Aug 26 2008
In your investment analysis of Mining Explorers and Producers do you focus on the various things one needs to consider when determining whether a mineral deposit is commercially viable?
When determining whether a mineral deposit is commercially viable at least the following things must be analyzed and understood pursuant to first a feasibility (sometimes called a bankability) study:
• the existing resource and reserve base at any given point in time in the contexts of geographic location, average grade, existing proven and probable NI 43-101 resources and reserves, and the perceived potential to expand the mineable deposit and timing of such expansion;
• the project’s physical location and comparative geo-political risk,
• the geology of the deposit in the contexts of extraction method (open pit versus underground), quantity, grade and metallurgy,
• what infrastructure (roads, rail lines, water access, utilities access, ore processing facilities), trained labour, weather conditions (enabling year-round exploration and drilling), and access to assaying laboratories is available to the property; and,
• the economics of the project in the context of forecasted metal prices, mining, milling and processing costs, recovery of secondary metals, and project financing.
Specifically with respect to financing, it is important to understand the company’s (read Board of Director’s and Management’s) philosophy and strategy of financing through debt, equity or a combination of the two. The company’s resultant debt:equity ratio is an important measure of project and company risk – and speaks directly to investor-specific risk tolerance.
For a more detailed discussion see the Valuation E-book Valuation of Small Cap Mining Companies found under the E-Learning tab on the Main Navigation Line of StockResearchPortal.com.
