Description : The evaluation of mineral projects involves the identification, mitigation and management of significant uncertainty. Benchmarking is an essential and effective way of increasing confidence and reducing uncertainty associated with input parameters and assumptions. Comprehensive and detailed benchmarking will ensure ‘best practice’ technologies, methods and systems have been considered and that the appropriate practices can be identified and incorporated into the project.
In conjunction with the involvement of experienced industry practitioners, benchmarking is best employed throughout project evaluation to enable early identification of ‘errors’, producing more accurate and predictable outcomes. Considerable time and effort is required to gather data and information, which should be benchmarked by the project evaluation team.
There is a history of mining projects underperforming, on production, on costs and on return to the investors. The quality of mine plans and feasibility studies, and the quality of the input data is being questioned in many ways. Benchmarking assists sound project evaluation practices, by providing a database of actual results, to validate project inputs and outcomes, ensuring they are realistic and achievable. Benchmarking also provides unbiased, statistical support as the basis for sound investment decision making and ensures well considered decisions are made resulting in a more efficient study process.
The evaluation of the quality of projects which are the subject of transactions also benefits from the use of real data obtained from a benchmarking database. Vendors are quick to highlight the benefits of their projects, and conceal the flaws, inflating the value. Buyers will want to quantify the potential of a project through the due diligence process relying on actual results from benchmarking
For the reasons broadly outlined above, benchmarking should be considered as an essential component of effective Project Evaluation.
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