Economic Evaluation Of Mineral Projects In The Commonwealth Of Independent States

Introduction There is a misconception that mineral-project economic evaluations in the former Soviet Union are either nonexistent or very limited. This is not the case. In fact, there are at least two basic methods that can be utilized to evaluate the vast mineral resources of the Commonwealth of Independent States (CIS). Evaluation procedures are based either on a comparison to known projects, which may rely on limited available data, or on potential-profit calculations, which generally uses more extensive databases. Significant philosophical differences between these systems and those utilized in the Western world include the following: •Under the centralized-government system, the economic evaluation of a mineral project was based on artificially determined mineral prices and costs. Every ten to 12 years, prices for concentrates and metals were established by the Council of Ministers and remained unchanged until the next reconsideration of prices . •The time value of invested money was not considered to be important under these "stable" prices, and inflation was assumed to be nonexistent in the planned economy. •An overestimation of the value of social and economic factors such as keeping the local population employed and providing the country with strategic minerals biased the economic evaluations of projects. Sequence of exploration Geological exploration in the CIS countries typically includes two major phases: prospecting and exploration. Prospecting consists of the following: •Regional geological studies. •General prospecting. •Prospecting. •Prospect evaluation. Regional geological studies are conducted within large territories and utilize satellite images, deep seismic zoning and other state-of-the-art methods. Geological and geophysical maps on a scale of from 1:200000 to 1:1000000 are developed to help identify regional anomalies and mineral prospective areas. The areas of primary interest are then subjected to general prospecting, beginning with geological mapping of the area at 1:50000 (1:25000) scale. The prospecting phase determines mineral potential based on further geological mapping (mostly 1:10000 scale), surface geophysics and geochemistry. Finally, the most attractive targets are subjected to further detailed evaluation (prospect evaluation) to help identify "possible" projects by means of trenching and wide-spaced drilling. The results of the prospect evaluation are analyzed and conclusions regarding the economical potential of the project are drawn. If the initial-prospecting phase results are positive and the prospect is recognized as economical, it then moves into preliminary exploration, which is followed by detailed exploration. Preliminary exploration determines the feasibility of the project on the basis of limited data. For example, in some underground projects, the initial exploration drilling and tunneling is done at two or three times wider spacing than would be required by the assumed mining method. Detailed exploration focuses on preparing the project for mining development, such as completing drilling and tunneling, particularly in the portion of the ore body to be first mined. During the project's mining phase, further exploration is usually conducted along the flanks of the mineralized structures and deeper sections of the ore body. Finally, during exploitation, it is sometimes necessary to delineate the ore body within the mining-block limits. A comparison between the United States (US) sequence of exploration activities and the CIS system is given in the Table 1. There is no "additional" and "exploitation" exploration shown in the US system, but it is common knowledge that all mineral projects are subjected to "additional" and "exploitation" exploration while being mined. An economic evaluation should be performed after the [ ]