The early incorporation of knowledge and results obtained from financial analysis can provide a means for economically resolving some problems found during exploration and development of a gold project at full scale. It is recognized that during prospecting for gold deposits, geologists and metallurgists are usually asked what they hope to find or the metallurgical respond of the prospect. A typical answer is to have a gold deposit as large as possible with the highest gold grade, and the economic implications are deferred until a capital investment decision is needed by the Management. At that moment, an economical analysis integrating several variables is prepared. The basic items of this study are tonnage and average grade, cut-off grade, capital and operating costs, final product value and estimated profit.

It is important to indicate that a close analysis of these items indicate that there is not intrinsic reason for avoiding financial analyses at earlier stages in exploration, as long as the uncertainty of the study is performed. Basically, for this item, the appropriate cut-off is the main uncertainty. Also, capital and operating costs may be difficult to estimate before detailed quantitative information is available by the geologist and metallurgist. Nevertheless, estimates useful for the types of applications related to the earlier exploration stages are possible.

It is important to indicate that the final product value estimate may or may not be easy, depending on the variability experiment by gold price. It is custom to use a simplified accounting methodology, which may be considered without introducing any significant loss of validity. For this reason it is important to describe the financial analysis applications which are important during gold exploration and project development. Essentially, these applications lend additional insight during exploration planning, property acquisition, exploration and project development. In reality, management uses several criteria and some simplification is important at the beginning and more detailed studies are required during the development of the different stage of the gold project.

Gold production profile