The value of information: a guide to the strategic development of projects founded on mineral resource categorization

Abstract

Work that was initiated to assess the value of information employed in decision-making on mine development led to the formulation a methodology that (a) appraises the economic value of exploration targets, (b) guides the strategic development of exploration targets and (c) calculates the value of information. The technique relates specifically to the development of large-scale copper porphyries, but may be modified for application to other deposit types. The development of exploration targets was to be driven in this case by the stipulations of the resources categorization protocol of Codelco–Chile, which specifies the technical (and economic) support required for the three phases of project development—exploration, conceptual and feasibility/bankability. The Codelco–Chile mineral resource protocol requires each main phase of project development to reach a given percentage of the ultimate project net present value. Such a provision demands the existence of both geological and economic models to provide the means to evaluate the net present value of target deposits. The evaluation of deposits is based on the drill-hole configuration adopted for each category of mineral resources, the geological model and distinct programmes of data collection, knowledge generation and project evaluation. The conclusions are that mineral resource categorization protocols play a key role in the formulation of cost-effective strategies for the successful development of exploration targets and that the unit cost of evaluating projects is a very small percentage of the unit price of copper.