Prospecting is the initial stage of gold deposits exploration and the initial results has impact on some economical aspects. It has been established that direct and indirect geological evidence of gold mineralization must be analyzed and compared to minimum expectations. The future gold deposit must survive this preliminary screening and the quality of the screen depends in part on the geologist´s concept of economic gold ore requirements.
Specific financial analyses appropriate to the prospecting area will indicate qualitatively the minimum tonnage and gold grade requirements for an economic venture. Optimism should prevail at this stage since a detailed examination and study of the occurrence will give a much better state of knowledge. Nevertheless, it is possible to define minimum requirements that allow the classification of target hypothesis into those with a high or low economic potential. A series of financial analyses must be performed. For example, for the conditions applicable in prospecting area I, cost appropriate for mining methods may be performed. These are processed with several tonnage and gold grade estimates resulting some graphs with curves, which are shown as bands rather lines to emphasize the qualitative nature of the cost factors. The width of search band is an expression of data uncertainty and the limiting lines are obtainable results under pessimistic and optimistic conditions. For a target hypothesis or consideration, an open pit target, management’s criteria may be obtained by increased tonnage or increased grade. The geologist and metallurgist can then evaluate the effect of such changes.
Land acquisition will be necessary after completion of a successful financial study with prospecting data. When land is acquired through negotiation with present landowners, the economic framework within which the future gold mine should operate is indicated. Financial analysis may indicate the effect of alternative royalty or land purchase conditions on the desired objective. In this case the sensitivity of the gold ounce price and percentage of net smelter return royalty as measured by discounted cash flow of return gives more information on the profitability of the gold project.
Minimum tonnage and gold grade based on preliminary data