Assessing a Mining Project: From Resource to Possible Mine

A geological discovery is the beginning of a mining project — not its outcome.

For a deposit to become a producing mine, numerous questions need to be answered. Some concern the geology, others the technical aspects, the economics, the infrastructure, permitting or the financing.

This isn't only about what is known today. Equally important is: what is being assumed? What still needs to be confirmed? What factors could change the project? These are exactly the questions that make analysing a mining project interesting.

1. The resource is only the beginning

One of the first figures encountered in a mining project is the resource. In simplified terms, it describes the mineralised material estimated on the basis of the available geological data. But a resource does not automatically say how much of the commodity can later be produced. Further questions need to be answered for that:

• How well has the deposit been studied?
• How reliable are the geological models?
• How is the resource distributed?
• Which grades are actually economically interesting?
• Which parts of the resource could be mined?

An important distinction arises here: a resource does not automatically mean economically recoverable material. Only further technical and economic studies can show which part can actually be considered a reserve.

2. Grade matters — but it isn't everything

Grade — the content of the commodity within the ore — is an important metric. A higher grade can, in principle, mean less material needs to be moved to recover a given amount of metal. But other factors matter too: a high-grade ore can be difficult to process. A lower grade, combined with favourable geology, good infrastructure and efficient processing, can still be economically interesting.

The question therefore shouldn't only be "how high is the grade?" but rather "how does the grade affect actual costs and potential production?"

3. What happens between the ore and the product sold?

Between the mined ore and the commodity eventually sold lies a processing step. Some of the contained metal may not be recovered. Recovery, in simplified terms, describes the proportion of the contained resource that can actually be extracted — and this can be decisive for economics. That's why metallurgical testing is an important part of project development. Relevant questions include:

• How was recovery determined?
• Under what conditions?
• Was processing tested only in the laboratory?
• Are there pilot-scale or larger trials?
• How does recovery change across different ore types?

The further a project is developed, the more important it becomes to have well-supported answers to these questions.

4. What does the path from resource to production look like?

A project passes through various stages of development. Each stage reduces certain uncertainties — but also brings new decisions and requirements.

A project should therefore always prompt the question: which uncertainties have already been reduced, and which still remain? An early-stage exploration project naturally has more open questions than one nearing the start of production.

5. What assumptions sit behind the economics?

A feasibility study can look very precise. Yet even a detailed study rests on assumptions, including:

• commodity prices
• production volumes
• CAPEX
• OPEX
• recovery
• exchange rates
• energy prices
• mine life

The calculated economics alone are therefore not the only thing of interest. Far more important can be: how sensitive is the project to change? What happens with a lower commodity price? What happens if construction becomes more expensive? What happens if production falls short or operating costs rise? This kind of analysis shows whether a project is robust or heavily dependent on favourable assumptions.

6. Infrastructure can determine the economics

Geology determines where the resource lies. Infrastructure partly determines how easy or difficult it is to develop economically. A project near existing roads, power grids, water sources or ports can have a substantial advantage. For a remote project, by contrast, additional capital expenditure may be required.

It's worth asking: what already exists? What needs to be built? How far is the project from key transport routes? What energy and water supply is required? Infrastructure is sometimes treated as a secondary topic — but for a project's actual development, it can be decisive.

7. Which risks actually matter?

Not every risk carries the same weight. A project can, for example, carry many minor uncertainties while remaining relatively robust on the decisive parameters. Conversely, a single open question can have a substantial impact. What matters, therefore, isn't just a long list of risks, but: which risks could actually change the project's economics or timeline?

This approach helps distinguish between general risks and the risks that actually decide a project's fate.

8. What is fact — and what is still an assumption?

This is one of the most important questions when analysing a mining project. Some information can already be well substantiated. Other elements rest on models, forecasts or future decisions. For example:

Fact: Certain drilling has been carried out.
Assumption: The results can be extrapolated to larger parts of the deposit.

Fact: Certain infrastructure exists.
Assumption: The existing infrastructure is sufficient for the planned production volume.

Fact: A certain process was tested.
Assumption: The process will work just as efficiently later, at industrial scale.

This distinction helps put information into proper context.

9. Which questions remain open at the end?

A good understanding of a project doesn't mean having a final answer to every question. Rather, it means being clear about which questions remain open — and when they might be answered. For example:

• What additional drilling is planned?
• When is an updated resource estimate expected to be published?
• What metallurgical testing is still outstanding?
• Which mining method will ultimately be chosen?
• What permits are still missing?
• What will the actual capital requirement be?
• How is financing expected to be arranged?
• When can a formal construction decision be made?
• What milestones come next?

These questions often reveal how far a project has actually progressed better than any single metric.

10. What ultimately makes a project attractive?

An interesting mining project is rarely defined by a single characteristic. It can be the combination of several factors: good geology, attractive grades, good metallurgy, low expected costs, existing infrastructure, a clear permitting outlook, and realistic financing.

No single factor needs to be exceptional — what matters is the overall picture. A project with a very large resource, for example, can face challenges due to high infrastructure costs. A smaller project, by contrast, can be interesting because of its location, its high grades, or a favourable cost structure.

The question therefore shouldn't be "is this project good or bad?" but rather "what characteristics make this project attractive — and what factors could undermine that advantage?"

Looking behind the numbers

Mining projects are often described through numbers: resource, grade, recovery, CAPEX, OPEX, production, NPV, IRR. These metrics matter. But behind every number are data, assumptions and models.

The real analysis therefore begins where one asks: where does this number come from? How reliable is it? What assumptions underpin it? How would it change if one of those assumptions changed? It is precisely this look behind the numbers that helps in understanding a mining project properly.

From possibility to reality

In the end, every mining project comes down to the same fundamental transition: can a geological possibility become a viable mining operation?

The answer doesn't emerge from a single metric. It emerges from the combination of geology, engineering, economics, infrastructure, permitting, environment, social factors and financing. One of the most important questions for any project is therefore: what has already been demonstrated — what is being assumed — and what still needs to be proven?

The further a project is developed, the more of these questions should have well-supported answers. And that is where a mining project's real progress lies — not simply in new numbers being added, but in uncertainty being reduced, step by step.

For a foundational introduction to the key terms and development stages, see our article Understanding Mining Projects: The Key Questions to Start With. To learn more about how we support transactions involving mining projects, visit our Mining Projects page.

Related Insights

• NPV and IRR Explained: How to Value a Mining Project — the central valuation metrics in detail.
• Resource vs. Reserve: The Key Terms Explained — central terminology for assessing a mining project.