Proposed Gold Mine in Canada: Phased Project Planning
1. List the phases of the project and indicate the minimum and maximum cost of each phase as foreseen in August 2006.
2. “While estimates for the distant future are very ‘broad brush,’ it is always possible to make relatively accurate estimates for the imminent phase of a project.” Explain.
3. Describe how each of the proposed project phases will help reduce the risk of the project.
4. Comment on the problem that, once money has been allocated to the process, people might become “hooked” into the project and be tempted to go ahead regardless of high risks.
5. How would you determine the value of accurate estimates for the number of ounces that could be mined and for costs?
6. Would you trust any internal rate of return or net present value estimates at this time?
