Mining Journal looks for quality in the project pipeline

By Staff reporter / February 01, 2018 / www.mining-journal.com / Article Link

Unlike the recovery from most bear markets, today's commodity prices are a reflection of the industry being both supply constrained and restrained - not enough quality projects are coming through at the same time as projects are taking longer to move into development.  The damage was done several years ago when, in the face of falling commodity prices, miners and the investors backing them started thinking short term.  Exploration teams were laid off, budgets were cut and any slim profits generated were siphoned off in an attempt to appease shareholders that, through asset writedowns, were still paying for CEOs overindulgence in the boom.  Many junior explorers - the nimblest of all companies - went out of business, while majors went on a divestment spree. Now the worst is over, with the ‘zombies' that populated many exchanges either extinguished or revamped, exploration and development is back in vogue. Companies are aware of this and are using every avenue to gain investment. Assets that didn't stand a chance of making money when copper was lingering around US$4,000 per tonne, gold was closer to $1,100 per ounce and lithium was just used for making glass and ceramics are back on the table and being touted as ‘world class'. This has clouded the project landscape for investors, making it harder to differentiate between an average project and one that has long-term profitability at its core. While the promoters suggest there are many such projects set to emerge in future years, Mining Journal knows this is not the case. True exploration success has been thin on the ground. And, even when a discovery has been made, the longer development lead times in mature and emerging markets, on top of perceptions of higher execution and regulatory risk in frontier nations, means the move to production is a longer and more complex journey than it has been for some time.   Now the worst is over, with the ‘zombies' that populated many exchanges either extinguished or revamped, exploration and development is back in vogue Factor in analyst estimates of increased demand for some commodities in the future, and the supply deficits are inevitable.  Mining Journal wants to take its 183 years of experience judging projects and their owners to good use, highlighting the quantity of quality assets currently in the pipeline.  It is with this intention that the Mining Journal and Mining Journal Intelligence teams have joined up and researched the assets of more than 2,000 publicly-listed companies and come up with the Mining Journal Intelligence database. Focused on the gold and silver, copper and energy minerals space, the database features projects that should find funding from the markets and, in theory, be built.  The assets are located in various global jurisdictions and have production ambitions starting from less than 100,000 ounces per annum to those aiming for annual output in the millions of tonnes. To ensure this database was as robust as possible and highlighted only quality projects, we set out strict criteria: The project owner had to have a market capitalisation of at least US$20 million - a cutoff that excluded the promotional pretenders;The management team had to have the credentials to make the all important move from exploration to development;The project had to offer potential upside for investors, and;The owners had to have laid out a basic economic case for the project (economic study completed or imminent).The aim of this database is to encourage more investment into the sector by shining a light on projects that should move forward. This is not all Mining Journal has been doing. In London in June, we are holding an event to showcase 30 of the projects from the Mining Journal Intelligence database. The event, titled the Mining Journal 30, will take place on June 26-27 and provide a platform for companies to present to a highly-qualified audience of the most influential institutions, private and family investors.  This inaugural event will be followed by another in Canada, in October, based on the same selection criteria. And, we will be keeping an eye on every project moving forward in the gold and silver, copper and energy minerals space.  Drill holes will be logged, project appointments analysed, permitting decisions examined and bolt-on acquisitions accounted for.  The database will be fluid, with projects moving in and out depending on progress.  This will allow Mining Journal to take an up-to-date view of the quality project roster four times a year. Over the next few months, we will be higlighting the characteristics of the projects on the Mining Journal Intelligence database - examining the project management teams, unpicking the project's economics and uncovering the potential upside that sits alongside the existing market valuation. Stay tuned to find out why the investable project pipeline is so thin and what we as an industry can do to get it flowing again.    To find out more about the the Mining Journal Intelligence Database or the Mining Journal 30 event, please contact Dan Gleeson. The dedicated Mining Journal 30 event website is available here.

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