Junior Mining Company Stages & Lifecycle
Have you ever wondered what the stages a junior mining company goes through before turning major? Or what the average life span of a junior mining company is?
As Stewart Udall said “Mining is like a search and destroy mission” so let’s review the discovery process.
Exploration
The mining industry relies on exploration to create new resource reserves, so this excludes desktop studies and resource estimates. Companies falling under this category are speculative in nature. Drill programs resulting in significant discoveries are the only measure of success and are the most positive time to invest in junior mining companies.
Discovery
Finding a potential reserve is helpful to the process of exploration and estimation can begin on determining how large the deposit is. At this stage a company’s best strategy is to produce a 43-101 resource estimate, as defined by the Standards of Disclosure for Mineral Projects in Canada. This is a set of rules and guidelines ensuring the transparent release of information regarding mineral properties.
Deposit Definition
Potentially valuable reserves can be discovered during exploration, so to make sure the mineral delivered is of the desired grade, minerology testing of samples is done. Scientists and geologists work together to analyze and define a deposit from samples sent out to a laboratory.
Mineral Resource Calculation
This vital stage lays out the tonnage and grade of the deposit. Different methods are used in accordance with the ore geology, geometry and boundaries. Some of the steps involved will be:
1. Creation and validation of database.
2. Section plotting and modeling.
3. Geostatistical analysis.
4. Block modeling and estimation.
Preliminary Economic Assessment (PEA)
This stage hopefully determines the potential viability of a mineral reserve and whether to develop a mine for resource extraction. Assessments are made on factors like engineering, economic and geological aspects of the mine. A key point in any PEA is to determine the capital cost required of the project when it goes to production.
Pre-feasibility Study (PFS)
Early stage analysis of the project done by small, specialized teams providing stakeholders information whether to green light a project and release investments. The study includes logistics, capital requirements, and considerations of challenges for the decision-making process.
Feasibility Study (FS)
A much more detailed analysis of the considerations covered in the PFS which requires significant investments of capital and time. A feasibility study measures profitability factors and how to effectively mine a resource.
Production Decision & Financing
Most of the time mineral deposits never make it to this stage, but for those that do make it here a company develops finance and production plans to ensure funds for mine construction and mine operations. If conditions are met, shareholders could observe potential revenue from the project.
Construction Begins
The information collected so far helps make strategically intelligent decisions for the progress of the project. Completion of research and mining permit approvals can lead to the beginning of construction, which may also include infrastructure, e.g. building railway access or roads in the case of Zimtu equity holding Commerce Resources.
Mining Operations Commence
Production begins and supplies of ore can last for 10 to 30 years even beyond. Mining involves the extraction of ore, separation, processing, disposal of waste, and shipping.
You might not be aware but there are two methods for mining, namely open pit and underground. This judgment is made based upon the nature of the mineral deposit and other concerns.
As you can see, there are a lot of variables when investing in Mining, but by researching the Junior Mining Company Stages, investors can reduce risk by understanding the process.
Thank-you for reading
— This guest Zimtu blog post was researched and written by Kunal Singh, who is completing his Farleigh Dickinson University practicum at Zimtu Capital