A sensitivity analysis for the project must be done in order to study the effect of same parameters on the Net Present Value (NPV), net cash flow minus initial investment). The information is shown in a graph called spider. The variables to be analyzed are gold price, operating cost, capital cost and gold head content. They are varied in 25% increments from 50% of base case to 150% of base case values. The slope of the criterion lines indicates how sensitivity the project economics are to change in these criterions. The steeper the line indicates what parameter makes more sensitive the project economics.
For example, the following graph shows that the project is extremely robust and without any doubt is not affected by the gold price. In some projects, most of the plant revenues are affected by taxes or any other deduction. The project economics are most sensitive to gold grade. In this way, it will be important to assure a high and stable gold grade during the life of mine.
Spider Graph Sensitivity Analysis
An issue very important to be handled by gold mining companies is the environment and the effects of the treatment process. State laws and regulations govern the protection of the environment. Although they can change with the time, the main is to protect the environment and be stricter with the mining projects. In this way, the company must protect the environment since the exploration stage and has to prove that the environment has not been damaged. In other word, the project must be in compliance with all applicable laws, rules and regulations.
The company must expend money in order to develop non-contaminant projects. This situation is being more important each day because project approval is done not only the government and shareholders, else by the communities around the project.
Economy, environment and communities are aspects to be considered in every project without considering the potential of the ore body. If the project is viable, the different areas must be organized and prepare a project development schedule which indicates the time required to complete different steps of the project. Obviously some projects have to handle some special issues.
Engineering of the plant will start as soon as the metallurgical information is complete and available in enough detail so that the equipment can be sized and selected from any vendor. It is important that engineering and financial agreements with the contractors can be done anticipated time. As soon as the equipment list is available, orders will be placed for all components of mine and processing plant. The next table shows a schedule with the main tasks to be completed during three years.
Project Schedule