Protect stock value with the right studies upfront
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!
Get in touch with our editor Dale Benton at [email protected]
Coal India Secures First-Of-Its-Kind Digital Deal
Coal India Limited (CIL) has appointed Accenture Solutions to digitally transform seven of its open-cast mines as the company strives to improve performance and increase coal production. Accenture is due to lay down digitalisation groundwork until March 2022.
The deal aims to increase coal production by 100 million tonnes (MT) by the end of FY’23. Once the minimum quantity has been surpassed, an agreed sum will be paid to the consultant for every additional sum of coal produced. This success fee will only be paid on the procurement of the minimum assured quantity.
The move will see heavy earth moving machinery (HEMM) fitted with digital sensors to monitor performance efficiency at all levels. Additionally, modern data analytic techniques aim to increase mine productivity and project monitoring through functional system management and effective observation.
An Exciting Venture For Global Mining
CIL, which aims to provide energy security in an environmentally and socially sustainable manner, hopes the move will help transform the entire business of mining operations and ensure higher volumes of coal are acquired at a lower cost.
“This is a first of its kind initiative by the company utilising digitalisation to ramp up coal output,” CIL has said.
A Digital Step Towards Enhanced Performance
Digitalisation is expected to take place at open-cast mines in Kusmunda, Gevra, Dipka of Southern Eastern Coalfields (SECL), Migahi, Jayant, Dudhichua, and Khadia of Northern Coalfields (NCL). Nearly 32% (188 MT) of CIL’s 596 MT output in FY’21 was accounted for by the seven selected mines. However, this new deal is set to see a large increase following the subsequent digital changes due to be made.
“Learning from the outcome and success of this model, we may replicate it in our other large mines,” says CIL, optimistic about the future following the modernisation of their mining.
It is expected that the move will help address roadblocks and guarantee corrective measures are put into place, ensuring the company is able to move forward with its aim of increasing output whilst remaining sustainable and eco-friendly.