Articles tagged with: Project Manager

Life as an Engineer – Read All About It

One of the interesting aspects of being an engineer in the mining industry is travelling around the globe (or even) around your own country. I have been to over a dozen countries as part of my career and this only makes me a small-time traveller compared to other engineers I know. Travelling and experiencing the world is often part of the job, whether working for a junior miner, a major, a financial house, a consulting firm, or an equipment vendor. It is actually quite difficult to avoid travel if you work in mining.

Diavik Project

Recently a former colleague of mine on the Diavik Diamond Diavik project has published book that describes his life as an engineer. The book is titled Roseway: a Life of Adventure and is available on Amazon.
Its the story of John Wonnacott, a Canadian professional engineer who was involved in the construction of several projects, including the Diavik Diamond mine in Canada, a nickel smelter in China, a gold mine in Brazil, and a titanium mine in Madagascar to list a few.
John has a broad background, having conducted engineering studies in the jungles of Indonesia, the cold of Greenland, the sands of the desert, the heat of Australia, the altitude of the Andes. He has documented his engineering career in his new book.
Disclaimer: I have not yet read the book since it has only recently been published. However John has kindly sent me some excerpts that I have reprinted below to provide everyone with a sense for the content and style.

Some Excerpts

Introduction

At one time or another, I have been a professional paper-boy, forest worker, tree planter, market gardener, food processing equipment operator, lobster fisherman’s helper, commercial dragger deckhand, short-order cook, military engineering officer, computer system installer, greenhouse worker, permafrost researcher, marine oil spill cleanup specialist, pyrometallurgy researcher, garbage landfill operator, project manager, construction company general manager, regional director, open pit diamond miner, underground gold miner, corporate vice-president, design consultant, company owner, private corporation president and for 50 years, a damn good engineer. I have also been happily married to my wonderful wife Carole Anne for more than 52 years and we have 2 outstanding children. So I can add “husband”, “father” and “grandfather” to the list – but making lists like this is boring. Let me tell you my story.

Newfoundland

I remember in the late fall of that year, the company had a chance to bid on a larger project in Gros Morne National Park, Newfoundland. So our President, Frank Nolan (he was a brother to Fred Nolan, the infamous land-owner at Oak Island, by the way), decided he wanted to see the site and he chartered a Bell 106 helicopter to fly us there from Deer Lake. It was December (they say “December month” in that province) and when we got close to the Park, we ran into a sudden snow squall.
From bright sunny weather we were suddenly flying in heavy wet snow. I was sitting in the back of the chopper, with Frank sitting in the left front passenger seat. We were chatting with the pilot, via the radio headsets, when suddenly there was a loud “BEEP BEEP BEEP” sound coming from the front of the aircraft, and a number of the instrument lights started flashing. The engine had cut out – we learned later that wet snow had blocked the air intake and the engine had stalled – and we started descending pretty fast. Most people don’t realize that a helicopter will glide (quite steeply, at a glide angle of about 10 to 1) provided the pilot gets the torque off the rotor and he makes the correct feathering adjustments.
Our pilot did that instinctively and when we passed through the squall he calmly explained to us what was happening as he looked around for an open, flat spot to land. We didn’t have many options as we were flying over a densely wooded forest, with the mountains of Gros Morne and a deep fiord up ahead. But the pilot spotted a snow-covered frozen bog that was not a lot bigger than the helicopter and he put us down there as smoothly as if the engine hadn’t stopped. Maybe the deep snow cushioned our impact, because I felt nothing. But the instant we landed, Frank Nolan wrenched his door open, and he bolted out of the machine, straight ahead, in front of us.
The rotor was still spinning rapidly, and just as Frank ran ahead, the chopper settled further into the snow, tilting the machine forward in the process. With the chopper blades almost skimming the top of the snow, both the pilot and I expected Frank to be cut into pieces by the rotor, but he was just past their reach and he ran on, unaware of his narrow escape. When the spinning parts stopped, the pilot and I climbed out of the chopper to catch up with Frank. Examination of the machine showed us how the snow had plugged the air intake. The pilot cleared away the snow, and walked around the chopper once and then we took off again. We continued our aerial inspection of the National Park project and later that afternoon we flew back to Deer Lake.

Madagascar

The QMM field office In Port Dauphin, Madagascar was located near the edge of town, and I typically walked from my lodging to the office each morning when I was there, about the time when school started for the children. Typically I passed dozens and dozens of tiny bamboo huts with corrugated metal roofs, and dirt floors each about 2 meters square.
I was constantly amazed by the flocks of young boys and girls walking to school – each child aged from 6 to 15 years old, I suppose – dressed in immaculate white shirt or blouse and blue shorts or skirts. I never saw a dirty child, and how they could have kept clean clothes while living in those small crude huts was something I never could figure out. Even more amazing, were the genuine, wide smiles and frequent greeting as we passed the children: “bonjour monsieur, bonjour monsieur”.
It brings tears to my eyes even now, thinking about those children. If they were girls, they could look forward to a life expectancy of 48 years, according to the town officials we talked to. If they were boys, they could expect to live to an age of only 40 years. The perils of fishing in the ocean in dugout canoes made life even harder for the men.
The next morning, we arrived at the Astana international airport, to find that the check-in arrangements were quite different from what we were used to. Instead of checking our luggage at a desk and then walking through Security to get to our departure gate, everyone was expected to wheel their luggage and handbags through security, as the airline check-in desks were located inside.
The mechanics of rustling our luggage weren’t difficult, but as I passed through the check-point, suddenly a strange-sounding alarm went off. As the alarm rang and rang, my mind raced – what did I have in my bag that would trigger the alarm, I wondered? It didn’t help that the Security guards only spoke Russian, and they were dressed in military uniforms with ridiculously large military caps, which made them look imposing (and silly). But what began to worry me more, was that the look on the Security guards’ faces was not the usual one that happens when a piece of metal sets off an alarm. The guards looked frightened and angry, at the same time.
Fortunately for us, the commotion caught the attention of the clerks at the Turkish Airlines desk inside the terminal building, and one English-speaking fellow approached, speaking to the security guards in Russian first, then saying to us: “I speak English, may I help”? Well, he helped, but it took a while, because it turned out that a rarely used hidden nuclear radiation detector had been triggered when I came through the gate, and the guards were concerned that I had some kind of radioactive material in my suitcase.
For a moment my mind went blank, and then I remembered a card that I was carrying in my wallet. I had had a bout of prostate cancer the previous fall, and my brachytherapy treatment had involved inserting over a hundred tiny radioactive pellets in and around my prostate – designed to kill the cancer. The pellets decay naturally in a fairly short time, and by now, 9 or 10 months after my operation, I would have bet that the radioactive material had all decayed to an undetectable level. But my doctor had given me a card to carry, which explained the medical procedure, just for circumstances like this. When I pulled out the card, it was like a “Get out of Jail Free Card” from the Monopoly game. Instantly the guards’ attitudes changed from fear and suspicion, to sympathy and smiles. One of the big fellows wheeled my luggage over to the Turkish Airlines desk where the Good Samaritan clerk reverted back to his normal job of checking us in.

**** end of excerpt ****

Conclusion

It is one thing to briefly visit a remote project as part of a review team. It is another thing to be there as part of a design team trying to solve a problem and engineer a solution. I know of many engineers and geologists that would have similar work life experiences as part of their careers. However John has taken the initiative to write it all down.
The author is available to be contacted on LinkedIn if you have any questions or just want to say hello (at https://www.linkedin.com/in/john-wonnacott-84aa461a/).
The book can be found on Amazon at this link: Roseway: a Life of Adventure.
This is a story from the life of an experienced engineer working in the mining industry.  If you want to read the perspective from a new mining engineer graduate, check out this post “A Junior EIT Mining Story“.   There is no book deal yet here.
If you find stories about working as an engineer of interest, I have written a 2 part blog post on my adventures in the potash industry in Saskatchewan.  You can read that post at this link “Potash Stories from 3000 Feet Down – Part 1
Note: You can sign up for the KJK mailing list to get notified when new blogs are posted. Follow me on Twitter at @KJKLtd for updates and other mining posts.
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Meetups and Mining Millennials

mining millenials
Over the last year I have had many encounters with the Toronto tech start-up community.  I have noticed some similarities with the junior mining industry but some differences also.
The tech start-up model is similar to the junior mining business model as it relates to early stage funding followed by additional financing rounds.  One obvious difference is that mining mainly uses the public financing route (IPO’s) while the tech industry relies on private equity venture capital (VC’s).
There are also some less obvious differences.
Generally the tech industry is young, vibrant, technology-savvy, and applies the latest in social technology to collaborate.  The mining industry seems to be lagging behind on many of these aspects.
The following article will describe a few of my observations. As you read through this, ask yourself “Should the mining industry be doing these things?”

Tech Meetups and Networking

My first experience with the tech industry was associated with the many after-hours networking meetings called “meetups”.  They are held weeknights from 6 to 9 pm  and consist of guest speakers, expert panels, and for general networking purposes.   Often guest speakers will describe their learnings in starting new companies and failures they had along the way.
The meetups may also provide “how-to” advice for techniques like Google Analytics, Facebook advertising, Google Adwords, email marketing, etc.).
Attending these meetups is usually free.  They are typically held after hours at different tech company offices and they often provide free beer and pizza. One can see the entire industry working together for the betterment of the industry.

How to Organize Meetups

Scheduling of meetups is done via the online software platforms Meetup or eventbrite.  Both of  these work well for announcing the meeting notice and tracking signups and attendees.
By the way, meetups are not only tech-related; they are also held for interest groups for hiking, theatre, writing, yoga, business marketing, etc.  The platforms provide a good way to manage communities.  Unfortunately here in Toronto there are no geology or mining related meetups so the mining industry may be missing out on a good way to build a more collaborative community.
The mining industry does have some local meetings, as far as I know there are mainly three after-hour mining events.  The CIM has a monthly luncheon with a cost of $50-$65 (not exactly inclusive to everybody).   There is a Toronto Geological Discussion Group that holds monthly meetings and seems to be comprised of the older geologist demographic.  The third event is Mining 4 Beer, which a small group that meets intermittently at a local bar.  These few events limit the amount of buzz for those working in the mining industry.  There are a lot of mining companies here with a lot of mining people but not a lot of vibrancy.

Where to hold an event

Most of the tech meetups are held in local tech offices.  These offices are great. They have an open concept, pool tables, ping pong, video games, fully stocked kitchen. Who wouldn’t want to work there?
The last time I was in the offices of a large engineering firm I felt like a lab rat in a cubical maze.   I’m not saying engineering offices can switch to a tech office layout, but more enjoyment of the office environment might help draw more people to the mining industry.
Perhaps it’s easier to have a positive work attitude when money is being thrown at you (as is happening in the tech world) rather than having to scratch and claw for funds like mining must do right now.   However I suggest if one wants more smart young people to come into the industry then one needs to adapt.  This means more than just buying the latest 3D geological software.  It means creating an environment that people want to work in.
In the late 1990’s I was working in the Diavik  engineering office in Calgary.  They provided a unique office layout whereby everyone had an “office” but no front wall on the office so you couldn’t shut yourself in.  There were numerous map layout tables scattered throughout the office to purposely foster discussion among the team.
A similar type philosophy is used by Apple in their office layout design where even the kitchen placement has a purpose.  People should mingle and run into one another to promote conversation.  Discussion is good. Camping out in an office is not good.

Keep it short and to the point

Another thing I noticed with the tech industry is that when start-up tech companies are given an opportunity to tell their story, typically they only have 5 to 10 minutes to pitch.  No long winded thirty page PowerPoint presentation to explain what they are doing.
The tech industry is also big on the “elevator pitch”, a one minute verbal summary of what they are doing.  The tech people are taught to be concise.  If you can’t explain it in plain language in one minute then it’s too complicated.
For comparison, many mining investor presentations can be long, highly technical, and tailored to other technical people and not the average person.   One must ask who is the real target audience for those presentations?

Communication methods

The tech industry relies a lot on remote workers.   They might be overseas or spread around Canada. For communication and collaboration, they use various online systems such as Slack, Google Hangout, Trello.  No more  long email threads with five people cc’d on each email.   Slack uses a chatting approach, similar to text messaging, which makes it easier to follow the conversation and share files.
Can the mining industry be taught to use something new like Slack?  I don’t see a problem with that as long as one honestly wants to learn it. It’s really not that complicated.
For interest, another blog provides some more discussion on online collaboration software “Online Collaboration and Management Tools“.

Conclusion

The bottom line is that I can see a great difference in the attitude and atmosphere in the tech industry compared to the mining industry.  The junior mining game was the precursor for the tech start-up industry but has not kept pace with evolving work techniques.
As senior personnel retire from mining, the loss of this mining experience will be felt.  However the new ideas that may follow could be a positive outcome.
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Independent Consultants Are Growing

I have read quite a few articles indicating that the mining industry is seeing a shortage of experienced people, on both the technical and management side of the business.  Apparently the baby boomer generation is now nearing their retirement or early-retirement stage and there is a gap in the number of experienced people following behind.
Many of these retirees enter the “independent consultant” stage of their careers.
I also hear from recruiters that there is a shortage of engineers willing to take remote or international assignments.  This is particularly difficult when a senior level candidate has a growing family.

Can the independent engineers help out?

In a previous article (14. Miners – Why Have Your Own Independent Consultant?) I discussed why mining companies (or even consulting firms) should make use of the independent engineers as advisers or Board members.
I understand from colleagues in the mining industry that many of the people nearing retirement are willing to take on consulting assignments or board or directors roles or other management roles.  They are often willing to work part time and independently.  Or they may work as “associates” with engineering firms.
So there likely is a significant network of experienced people out there.  It’s just a matter of being able to tap into that network when someone needs specific expertise.
So how can one do this?
LinkedIn currently seems to be the only global network for technical people.  It is a great way to connect with engineers and geologists industry wide.
LinkedIn members work everywhere, at mine operations, consulting firms, financial houses,  as independents, or even retired. Almost every technical person I know is registered on LinkedIn.
The question is how to find these people when you are looking for a specific independent expertise for a short term or over the longer term.

Networking

Networking with people you already know is the most common approach.  However what if you need someone with particular knowledge?
LinkedIn is a great search mechanism for technical experts.  With a keyword search one can identify a lot of experts with very specific skill sets.  The problem is that many of the experts highlighted by the LinkedIn search may be fully employed at mining operations or with large consulting firms and may not be the person you are looking for.
To my knowledge, there is no searchable online registry solely intended for independent geologists and engineers.  It would be in the interests of the mining industry to have some type of easily searchable independent consultant directory to be able to tap into the expertise that is out there.  I understand that MineLife.org  is attempting to build such an online service but it still appears to be early in the development stage.
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Work Breakdown Structures – Don’t Forget About The WBS

mining project WBS
Normally at the start of a mining study, the team members receive a matrix of responsibilities.  This table shows which people (or groups) are responsible for different aspects of the study, i.e. who is responsible for geology, for mine design, for process design, infrastructure, etc.  This is great tool and a necessity in making sure that everyone knows what they are supposed to do.
Next we generate a project schedule based on some work plan.  In realty this isn’t the correct sequence.

Sometimes the WBS is forgotten

What often gets forgotten in early stage studies is providing the team members a Work Breakdown Structure (“WBS”).   I consider the WBS an equally important component as the responsibility matrix and both should always be provided.
The WBS is a hierarchical breakdown of the project into phases, deliverables, and work packages usually associated with cost estimation. It is a tree based structure, developed by starting with the final objective and then dividing that into manageable components based on size, duration, and responsibility.  Typically this is done for the capital cost estimate, breaking it down into individual cost areas and cost components.  A WBS can also be used for the operating cost estimate.
request for propoalsThe WBS can provide the following information to the team:
  • It assigns the costing responsibility to specific people or group so each know what must be delivered.
  • It provides a consistent format for developing and reporting the capital costs (and operating costs).
  • It helps ensure that no cost components get omitted and no costs get double counted.
  • It provides the cashflow modeler with a clean format to import the capital cost into the cashflow model.
  • The WBS should be developed before the project schedule, not after it.

Any study will benefit from a WBS

Typically a WBS is developed for pre-feasibility and feasibility mining studies but is often ignored at the PEA stage.  Some feel it is too detailed for that level of study.  I don’t feel this is the case.
The WBS is a communication tool to confirm responsibilities.  Thus even a simplified WBS is still useful at the PEA stage.
I have seen some instances where a WBS has been created but does not get wide distribution to the entire team.  The WBS should be provided to everyone and ideally a team session be held to walk through the WBS structure.
The idea is not make everyone a costing expert, but rather to ensure all understand how the project cost estimate will be structured.

Conclusion

The bottom line is that regardless of the level of study, a WBS should always be created.
Some will say the WBS is not required for early stage studies but I have found benefits in having one, at least for the capital cost estimate.   Obviously the level of detail in the WBS should be appropriate to the level of the study.
Once the WBS is in place, then go ahead and build your project schedule.
A competent Study Manager can easily create an initial WBS, thereby mitigating some headaches when the final study is being assembled.   You may even want a basis WBs at the proposal stage.
By the way, before awarding a study to anyone, try to have a prepared Request for Proposal beforehand.   I have written about the benefit of this document in a blog post titled “Request For Proposal (“RFP”) – Always Prepare One
My entire blog post library can be found at this LINK with topics ranging from geotechnical, financial modelling, and junior mining investing.

 

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Importance of a Study Manager – That’s the Key

project manager
Over my career I have worked as an engineering team member on numerous projects and mining studies.  Some studies went better than others.  Unfortunately some dragged on, ran over budget, and ended up delivering a less than optimal product once all was said and done.
There are numerous factors that will influence the successful completion of a study.   They can be related to the quality of the technical team, the budget, the time window, and direction from the Owner.  However the key factor that I observed is the competency of the Study Manager (or Project Manager).

Study Managers must wear many hats

Study managers are responsible for being the main liaison with the Owner. They must herd a team of geologists and engineers in the same direction. They must ensure that technical quality and consistency is maintained by the entire group.  They are responsible for ensuring that budgets and timelines are being met.  The combination of all of these responsibilities can be an onerous mission, more so depending on the experience of the Owner’s team.
Every technical team has those members that will deliver quality within timelines consistently.  There are also team members that have difficulty meeting targets.  The Study Manager, early on, needs to figure out who fits into which category and then must be able to work with each.

Studies can quickly grind to a halt

An entire study can quickly grind to a halt simply because one key component becomes bogged down. A good Study Manager may occasionally ruffle some feathers but is always appreciated by the team knowing that everyone will be held to account.
The Study Manager also needs to understand the objectives of the Owner and ensure the team is working towards those objectives.
The Study Manager however must also be honest with the Owner, keeping him informed of the actual progress and warn if some target will not be met.
The Study Manager coordinates communication within the team and with the Owner.  Some managers are excellent at this while others fall into the trap of communicating on a “need-to-know” basis or “too late” basis.
Timely and thorough communication is important.  Don’t assume that one is hampering progress by involving the team in frequent communications. They serve a purpose.

Environmental Assessments need engineering input

Often the Environmental Impact Assessment is being conducted concurrently with an engineering study.  The level of internal and external communication now becomes even more critical due to the large number of new technical disciplines involved.
It is not uncommon for EIA’s to make regulatory commitments  that have not been signed off by the engineering side. The Study Manager should be aware when such commitments are being made because the engineering design needs to reflect them.

You should approve the Study Manager

When approving the consultant’s Study Manager, keep in mind that in some instances you may find that different managers within the same organization may have different internal authority.  For example, if technical people are needed on another project, some managers are able to keep their team together.  Other managers may lose team members to the other project if that manager has more internal authority.  Losing manpower doesn’t help a study progress,  so if possible try to get a sense for the authority that the Study Manager has within the organization.

Conclusion

The bottom line is that when a project Owner has received proposals for a study and is in the process of awarding that job, the most important consideration is who will be the Study Manager.  If possible meet or chat about how they will manage the study and what their experience is.  Check references if possible.
The voluminous proposals provided by consulting firms contain a lot of information like Gantt charts, organizational charts, cost estimates, team resumes, safety plan, and corporate project experience.  Focus on the Study Manager. Don’t assume they are simply an administrator scheduling meetings and issuing monthly reports. They are the key to success.
A good Study Manager can make a poor engineering team perform, while a poor Study Manager can bog down a great technical team.
One thing to be aware of is that with some firms, a Study Manager is not the same role as a Project Manager.  The SM may undertake more clerical duties, such as weekly or monthly reports, manhour tracking, distributing documents, and coordinating the logistics of the study rather than the technical aspects that a Project Manager may look after.
Another blog post discusses undertaking studies using multiple engineering teams and the pitfalls to watch out for.  That blog post is at “Multi-Company Mining Studies Can Work Well…or Not“.
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Mining Due Diligence Data Rooms – Help!

Mining reviews
Many of us have heard the statement “Have a look in the data room, it’s all in there”. This can bring a cold sweat to even the most experienced engineer who undertaking a due diligence review.  How many of you can recall being given FTP access to a data room that is full of highly disorganized folders and sub-folders, files with cryptic names, different updates of the same file in different folders?

It’s like looking for a needle in a haystack.

It can be difficult to impossible to determine which files are important and relevant and which files have been simply dumped into the data room. There is nothing worse than spending a day reviewing an Excel financial model only to find out that it wasn’t the latest version and a different un-related folder had the correct version.
Data rooms are typically created for due diligence exercises, or during advanced an engineering stage. Regardless of the purpose, it is helpful for all involved  to have a document control person who understands what is in the data room, what is important, and what is non-essential.
Large projects often have an dedicated document control person to manage the data room.  However smaller companies in a due diligence phase may tend to use a team approach.  Everyone dumps all their electronic files into the data room, including email transcripts, using some type of sensible folder structure (hopefully).
It’s then up to the user to dig through the files to locate what they need.  This can be an onerous task, costing everyone money in wasted time.

Organization of the mining data room is key

Comprehensive searchable document management systems such as Ansarada, Aconex, SharePoint, and others are available.  They can be pricey and will require a team mindset to function, organize, and catalog the information.  However a properly implemented system can make it easier to search for files, keywords, and the latest versions of files. “Properly implemented” means that the entire team takes time when putting information in to ensure it is properly tagged meta-data.  Its is not uncommon for such systems to become repositories for hundreds or thousands of different files.
When using a cloud-based data room or FTP site, try to select one that allows bulk downloading of documents rather than only allowing one file download at a time.
Some data rooms, for security and tracking purposes, require users to be online in order to open a document, even documents downloaded onto your computer.  This makes it difficult to work when one doesn’t have internet access (like on an airplane).
Some data rooms limit the cut & pasting ability from the documents.  This can make it difficult to prepare your own summary  report if you want to include pasted images from the documents.

Conclusion

The bottom line is that management of a mining data room is critically important, although I don’t know if there is any single magic solution.
Small mining companies may have tight budgets and a limited management team so organizing data properly isn’t high on the priority list.   I suggest to anyone organizing a data room, please take the time to properly set up the folder structure, develop a single bibliography of what files are in there, and assign a person to be familiar with the general contents of the data room.
Unless its a legal case involving lawyers, don’t just dump in everything. Avoid unnecessary data files or “work in progress” files that are not actually required by anyone.

Read More on the Subject

Another aspect of data rooms that can help make a due diligence taxing is the way the spreadsheet models are built.  Models can either be made simple and user friendly, or can be complex showing how clever the model creator is.   You can read some thoughts on this at the following link “Mine Financial Modelling – Please Think of Others“.
For more discussion on the topic of mining due diligence, another blog post discusses the help that a technical checklist can deliver.  There are many aspects of a mining project, from legal, social, to technical and a checklist helps to avoid missing things.  You can read more about the checklist on this at “Mining Due Diligence Checklist“. You can even request a free copy of my Excel checklist if interested.

 

Note: If you would like to get notified when new blogs are posted, then sign up on the KJK mailing list on the website.  Follow us on Twitter at @KJKLtd for updates and insights.
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Junior Miners – Get Your Own Independent Consultant

PEA consultants
Over the past few years I have worked in different consulting roles; as an independent consultant; as a member of a large consulting team; and as owner’s representative managing consultants.   I have learned that there is a role for both the independent consultant and larger consulting firms.  Read on for more in this self-serving article.

Independents have a role

A previous blog (“9. Large Consulting Firms or Small Firms – Any Difference?”) discusses where large and small consultants fit into the overall picture.   Large technical teams are required where there are broader scopes of work, significant effort levels, and where multiple skills sets are needed.
Independent consultants are a different thing.  They are best suited for assisting the Owner directly, either independently or as part of an overall corporate advisory team.  Non-technical junior mining management teams should always have access to in-house engineering capability for brainstorming or technical direction.
Even if some of the management are technically oriented, having independent thought is valuable. The question is whether the engineer should be a cheerleader or a true independent observer.
Independent consultants will differentiate themselves from large engineering firms in several ways.
  • They don’t bring a lot of extra personnel onto a job.  They focus only on what is needed and can draw in other expertise when needed.
  • They can provide unbiased advice.  Larger firm sometimes have business development conflicts. The independent consultant does not have the motivation to win a feasibility study or EPCM contract.
  • A company can develop a long term working relationship with an independent consultant.  Everyone gets familiar with each other’s objectives and goals.  Large engineering firms can be revolving doors with people moving on to other firms.
  • Independents can work efficiently at a pace of their own choosing.  This can result in lower costs and faster deliverables.  I know many independent consultants will work evenings and weekends to meet client targets.
  • Independents can provide long term stability since they won’t have any employee turnover.  Personally I was involved for over 15 years with a mining operating in Suriname.  The expat staff at the mine site experienced significant turnover.  This was partly due to them being promised personal development relocations.  I ended up being the only constant for the mine site.  I knew the history and why things were done they way they were.  I even had copies of old study reports they could no longer find in their files on site.  I knew what was done previously, thereby avoiding re-inventing the wheel each time there was a new technical manager was brought in.

Consultants and Stocks Options

A point of discussion is whether the independent consultants should receive stock option compensation.  I have worked under both situations.
Awarding stock options might eliminate the “independent” nature of the relationship and hence negated the ability to sign off as an independent QP.  In some circumstances, the company may not require the independent consultant to be a QP since they mainly fulfill an advisory role.
Does one want independent advice, from someone who may not be a significant shareholder or option holder?
One advantage of awarding stock options is that the consultant may become more beholden to the project.  They feel it is their project too, rather than simply acting as an adviser.  They may have a longer term interest in being involved with the project and the company.
Conversely the company may prefer the consultant doesn’t have any direct ownership so that their advice can be viewed as being unbiased. Having a contrarian view of corporate plans is a good thing.
I feel that awarding stock options is a good way to foster long term commitment from the consultant. It can be easier for them to walk away without any such inducement.

Conclusion

The bottom line is that independent consultants have a role to play and should be part of all owner’s teams, whether be on the Board or on an Advisory Panel.   The independent consultants can be selected based on their technical specialization (i.e. exploration, resource modelling, mining, metallurgy, environmental) and provide valuable part time guidance to the company.
The caveat is to ensure that the consultant is technically capable.  I have seen instances where certain members of the advisory panel gave poor advice.  perhaps they weren’t that technically capable but simply friends with some of the management.  Unfortunately other advisors would see these limitations, but not say anything out of professional courtesy.
Lastly, decide whether the engineer should be an honest advisor or a cheerleader.  Companies should want to hear the truth.  If a 3rd party due diligence teams comes in, they will be looking for flaws in the project.  It would be in a company’s self interest to know what those flaws are before the due diligence teams finds them.
One of the things an advisor can help do is decide the study path the company should take.  To learn more about the 4 mining study types, you can check out this blog post “4 Mining Study Types (Concept to Feasibility)“.
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Financings – It Helps to Have a Credible Path Forward

mine economics
Update: This blog was initially written in May 2015, however not much as changed to the end of 2018.
Let me say the obvious; the state of the junior mining market is not great these days.  The number of financings is down and it seems there are a lot of companies struggling to get their piece of the financing pie.   People mention to me that there actually is a fair bit of private equity funding available but only for the right projects.
I have heard from geologist colleagues that financing grass-roots exploration is still extremely difficult.  That is unless company management has had past successes or is well connected to the money scene.
I’m told that 43-101 resource estimates alone no longer generate much excitement.  For projects to be “on the radar” they need to be advanced to at least the PEA stage.  It seems that investors want some vision of what the project might eventually look like.
I have be made aware of more junior mining companies that are struggling for cash while others seemed to have no problem in getting at least some funding to continue their operations.  To me, the biggest differences between these two situations are;
  • If there is top notch management in place,
  • The type of project they had,
  • If their path forward and development plan made sense.

You don’t want to always change management

Management is what it is.  Companies attempt to bring on experienced people to the executive level or to the Board level.   Experienced management can hopefully establish if their project will have a high probability of success or if the project is going to be a hard sell.  This will provide guidance on whether to continue spending money on the project or look for a new project.
From my experience in undertaking due diligence, when a company is looking for financing it is important that  management have the capability to present an orderly, practical, and realistic path forward.  It is important to demonstrate where they will spend the money.
I have participated in due diligence meetings listening to management teams explain that they will have a resource estimate this year and be in production in two years.  Those around the table glance at one another, knowing that they will be lucky to have a feasibility study completed by that time and even more lucky to have their environmental permits in place.   This makes investors nervous.

Keep plans realistic and achievable

It does not help the perception of a management team (or the project itself) if the path forward is unrealistic and unattainable.  The exception being if the management team have done it before.   Similarly low-balling cost estimates and presenting great NPV’s will usually fool no one that has experience. It ultimately may do more harm to credibility than good.
The bottom line is that in order for a project (and the management team) to get serious attention from potential investors is to make sure there is a realistic view of the project itself and have a realistic path forward.
Even a good property can be tarnished by making the technical aspects look over-promotional rather than real.  Make sure the right technical people are involved in the entire process and that company management are listening to them.
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Large or Small Mining Consulting Firms – Any Difference?

Mining feasibility pre-feasibility
Some junior mining companies select their mining study consultant based on the assumption that they need a “big name” firm to give credibility to their study.   This creates an interesting dilemma for many smaller mining companies since they the larger firms can cost more.  Its also a dilemma for smaller engineering firms trying to win jobs.  While large consultants may cost more due to higher overheads; their brand name on a study may bring some value.
In my personal experience I find that larger consultants are best suited for managing the large scale feasibility studies.  This isn’t because they necessarily provide better technical expertise.  Its because they generally have the internal project management and costing systems to manage the complexities of such larger studies.
The larger firms are normally able to draw in more management resources; for example, project schedulers, cost estimators, and document control personnel.  Ultimately one will pay for all of these people, albeit they may be a critical part in successfully completing the study.
A feasibility study is more rigorous than a pre-feasibility study, which in turn is more rigorous than a PEA or scoping study.

Sub-contracting Parts

For certain aspects of a feasibility study, one may get better technical expertise by subcontracting to smaller highly specialized engineering firms.  However too much subcontracting may become an onerous task.  Often the larger firms may be better positioned to do this.
In my view, likely the best result will come from a combination of a large firm managing the feasibility study but undertaking only the technical aspects for which they are deemed to be experts.
The large lead firm would be supported by smaller firms for the specialized aspects, as per a previous article “Multi-Company Engineering Studies Can Work Well..Or Not”.

What about smaller studies?

For smaller studies, like scoping studies (i.e. PEA’s), which can be based on limited amounts of technical data, I  don’t see the need to award these studies to large engineering firms.  The credibility of such early studies will be linked to the amount of data used to support the study.  For example, there may be limited metallurgical testing, or limited geotechnical investigations; or the resource is largely inferred.
Not all PEA’s are equal (see “PEA’s – Not All PEA’s Are Created Equal”).  A large firm’s application of limited data may be no more accurate or defensible than a small firm’s use of the same data.
One of the purposes of an early stage study is to see if the project has economic merit and would therefore warrant further expenditures in the future.  An early stage study is (hopefully) not used to defend a production decision.  The objective of an early stage study is not necessarily to terminate a project (unless it is obviously highly uneconomic).
I have seen instances where larger firms, protecting themselves from  limited data, were only willing to use very conservative design assumptions in early stage mining studies. This may not be helpful to a small mining company trying to decide how to advance such a project.

Conclusion

The bottom line is that for early stage studies like a PEA, smaller engineering firms can do as good a job as larger firms.  However one must select the right firm.  Review some of their more recent 43-101 reports to gauge their quality of work.  Don’t hesitate to check with previous client references.
For the more advanced feasibility level studies, be wary if a smaller firm indicates they can do the entire study. Perhaps they can be responsible for some parts of the feasibility study as a sub-contractor to a larger firm. Managing these large study may be beyond their experience and internal capabilities.
Whether you are considering a small or large engineering firm, know their strengths and weaknesses as they will relate to the specific’s of your study.
In another blog post I have expanded the discussion about the importance of the study manager role. You can read that post at this link “Importance of a Study Manager – That’s the Key“.
Another blog post discusses undertaking studies using multiple engineering teams and the pitfalls to watch out for.  That blog post is at “Multi-Company Mining Studies Can Work Well…or Not“.
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Multi-Company Mining Studies Can Work Well…or Not

Mining studies
These days most, if not all, economics mining studies rely on a engineering teams comprised of participants from different consulting firms or from different regional offices of the same firm.   This approach gives the opportunity to use specific experts for different aspects of the study.
My recollection is that many years ago larger consulting firms would offer to do an entire study in-house. They would have the in-house team to cover almost the entire study. That approach seems to have changed and now the multi-company path is the norm.
This approach is partly being driven by the clients who wish to use specific consultants they are familiar with and have existing relationships with.
In some instances, larger firms may still make the argument they can take on all of the project scope themselves.  However one must reflect on such offers.  The danger being a less qualified technical team seconded from offices that are not busy.  Possibly you won’t get the best team; you  get who is available.
In many multi-company studies, it is not uncommon that few of the team members have ever worked together before.  It may be a consultant’s team building exercise right from the start.
I have had both good and bad experiences with these types of engineering teams.  Some of them work very well while others floundered.  Even when working with different offices of the same firm, things may not go as planned.

The Study Manager is Key

To have a successful mining study team, in my experience the two key factors are;
  1. The competency of the Study Manager;
  2. The amount (and style) of team communication.
The Study Manager is vital to keeping everyone working on the same page and ensuring timelines are met.   A single team member delaying their deliverables will delay others on the team.
Some consulting firms have multiple projects underway at the same time.  Unexpected delays in one study may cause them to shift idle personnel onto other studies.  Unfortunately sometimes it is difficult to bring the team back together on the original study at a moment’s notice.
The Study Manager must ensure that everyone understands what their deliverables are.   Generally this is done using a “Responsibility Matrix”, but these can sometimes be too general.
Where cost estimation is involved, the Responsibility Matrix should be supported by a Work Breakdown Structure (“WBS”) assigning the costing responsibilities.  Given that the contentious parts of many studies are the capital and operating cost estimates, I personally view the WBS equally as important as the Responsibility Matrix.
Team communication is vital and there are different ways to do it.   Weekly or bi-weekly conference calls work well but these need to be carefully managed.  With a large team on a conference call, there is a fine line between getting too much technical detail versus not enough detail.
On some studies I have seen a weekly call restricted to one-hour long and then everyone flees until next week’s call.  At the end of these conference calls, one might have an uneasy feeling of it being incomplete. Perhaps people were not clear on something but hesitated to ask become the one-hour time limit is up.   In such cases it is important for the relevant parties to continue on or to have a separate call.

Make it important to  speak up

The bottom line is that multi-company teams will work fine as long as the study manager is capable.  Its not a simple task, and not everyone can do it well.  However everyone (client and the other team members) appreciate working under a really good study manager.
In another blog post I have expanded the discussion about the importance of the study manager role.  You can read that post at this link “Importance of a Study Manager – That’s the Key“.
In another blog post I have gone into a bit more depth on the role a Work Breakdown Structure plays.   You can read that post at this link “Work Breakdown Structures – Don’t Forget About The WBS“.
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