Introduction

METS provides due diligence services for the resource sector and has a detailed knowledge of it supported by a great depth of technical expertise gained over many years working with the industry. METS is an Independent Engineer and conducts due diligence reviews for financial institutions considering the lending of funds or expanding existing projects. METS also conduct risk assessment and measurement that includes the identification of all risks, which may have a significant impact on the project's organisation, structure, design, construction and operation, and anything else under consideration. Due diligence and the acquisition of data on risks and their consequences during feasibility studies will help determine the effectiveness of strategies for modifying risks or their consequences

In-house Resources

• Project financial modelling skills
• Risk assessment analysis
• Operating cost comparisons
• Capital cost comparisons
• Asset management
• KPI's
• Due diligence checklists
• Existing operations database

Project Experiences

• Metallurgical capability
• Directed towards client needs
• Understanding of the technology
• Worked on many major projects

The Due Diligence Process

A logical approach to due diligence follows a step-by-step programme culminating in a comprehensive professional report.

• The use of new and unproven technology
• Schedule delays, unrealistic future schedules and budgets
• Unusual contracting arrangements
• Unclear ownership, Native Title Risks
• Project scope unclear or continually changing
• Project needs not clearly defined
• Conflict among the participants or management
• A large number of approvals required ahead of the project
• Significant environmental risk or impediments
• Unusual skills, knowledge or peculiar requirements
• The spread of project risk or skewed distribution
• Capacity and resources of the company to achieve the stated project goals
• The use of unproven equipment for the project
• Clearly defined alternative consumables suppliers
• Any unusual sampling or assay problems with the ore
• Any specific technical training requirements for the workforce
• Bipartisan local political support for the project
• Adequate bench-scale and pilot plant testing of the proposed flowsheet
• A fundamental understanding of the mineralogy and metallurgy for the project
• Adequate infrastructure, water, power, housing and social infrastructure to support the project
• The dependence on "key" personnel for the project success
• A history of "false starts" or "left field" surprises
• A clear understanding by management of the risks and a strategy to minimise the risks
• Inexperienced management with no previous track record in the sector

• Site visit
• Review project documentation
• Use standard checklist
• Sample locations
• Review testwork
• Mass balances
• Flowsheet review
• Recovery estimates
• Capacity
• Manpower
• Training
• Management
• Infrastructure
• Markets
• Performance and production completion
• Discussion with client
• Reporting

Reality Checks

• Delays to start up
• Cost over runs
• History of false starts
• Reasonableness

In addition to inspection of bench-scale and laboratory test results, it is necessary to determine if a typical workforce utilising proven equipment and proven technology could achieve the production of the nominated products with the appropriate market specifications and at the budget costs indicated. We will assess the likelihood of achieving the stated plant availabilities and production objectives and how critical the process control issues are in achieving process outcomes. We will look at the materials of construction and suitability for the environment and the co-dependency of unit operations and how they were interlinked. We will consider how the critical dependence on ore variability could affect the operations and how much testing has to be done to confirm variability. Simple issues such as scale formation and the adequacy of surge capacity between crushing and milling were considered to ensure in practical terms what is being accomplished in the laboratory could be transferred to an operating plant.

Metallurgy and Operation

• Ore sample representative
• Mineralogy
• Testwork results
• The process operability maintainability
• Unit process - crushing, grinding, leaching, stripping, tailings
• Management
• Supervision
• Staffing - skill and experience
• Accommodation
• Transport, reagents, services
• Industrial relations
• Quality assurance
• Security
• Maintenance / repair
• Infrastructure power, water, roads