or Preliminary Assessment which lays out an initial mine plan and financial model for the project. This study can be completed on Inferred Resources and includes broad mine design and capital costs estimates.
The Scoping Study also helps to identify the opportunities that can be maximized and the risks that require mitigation during further stages. During this phase, capital and operating costs are usually estimated to a +/- 30% confidence level.
Platinum Group Metals has completed this step.
As the project drilling and engineering sharpens project parameters including resource assessments and calculations and mine design specifications, the next step undertaken by the project is a Pre- Feasibility Study.
This phase of the engineering and mine planning process is usually completed from an Indicated Resource and cost estimates are typically +/-20%. All aspects of a mine project are detailed in the Pre-Feasibility Study including resources, mining methods, equipment required, milling and recovery methods, metals sales and price assumptions, as well as permitting, social and environmental issues. A financial model is included with sensitivities to various factors.
Platinum Group Metals completed this study in January of 2007.
It is not likely that the major components of the project will change from Pre-Feasibility to Final Feasibility - the final stage where major project design is completed with real quotes for the major project cost items.
Typically 25% to 30% of the detailed drawings for actual construction will also be completed at the Final Feasibility stage. Cost estimates are typically +/-15%, which is significantly more accurate than at the Scoping Study stage. Feasibility Studies are used by the partners and investment banks for funding of equity and debt for the construction of a mine.
Platinum Group Metals has completed a full feasibility study in July 2008 and updated this study in October 2009.