Junior Mining

Google Earth – Share Your Project in 3D

Date: July 10, 2019 Author: Ken Kuchling Comments: 2 Replies
Google Earth is a great tool and it’s free for everyone to use. No doubt that many of us in the mining industry already use it regularly.
Previously I had written an article about how Google Earth can be used to give your entire engineering team a virtual site visit. It’s cheaper than flying everyone to site. That blog is available at this link “Google Earth – Keep it On Hand”.

What else can Google Earth do for me?

The Investor Relations (IR) department in a mining company can also take advantage of Google Earth’s capabilities. Typically the IR team are responsible for creating a myriad of PowerPoint investor presentations. Their slideshows will include graphics highlighting the project location, showing exploration drilling and planned site facilities for advanced projects. This is where Google Earth can be used to create a more interactive experience for investors.

Google Earth with 3D Buildings

Rather than relying only on PowerPoint, the technical team can create drillhole maps, 3D infrastructure layouts, open pit plans, 3D tailings dams, and import them into Google Earth.
By creating a KMZ file, one can share this information with investors, analysts, and stakeholders. This will provide an interactive opportunity to view the information themselves.
Viewers could fly around the site, zoom in and out as needed, examine things in 3D, and even measure distances. Viewers can even save the project in Google Earth and return back whenever curiosity dictates.
I have been a part of engineering teams where Google Earth has been used to share layout information. However I have not yet seen such information offered as a downloadable KMZ file to external parties. If you know of any companies that are currently doing this, please let me know (kjkltd@rogers.com) and I will share their link here.

There also is VRIFY

VRIFY is a new cloud based platform that provides 3D viewing capability. It provides a map based graphic tool to IR departments for sharing project information. VRIFY can also enhance collaboration among engineering teams by enabling a group to view a virtual project and sketch on the image in real time.

VRIFY desktop screenshot

VRIFY also allows more detailed information to be displayed in the form of hotspots within a project. Click on them to get more information on that topic (see image to the right).
Although I have only been given a demo of VRIFY, it appears to be a nice package that provides more functionality than Google Earth. Unfortunately VRIFY is not free for a company to use. The minimum subscription cost is about $10,000 (plus extras).
In June 2019 VRIFY made a deal with Kirkland Lake Gold whereby interested property vendors can submit their project to Kirkland Lake management for their review.
Here is the link (https://vrify.com/dealroom). In the proposed approach, the project information is submitted using the VRIFY platform. Essentially some of the same information presented in a PowerPoint is now provided in a more interactive fashion. Participating companies must first enter into a client service agreement with VRIFY. We will see how this idea works, since it does add a cost and new complexity for the property vendor.
There is another cloud based service called Reality Check, which offers virtual reality site visits.

Conclusion

The bottom line is that the trend in the mining industry is towards more open data sharing whether you’re connecting with the public or within your own engineering team. New and old cloud based platform tools can be used to do this. It just depends on your budget.
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Flawed Mining Projects – No Such Thing as Perfection

Date: May 29, 2019 Author: Ken Kuchling Comments: 2 Replies
Recently I read a post on LinkedIn where somebody was asking what key metrics companies are looking for in order to develop (or provide financing to) a new mining project. It’s more than just a project having a good NPV or IRR.  They are also looking at how difficult it is to achieve the targeted NPV.
Mining companies are always on the hunt for new projects to grow their cashflows. They would all like to find the “perfect” project; one with ideal conditions and great attributes.
However those perfect projects likely don’t exist anymore, if they ever even did.
Consequently companies must be willing to accept some potential flaws (or risks) in their go-forward projects.
The question is what flaws are they willing to accept and how far away from the ideal situation are they willing to go.

What makes a perfect project?

If one could envision a perfect mining project, what might it look like?   Here are some attributes that one would want to see (in random order). If a project had 100% of these, it would be a fantastic project.
    • A high grade ore orebody
    • A large reserve and long mine life to ride out commodity price cycles
    • Low operating cost
    • Low cash cost, in the bottom quartile of costs
    • Well defined ore zones, allowing simple mining with low dilution
    • A geotechnically competent rock mass
    • Clean and straightforward metallurgy
    • Consistent and straightforward permitting regulations
    • A stable government and stable fiscal regime
    • Safe security conditions for site personnel
    • High NPV and high IRR
    • No acid runoff issues from waste products
    • Stable tailings disposal conditions
    • Readily available local workforce / local power supply / good water supply
    • Favorable local community and stakeholder support
Other readers may have more attributes that they would like to see if asked to theorize “What constitutes a perfect mining project?”

Take off the promoter hat

backhoe on soft claysNow take an honest look at some recent (or past) projects that you have been involved with. How many of the perfect attributes listed above would be represented? It would be surprising to see them all checked off. Unfortunately that means certain flaws (risks) must be accepted when developing a project.
Each company (or financier) will have their vision as to which attributes are “must have” and which ones are “nice to have”.

But we have risk tools

There are many risk tools available to help in evaluating the potential flaws in a project. Unfortunately these tools don’t make the decisions for management.
Risk based Monte Carlo analysis requires management to pre-define the magnitude of the risks and then decide upon what probability of success is acceptable. Real option analysis or decision trees or Kepner-Tregoe are examples of other tools that can help in the decision making process.
Ultimately risk is risky.  Management must make the go/no-go decision regardless of how many probabilistic histograms and tables they have generated. A 90% chance of success still means there is a 10% chance of failure. The probability of failure may be low, but it is not zero.
It would be interesting to examine recent failed projects to define the cause(s) of failure. One could then see if the cause was something that was pre-determined as a risk, either as a small risk or a large risk. Perhaps the cause was something that management felt could be mitigated or perhaps it was something viewed as highly unlikely. No doubt that successful projects also had risks, which were either mitigated or which (luckily) never occurred.

Conclusion

The bottom line is that management understandably have a difficult task in making go/no-go decisions. Financial institutions have similar dilemmas when deciding on whether or not to finance a project.
In my career I have sat in on such management discussions and it’s never been a simple process, mainly because no project is perfect. Management know all the flaws (at least they think they do) and thus have to decide whether to push forward knowing the flaws exist.
I fully expect that future mining project risk will increase due to the complexity of project designs and broadening of stakeholder dynamics. Hence decision making in the mining industry isn’t going to get any easier regardless of the decision tools being used.  Look at your own situation, are your projects getting easier or harder?
One should examine the impact of the project flaws on the project economics.  The most common way to do this is the sensitivity chart (i.e. spider graph).  However this itself is a flawed way to evaluate the flaws.  You can read why at this blog post “Mining Cashflow Sensitivity Analyses – Be Careful“.
A better approach is to use a probabalistic analysis, like Monte Carlo simulation, that can examine multiple factors at the same time.   I discuss the benefits of this approach in a blog post ” Mining Financial Modeling – Make it Better!“
Note: If you would like to get notified when new blogs are posted, then sign up on the KJK mailing list on the website.  Otherwise I post notices on LinkedIn, so follow me at: https://www.linkedin.com/in/kenkuchling/.
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AI versus the Geologists

Date: March 29, 2019 Author: Ken Kuchling Comments: 1 Reply
We likely have all seen recent articles about how Artificial Intelligence (AI) is going to change the mining industry.   I have been wondering if AI is a real solution or just a great buzzword.   My original skepticism has diminished somewhat and let me explain why.
At a booth at the 2019 PDAC I had a chance to speak with a publicly traded company called Albert Mining (referencing Albert Einstein’s intelligence).  They are providing exploration consulting services by applying a form of AI and have been doing so for many years.  The company has been around since 2005 but were not using the term AI to describe their methods.
These days the term “AI” has become very trendy.  Currently IBM Canada and Goldcorp are using Watson and AI to further their exploration efforts on the Red Lake property. GoldSpot Discoveries is another recent player in the mining AI field.  It appears Goldspot offers something similar to Albert Mining but they extend their platform to include picking projects, picking teams, and picking investments. That’s a lot of analysis to undertake.  Albert Mining is focused solely on mineral exploration.

Here is what I learned

Albert Mining’s system, called CARDS (Computer Aided Resource Detection System) uses pattern recognition and multi-variate analysis to examine a mineral property to look for targets.     The system requires that the property has some known mineralization hits and assay samples.  These are used to “teach” the software.   Both positive hits and negative hits are valuable in this teaching step.
The exploration property is sub-divided into cells and data are assigned to each cell.  These data attributes could be derived from geophysics, geochemistry, topography, soil samples, indicator minerals, assayed samples, geological maps, etc.  I was told that a cell could contain over 700 different data attributes.
The algorithm then examines the cell data to teach itself which attributes correlate to known mineralization and which attributes correlate with barren areas. It essentially determines a geological “signature” for each mineralization type.    There could be millions of data points and combinations of attributes.  Correlation patterns may be invisible to the naked eye, but not to the computer algorithm.
Once the geological signatures are determined, the remainder of the property is examined to look for similar signature hits.  Geological biases are eliminated since it is all data driven.   The newly defined exploration targets are given a ranking score based on the extent of correlation.
Some things to note are that the system works best for shallow deposits, unless one has some deep penetrating geophysical surveys.  The system works best if there is fairly uniform data coverage across the entire property.  The property should also have generally similar geological conditions and as mentioned before, the property needs to have some mineralized assay information.
This exploration approach reminds me somewhat of the book Moneyball.  This book is about the Oakland A’s baseball team where unconventional statistics were used to rank players in order to find hidden gems.

Are geologists becoming obsolete?

I was told that many in the geological community tend to discount the AI approach.  Either they don’t think it will work or they are fearing for their jobs.  Personally I don’t understand these fears nor can I really see how geologists can ever be eliminated.  Someone still has to collect and prepare the data as well as ultimately make the final decision on the proposed targets.   I don’t see the downside in using AI as another tool in the geologist’s toolbox.
Albert Mining’s stock price has recently gained some traction (note: I am not promoting them)  because junior mining news releases are starting to mention their name more often (Spruce Ridge Resources and Falco Resources are some examples).
Probably years ago if a mining company said their drill targets were generated by an algorithm, they might have gotten strange looks.   Today if a mining company says their drill targets were generated by AI, it gives them a cutting edge persona.  Times have changed.

In conclusion

I suggest we all take a closer looks at the AI technology to better understand what it does.
P.S. I  might also suggest that Albert Mining consider revising their company name to incorporate the term “AI” to stay on trend. (Update: In October 2019, Albert Mining changed their name to Windfall Geotek; I’m not sure it better explains what they do).
Note: If you would like to get notified when new blogs are posted, then sign up on the KJK mailing list on the website.  Otherwise I post notices on LinkedIn, so follow me at: https://www.linkedin.com/in/kenkuchling/.
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Mining Due Diligence Checklist

Date: February 25, 2019 Author: Ken Kuchling Comments: 41 Replies
It doesn’t matter how long you have worked in the mining industry, at some point you will probably take part in a due diligence review. You might have been asked to help create a data room. Perhaps your company is looking at a potential acquisition. Maybe you’re a consultant with a particular expertise needed by a due diligence team. It’s likely that due diligence has impacted on many of us at some point in our careers.
The scope of a due diligence can be exceptionally wide. There are legal, marketing, and environmental aspects as well as all the technical details associated with a mining project. The amount of information provided can be overwhelming.

Checklists are great

Checklists are great and can be very helpful in a due diligence review. A detailed technical scope checklist is a great way to make sure things don’t fall through the cracks. A checklist helps keep a team on the same page and clarifies individual roles and tasks. Checklists bring focus and minimize sidetracking down unnecessary paths.
Recognizing this, I have created a personal due diligence checklist for these exercises. A screen shot of it is shown below. The list is mainly tailored for an undeveloped mining project still at the study stage, but it still has over 230 items that might need to be considered.

Every mining due diligence is unique

Not all of the items in the checklist are required for each review. Maybe you’re only doing a high level study to gauge management’s interest in a project. Maybe you’re undertaking a detailed review for an actual acquisition or financing event. It’s up to you to create your own checklist and highlight which items need to be covered off. The more items added the less risk of missing something in the end.
You a create your own checklist but if you would like a copy of mine just email me at KJKLTD@rogers.com and let me know a bit about how you plan to use it (for my own curiosity). Specify if you would prefer the Excel or PDF versions.
Please let me know if you see any items missing or if you have any comments.

Due Diligence isn’t for everyone

Mining due diligence exercises can be interesting and great learning experiences, even for senior people that have seen it all. However they can also be mentally taxing due to the volumes of information that one must find, review, and comprehend, all in a short period of time.
Some people are better at due diligence than others. It helps if one has the ability to quickly develop an understanding of a project. It also helps to know what key things to look for, since many risks are common among projects.
Further on the topic of mining due diligence, I have a previous blog post triggered by my frustrations with some poorly set up data rooms.  You can read that at “Due Diligence Data Rooms – Help!”  My request is that when setting up a mining data room, please think about the people who will be using it.
Note: If you would like to get notified when new blogs are posted, then sign up on the KJK mailing list on the website.  Otherwise I post notices on LinkedIn, so follow me at: https://www.linkedin.com/in/kenkuchling/.
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The Mining Bank or eBay for Mining Properties

Date: September 20, 2017 Author: Ken Kuchling Comments: Leave a reply
mining properties
I recently attended the Money Show here in Toronto to learn a bit more about personal finanace, investing strategies, and to check out  the latest stock analysis software.
There was also a trade show, but only one mining company booth was present.  This definitely wasn’t the PDAC.  Interestingly there were about five marijuana company booths, so that is where the promotion is today.
The lone mining company was Globex Mining, here is their website.  They referred to themselves as a “mining bank”, so that was something that peaked my interest.

Mining bank

Speaking with their president, Jack Stoch, he gave me an overview on their business model.  As I understood it, GLOBEX’s model is to acquire a portfolio of mineral properties.  They would try to enhance their value by undertaking some limited geological work.  Finally they would option, JV, or sell the property while retaining an NSR royalty.
Mr. Stoch told me that Globex currently has over 140 land packages in their inventory.  Their properties will be at different stages.  Some have resource estimates, others only mineralized drill intersections, mineral showings, untested geophysical targets, or combinations of these.
They are focusing their acquisitions on lower risk jurisdictions like Quebec, Ontario, Nova Scotia, New Brunswick, Tennessee, Nevada, Washington, and Germany.  They try to acquire historical mines that have old shafts, following the adage the best place to find a new mine is next to an old mine.   They also have some industrial mineral properties.

 

Globex’s only NSR revenue property right now is a zinc project in Tennessee that can generate a seven-figure royalty each year, when that operation is up and running.  Unfortunately for Globex the zinc operation has not been in consistent operation the last few years.

Its a good concept

I like the concept that Globex are promoting.  I like the idea of having a one-stop shop that acquires and options out exploration properties to mining companies looking for new projects.
I also like the idea of trying to consolidate land packages in an area,  minimizing the patchwork of multiple ownership claims that can hinder advanced development.
Globex hope that by putting time and effort into a bunch of properties a few of them will pay off.  If they can generate sufficient NSR revenues, the company may get to the self-sustaining stage.

Its not a new idea

The idea of companies involving themselves in a portfolio of early stage prospects isn’t new.  This has been being done by EMX Royalty Corp (formerly Eurasian Minerals) for properties around the globe.    Abitibi Royalties is also doing something vaguely similar, whereby they would help fund prospectors in exchange for a long term royalty on a property. There are likely others.
There is a high risk to being successful but the cost of entry is relatively low.
It will be interesting to watch Globex over the longer term to see how many properties they can acquire and how many of these will pay off. Spending a bit of money on mapping and exploration on a property may benefit them by increasing value in the eyes of potential partners.
Statistically, mineral exploration is a high risk game but by limiting expenditures and diversifying the portfolio, some of that risk can be mitigated.
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Does the Mining Industry Employ Interns?

Date: May 22, 2017 Author: Ken Kuchling Comments: Leave a reply
employing interns
Over the couple of years I have been working on a side project in the tech industry.   One of the things that struck me was the hiring of interns, both paid and unpaid.
I’m now aware that interns are being hired in other industries such as legal, politics, journalism, and marketing.  However I have never come across the use of interns within the mining industry.
Intern

Why hire interns?

I was recently talking to a marketing consultant about tips on tech marketing and one of the suggestions she made was to hire an unpaid intern.  They would do much of the legwork of finding sales contacts and establishing contact with them.
My first question was why would anyone work for free?  There are  three main reasons:
  1. For school credit; as part of a course credit in college or university where an internship is part of the program requirement.
  2. For experience; it is difficult to get a real job without experience and so the internship teaches, builds  experience, and establishes a portfolio of work.
  3. Networking; building up industry connections can possibly lead to permanent work down the road.

Its the right thing to do

At first I was taken aback at the thought of asking someone to work for my company for free.  Are we that cheap?
Thinking about it further, if you are paying someone a salary the expectation is that they should be somewhat skilled at their job.  I have come to realize that the internship may actually be a win-win for both parties.

Its a win-win

The company gets a chance to learn about potential employees and also gets productive service from them.
The intern gains employment experience and learns about the realities of the business world.  Students have already paid the schools to teach them.  Now businesses can help teach them more, but at no cost.   It’s a win-win for both.
So how did our unpaid intern search go?  We posted a free ad on indeed.ca.  Within 72 hours we received over ten replies, of which only 2-3 came close to meeting the actual qualifications.  Some of the applicants had no relevant experience at all.
Possibly in today’s job market people are willing to work for free on the hope that they can get some experience, which will hopefully lead to a permanent job in the future.

Conclusion

The question is whether the mining industry can make use of interns in the areas of geology, engineering, marketing, presentation graphics, websites, etc?
There may be many students or recent grads looking for an opportunity and are willing to do whatever it takes to  advance their careers.
Even if your operating budget can’t afford the cost of hiring another person, you may still have a chance to help out someone new in the industry.
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Underground Feasibility Forecasts vs Actuals

Date: January 28, 2017 Author: Ken Kuchling Comments: Leave a reply
underground costing
I recently attended a CIM Management and Economics Society presentation here in Toronto discussing the differences between actual underground production versus the forecast used in the feasibility study. The presenter was Paul Tim Whillans from Vancouver Canada.
His topic is interesting and relevant to today’s mining industry.  Paul raised many thoughtful points supported by data. He gave me permission to share his information.
The abstract for his paper is inerted below.  The paper can be downloaded at this LINK and here are the presentation slides.

ABSTRACT

“An underground mining study that is done in accordance with NI43-101, JORC or similar reporting code is generally assumed by the public to be representative, independent and impartial. However, it has been well documented by academics and professionals in our industry that there is a sharp difference between the forecasts presented in these underground studies and the actual costs when a mine is put into production.
For underground mines, the risks associated with obtaining representative information are much greater than for surface mining and the cost of accessing underground ore is also proportionally much greater. There is a pressing need to align expectations, by improving the accuracy of projections. This will result in reduced risk to mining companies and investors and provide more reliable information to government agencies, the public, and more importantly, the communities in which the proposed mine will operate.
The objective of this article and an article currently being written titled “Mining Dilution and Mineral Losses” is to:
– Discuss the dynamics of intention that lead to over-optimism;
– Provide simple tools to identify which studies are likely to be more closely aligned with reality;
– Identify some specific points where underground mining studies are generally weak;
– Discuss practices currently in use in our industry that lead to a composite or aggregate effect of over optimism;
– Describe the effects of overly optimistic studies;
– Outline specific changes that are necessary to overcome these challenges; and
– Stimulate discussion and awareness that will lead to better standards.”

Conclusion

I agree with many of the points raised by Paul in his study. The mining industry has some credibility issues based on recent performance and therefore understanding the causes and then repairing that credibility will be important for the future.
Credibility ultimately impacts on shareholder returns, government returns, local community benefits, and worker health and safety; so having a well designed mine will realize benefits for many parties.
If you need more information Paul’s website is at http://www.whillansminestudies.com/
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Do Any Junior Producers Model a Gold ETF?

Date: March 1, 2016 Author: Ken Kuchling Comments: 4 Replies
junior mining company
I have often wondered if any of the smaller gold producers have ever considered modelling their business plan similar to a gold Exchange Traded Fund (“ETF”).
This hybrid business model may be a way for companies to provide shareholders a way to leverage themselves to physical gold rather than leveraging to the performance of a mine.

Let me explain further

Consider two identical small mining companies each starting up a new mine. Their projects are identical; 2 million gold ounces in reserves with annual production rate of 200,000 ounces with a 10 year mine life. On an annual basis, let’s assume their annual operating costs and debt repayments could be paid by the revenue from selling 180,000 ounces of gold. This would leave 20,000 gold ounces as “profit”. The question is what to do with those 20,000 ounces?

Gold Dore

Company A

Company A sells their entire gold production each year. At $1200/oz, the 20,000 oz gold “profit” would yield $24 million. Income taxes would be paid on this and the remaining cash can be spent or saved.
Company A may decide to spend more on head offices costs by adding more people, or they may spend money on exploration, or they could look at an acquisition to grow the company. There are plenty of ways to use this extra money, but returning it to shareholders as a dividend isn’t typically one of them.
Now let’s jump forward several years; 8 years for example. Company A may have been successful on grassroots exploration and added new reserves but historically exploration odds are working against them. If they actually saved a portion of the annual profit, say $10M of the $24M, after 8 years they may have $80M in cash reserves.

Company B

Company B only sells 180,000 ounces of gold each year to cover costs.  It puts the remaining 20,000 ounces into inventory. Their annual profit-loss statement shows breakeven status since their gold sales only cover their financial commitments. In this scenario, after 8 years Company B would have 160,000 gold ounces in inventory, valued at $192 million at a $1200 gold price.
If you’re an investor looking at both these companies in the latter stages of their mine life, which one would you rather invest in?
Company A has 400,000 ounces (2 years) remaining in mineral reserves and $80M cash in the bank. Company B also has 400,000 ounces of mineral reserves and $192 million worth of gold in the vault. If I’m a bullish gold investor and foresee a $1600/oz gold price, then to me Company B might theoretically have $256M in the vault (160k oz x $1600). If I’m a super bullish, their gold inventory could be worth a lot more..theoretically.

Which company is worth more?

I assume that the enterprise value (and stock price) of Company A would be based on its remaining reserves at some $/oz factor plus its cash in the bank. Company B could be valued the same way plus its gold inventory. So for me Company B may be a much better investment than Company A in the latter stages of its mine life. In fact Company B could still persist as an entity after the mine has shutdown simply as a “fund” that holds physical gold. If I am a gold investor, then Company B as an investment asset might be of more interest to me.
If Company A had good exploration results and spend money wisely, then it may have more value but not all companies are successful down this path.

Conclusion

It appears that most of the time companies sell their entire annual gold production to try to show profit on the annual income statement. This puts cash in the bank and shows “earning per share”.
My question is why not stockpile the extra gold and wait for gold prices to rise?  This might be an option if the company doesn’t really need the money now or doesn’t plan to gamble on exploration or acquisitions.
This concept wouldn’t be a model for all small miners but might be suitable for a select few companies to target certain types of gold investors.
They could provide an alternative mining investment that might be especially interesting in the last years of a mine life. Who really wants to buy shares in a company who’s mine is nearly depleted?  I might buy shares, if they still hold a lot of gold.
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Mining Fads and the Herd Mentality

Date: February 16, 2016 Author: Ken Kuchling Comments: 1 Reply
minerals
After having worked in the mining industry for over 40 years, it is interesting to experience the herd mentality that exists.  Its fascinating to see how easily the industry gets caught chasing the latest fads and loses focus on the long term picture.
All it takes is a short term spike in a certain commodity price, or a big discovery somewhere, and then off goes  the herd in that direction.  It doesn’t matter the rationale driving the event, companies just know they need to be in there.   Investors also know they need to be in there.  Its classic FOMO; the fear of missing out.
These fad events, or crazes, can be based on certain commodities, jurisdictions, or technologies. The mining industry is flexible.  Here are a few examples that I have seen; you may have others in your own experience.

Commodity Fads

Often as soon as there is a price spike or positive market narrative,  commodity specific projects can take on a life of their own.  The following are few examples, and when you reflect back on them, how many actually were a success for more than but a few.
  • Potash: several years ago potash prices spiked and acquiring potash leases was the fad.  It didn’t matter where they were located around the globe, be it Canada, Russia, Ethiopia, Thailand, Brazil, etc.   BHP even jumped in with both feet.  The potash craze has largely fizzled out as prices returned to normal.  We may be seeing a resurgence these days but not to the same level as in the past.
  • Lithium / Graphite:  as soon as green battery technology started to be promoted in the news in 2016, miners couldn’t run fast enough to pick up the lithium properties.  The same held for battery metals such graphite, vanadium, cobalt, and also rare earth categories. That was 2016.   After a lull for a few years, the process restarted itself in 2022, although it seems the graphite – lithium excitement is now calming down in 2026.
  • Uranium: years ago uranium prices spiked and uranium properties were hot everywhere.  Prices have dropped but seem to be ramping up again in late 2018 and the commodity is still somewhat hot in 2026.

  • Cobalt Excitement Curve

    Cobalt: see the price chart on the right to see how cobalt went into a craze and then out of it.  Companies jumped into cobalt projects, then jumped out when the price dropped.
  • Nickel: years ago a spike in nickel prices caused a surge in nickel properties, whether it was sulphide nickel, laterite nickel, or other forms.  Lately in 2026 nickel is given some credit as battery metal, but not as hot as it was.
  • Iron Ore: in conjunction with the Chinese construction boom decades ago, iron ore properties were hot around the globe, whether in high cost or low cost jurisdictions, it didn’t matter where the property was.  Iron is still being pursued but its a lot quieter today in 2026.
  • Diamonds: in conjunction with the first diamond discoveries in Canada in the 1990’s, diamond properties became super hot, whether in the Canada or around the globe.  If you couldn’t get a property in Canada’s NWT boom area, places like Alberta, Sask, Ontario or anywhere globally was fine too.   The luster of diamonds seems to be gone now.
  • China in general: decades ago every base metal project was thought of as either a potential supplier to China or a potential acquisition for Chinese companies.  As long as it could meet Chinese investor interest the project was good.  That is not the norm now, but China is still seen as a potential  target for many junior miner liquidity events.
  • In mid 2026, it seems that everyone is starting to look at tungsten and rare earths.   We will see how this enfolds going forward.

Regional Exploration Fads

Mineral claim map exampleWe have all seen the staking rushes that occur when a world class prospect is discovered.  I’m sure we can all recall getting the large claim maps (as shown in Ring of Fire map) with their multicolored graphics showing the patchwork of acquisitions around a discovery. PDAC was great for distributing these.  They were well done and always interesting to study.
Picking up properties in hot areas (i.e. near-ology) became the fad and share prices would move upwards regardless of whether there was any favorable geology on the property, as long as it was in the region and made it onto the colorful map.  Who recalls the following?
  • Voisey’s Bay: with a mad staking rush around Newfoundland, with nothing else really paying off in the long run.
  • Saskatchewan:  the potash staking rush where almost every inch of the potash zone was staked with only a couple of companies eventually moving forward and only one or two going into production.
  • Indonesia: during Bre-X people could not acquire properties in Indonesia fast enough.
  • NWT:  where the diamond property staking rush was crazy in the mid 1990’s.
  • BC Golden Triangle: where this seems to have been the hot area for the last few years.
Have I missed any areas that you see as hot?

Mining Technology Fads

Even mining or processing technologies could get caught up in somewhat of a wave and move the herd.  Sometimes it was driven by suppliers or consultants. For the engineers out there, who can recall…
  • Paste Tailings: with numerous conferences and consultants promoting thickened or paste tailings technology as the panacea.  This lead to numerous studies related to thickening, pumping, and disposal at each mine.  The paste fad has now ended as companies moved toward filtered tailings instead.
  • Block Caving: whereby in order to deliver high tonnages at low cost, bulk underground mining was being promoted.  Everyone wanted their underground project to be a low cost caving style operation.  This block cave concept is still in play today, but higher metal prices may make conventional open pits a bit more economic.
  • High Pressure Grinding Rolls (HPGR): where process consultants would highlight HPGR as the new replacement for conventional grinding mills.  I’m not sure this technology has taken the industry by storm as they were hoping in the 1990’s.
  • IPCC: whereby inpit crushing and conveying systems were being promoted in many articles and global conferences as the solution to operating cost issues.  I think implementation of IPCC technology isn’t as simple as envisioned and I’m not aware of many cases of its successful implementation.
  • Dot.com: in the early 2000’s many junior miners left exploration behind and transitioned to the dot.com boom, a fad that essentially went nowhere for most.
  • Pre-concentration: this seems to be a growing technology that may be gaining momentum.  It isn’t new technology and it will definitely have its benefits.  However a big stumbling block is how many deposits are actually suitable for its application.  I have written more about this technology “Pre-Concentration – Savior or Not?“
  • Stochastic Modelling: many proponents are pushing towards the use of probabilities in mine planning.  Its still the early stage here, so we will see if this gains traction.  The herd is not running in this direction .. yet.
  • AI:  The use of AI to summarize reports, compile, and analyze data is now being promoted by several online platforms.  As the previous example, we will see if this gains traction since the herd are not chasing this yet.
Have I missed any that you see as growing trends?

 

Conclusion

The bottom line is that over the years it has been interesting to watch the mining industry react to events.  Sometimes it seems like we’re passengers on a ship, almost capsizing due to the industry running from one side to other side and then back again.  Unfortunately that doesn’t necessarily make for smooth sailing.
What’s the next fad going to be? I don’t know … but if you can predict it, you can probably make a lot of money.
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. The entire blog post library can be found at https://kuchling.com/library/
For some free mining calculator apps, including project timelines and a simplified cashflow modeller, check out this website https://sites.google.com/view/drillingdown
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Global Tax Regimes – How Do They Compare?

Date: February 9, 2016 Author: Ken Kuchling Comments: 3 Replies
mining economics
Update: This blog was originally written in Feb 2016, but has been updated in Aug 2019.
As a reminder for all QP’s doing economic analysis for PEA’s, don’t forget that one needs to present the economic results on an after-tax basis.
Every once in a while I still see PEA technical reports issued with only pre-tax financials.  That report is likely to get red- flagged by the securities regulators.  The company will need to amend their press release and technical report  to provide the after tax results.    No harm done other than some red faces.

Taxes can be complicated

When doing a tax calculation in your model, where can you find international tax information?  PWC has a very useful tax-related website.  The weblink below was sent to me by one of my industry colleagues and I thought it would be good to share it.
The PWC micro-site provides a host of tax and royalty information for selected countries.  The page is located at https://www.ey.com/gl/en/services/tax/global-tax-guide-archive
On the site they have a searchable database for tax information for specific countries.
The PWC tax and financial information includes topics such as:
  • Corporate tax rates
  • Excess profits taxes
  • Mineral taxes for different commodities
  • Mineral royalties
  • Rates of permissible amortization
  • VAT and other regulated payments
  • Export taxes
  • Withholding taxes
  • Fiscal stability agreements
  • Social contribution requirements
PWC has a great web site and hopefully they will keep the information up to date since tax changes happen constantly.  The website also has a guide related to the rules for the treatment of capital expenditures.   Check it out.  https://www.ey.com/gl/en/services/tax/global-tax-guide-archive
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