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GEOLOGICAL-ECONOMIC EVALUATION OF MINERAL DEPOSITS




      Geological-economic evaluation of a subsurface resources area is periodic analyzing of results of every stage of geological and technical-economic studying of minerals within a subsurface resources area aimed at determination and/or changing of commercial value of their reserves based on information on real process flowsheets, technical and economic indices and financial results of minerals mining within such area. Detail, preliminary and initial geological-economic evaluations shall be distinguished*:

  • Detail geological-economic evaluation (GEE-1) consists in determining of economic efficiency of production activity of established or renovated mining enterprise and advisability of investing in works on its designing and construction. GEE-1 is carried out based on explored mineral reserves and includes feasibility study (FS) of permanent conditions for their calculation. Detail level of technical-economic calculations and reliability of financial indicators in GEE-1 shall be sufficient for making an investment decision without additional studies. Materials of detail geological-economic evaluation of a mineral deposit, positively evaluated by the State Commission on Mineral Reserves, is a main document substantiating advisability of funding works on development of designs for construction of mining enterprises;
  • Preliminary geological-economic evaluation (GEE-2) is substantiation of advisability of a mineral deposit (accumulation) commercial development and investing in works on geological exploration and development for mining. GEE-2 shall be carried out based on preliminarily explored and explored mineral reserves and executed as a feasibility report (FR) on advisability of further exploration, including pilot-commercial mining of a deposit (accumulation). For this purpose, evaluation of the deposit development efficiency shall be carried out based on ultimate salable products of a mining enterprise; technical-economic indices shall be determined via calculations or adopted by analogy;
  • Initial geological-economic evaluation (GEE-3) is substantiation of advisability of investing in prospecting/exploration works within areas promising for discovery of mineral deposits.
       GEE-3 shall be carried out based on preliminarily explored reserves and quantitative estimation of mineral resources, being submitted in the form of technical-economic considerations (ТЕC) regarding their possible commercial value. Assessment of possibility of commercial development of supposed mineral deposits shall be supported by consolidated technical-economic calculations based on proven analogy with already known mineral deposits or on technical assignment of a Customer, ordering geological exploration.

       State expert examination of materials of geological-economic studying of mineral reserves evaluated before 2005* is a compulsory procedure. Reiterated state expert examination and mineral reserves evaluation at deposits shall be carried out every five years of subsurface resources area exploitation, as well as in the following cases:
  • If reconsideration of regulatory requirements and technical specifications regarding tonnage or quality of minerals and their processing technology results in diminishing of total explored reserves by more than 20 percent or increasing in their tonnage by more than 50 percent. Reserves of deposits being mined are subject to iterated expert examination and evaluation if total explored reserves increase by more than 50 percent as a result of mining or additional exploration (as compared to reserves evaluated earlier by the State Commission on Mineral Reserves) or if written off and/or intended for writing off explored reserves as not confirmed or unfeasible for mining due to technical-economic conditions at deposits, exceed standards established by the legislation;
  • When difference between estimated figures and real technical-economic/financial indices of economic activity connected with minerals mining makes more 20 percent, as well as when changes in process flowsheets result in such difference.

*”Classification of Mineral Reserves and Resources of the State Fund of Subsurface Resources” with changes, introduced by the Resolution of the Cabinet of Ministers of Ukraine no. 264 of March 26, 2008.

**“Regulation on Procedure of Development and Substantiation of Mineral Feedstock Conditions for Calculation of Solid Mineral Reserves in Subsurface”.


 
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