At the early stages of the gold deposit exploration program, it is important to consider some economical aspects toward improving the first discrimination between potentially economic and uneconomic gold deposits by supplementing other information available to the exploration geologist and metallurgist. A complete tabulation of financial analysis is not common due to economically oriented geologists are constantly finding new uses for qualitative estimations. In this way exploration planning should define the commodities to be sought and outlines general zones within which active exploration will be conducted.
Basically, the planning decisions are influenced by the economic awareness of decision participants and timely financial analysis provides pertinent information useful in the allocation of exploration funds. Two zones may have a similar geological favorability for gold mineralization, but favorable taxation aspects may allow lower gold grade material to be ore in one of the zones. It has been noted that minimum gold grade requirements depends on the geographical and depth locations of the desired gold deposit. Nevertheless, when equivalent physical conditions are considered, substantial economic differences exist between countries and between political subdivisions within a country.
It has been noted in several gold projects that the differences mentioned above may be significant and complex. In some circumstances it is possible to assume some data or information based on experience from other gold exploration projects. For example, add 0.4 g/t of gold to minimum economic orebody requirements when evaluating exploration and prospection results in a zone A. financial analysis indicates if such statements may be misleading. The sensitivity relationship of gold grade and discounted cash flow rate of return obtainable from a particular deposit may indicate if low grade deposits are more profitable in Zone A, while high grade deposits are more profitable in Zone B. In this case, for a particular gold ore target model, deposits in Zone B need a higher average grade to achieve the minimum acceptable rate of return. Nevertheless, this apparent penalty reverses at higher grades and knowledge of this reversal improves exploration planning.
Effect of taxes on gold project profitability