Protect stock value with the right studies upfront

By Dale Benton
The recent share price collapse of a much-vaunted copper-gold project in south-west Alaska is an indication of what can happen when explorers and planne...

The recent share price collapse of a much-vaunted copper-gold project in south-west Alaska is an indication of what can happen when explorers and planners do not cover all the bases in the early stages of the project cycle, according to Marcin Wertz, partner and head of the mining unit at SRK Consulting.

 According to Mining Journal’s article Dumped on Valentine’s Day published last week, the shares of Northern Dynasty’s Pebble project lost 40% of their value after a private investment manager issued a report describing the venture as “worthless”. The report said that the upfront costs made the project commercially unviable, and that it was plagued with legal regulatory problems.

 The article said the proposed plan for the mine has been opposed by environmentalists, indigenous people and commercial fishermen; it was also halted by the Environmental Protection Agency in 2014.

 “We always encourage clients to start planning ahead very early on – so that they have the time to initiate the necessary range of studies that fully expose both the potential and the risk inherent in their ventures,” said Wertz.

 He warned against the temptation for new projects to rush ahead on the strength of a mining plan on its own, for instance; even experienced companies had lost significant investments through not doing all their homework.

 “It is vital to take a full 360-degree view of the project, and study all aspects from geology, geotechnical and mining to hydrology, environment and social impact,” he said. “While every project seeks to be economical, there is little sense in trying to side-step important up-front work that will cost the project dearly in future.”

 A proper scoping study, he said, flags all the issues that the project needs to consider going forward, putting it on much firmer ground and providing greater assurance to both shareholders and financiers.

 

The January 2017 issue of Mining Global is live!

Follow @MiningGlobal

Get in touch with our editor Dale Benton at [email protected]

 

Share
Share

Featured Articles

China increases copper import pace, following price plummet

In August, China reached a 26% rise - representing a 100,000+ tonne increase - in copper imports year-on-year, largely driven by product price drops

Ford criticises “inefficient” government mining permissions

In a letter to the US Department of the Interior, the car giant Ford has asked the American government to speed up its current mining permission process

Aggreko and Labyrinth Resources’ sustainable power project

Labyrinth Resources has been working with Aggreko to complete a virtual pipeline power project, which is designed to aid the sustainable energy transition

Despite regional ban, crypto miner Canaan doubles profits

Digital Mining

The future of all-electric sustainable mining technologies

Sustainability

Anglo American first half earnings decline 28 percent

Supply Chain & Operations