September 01, 2017
I was talking with our mining product manager, Brandon Gill, the other day and he was telling me about one of the projects he’s working on that piqued my interest. It’s a greenfield project in South America, and the customer is planning on different ore transportation methods outside of the traditional truck and shovel operation. It’s really interesting to think about the many new ways of mining that people can implement nowadays. Some are capital intensive, and some require additional permitting, both of which can be detrimental when you start the valuation process of a project.
Our customer with the South American mine was in the process of evaluating in-pit crushing and conveying. Evaluating the new greenfield project from a financial perspective, the in-pit crushing and conveying option was on par with the traditional truck and shovel method. There were some nuances though – it gave less flexibility to the operations side, and imagine the infrastructure required at a larger mine site with many working faces. That’s as far as I know about the project he is working on, but it got me thinking about how new greenfield projects are being evaluated today versus brownfield projects that were evaluated years, even decades, ago and are currently being evaluated today for an extension of the mine.
Project evaluation via example vs historicals
New greenfield project evaluation is a lot different than brownfield project evaluation because with the latter, you most likely have historicals you can model financials off of to estimate what will most likely happen at the mine. So, from a financial modeling standpoint, you can garner insights into how the mine will operate, when you will have downtime and how the climate affects overall productivity. It’s tougher to apply the same thought process to a new project because it’s a fresh new piece of land. Therefore, you have to look for mine sites around the world that have a similar geological layout, similar mining methods and a similar climate. That isn’t always easy to find, especially if you’re considering a new method of mining that hasn’t been performed before, or hasn’t been done successfully.
Accurate financial modeling becomes even more crucial for greenfield projects because you don’t have anything to base your model off of. You’ll have a lot of assumptions and educated guesses based on what you believe could happen— through research— but if those assumptions are wrong, it could cost you the whole project.
Streamline new mining project evaluation in Alight
Alight can help streamline financial modeling for greenfield projects. With Alight, you can input numerous assumptions and key drivers into the application—and continually update assumptions—to create scenarios and see the future financial impacts on the operation. The more information you have to base your assumptions on, the better. With Alight you can create and analyze numerous financial scenarios side by side and collaborate in real time with other contributors so evaluating mine sites can be done more quickly and efficiently than traditional methods involving spreadsheets.
Danny Tsendayush is a Marketing Manager at Alight. He holds a Bachelor’s degree in Mining Engineering from Colorado School of Mines and works closely with the Alight Mining Solutions team.