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By P. J. Petit

Financial evaluation is necessary to investigate the viability of implementing and/or utilising new technology in mining projects. It establishes a techno-economic base for decision-making and justifies capital expenditure. This paper aims to present a monetary appraisal of the electric rock drilling system in a typical feasibility project, whose purpose is to increase the production rate. The in situ environment is a platinum orebody, and the stoping operations occur in UG2 reef. The results are a function of production requirements, technical parameters and financial outlay of the drills. The costs involved in implementing and operating electric rock drills are assessed to the current method of drilling, namely the compressed air operation. A comparison of the electric and pneumatic rock drills in terms of financial outlays for drilling and service requirements, peripheral equipping and training is discussed. Other factors that affect the business case are technical advantages, safety and risk management and the environmental objective of the company.

Jan 1, 2006

By Lynton B. Manssen

Introduction Net Present Value (NPV) techniques are becoming widely used in industry as a standard analytical tool in making capital budgeting decisions. However, NPV techniques are often misused in "common practice." A comparison was made between the use of NPV techniques in common practice and an Adjusted Net Present Value (ANPV) approach to capital budgeting in the financial analysis of a mining project. The comparison was made by applying both methods to a hypothetical copper project. The intent of the analysis is to provide an example for practitioners to follow when financially analyzing mining (or other) projects. To maintain the thrust of the analysis, the project has been evaluated as a stand alone, total project. No consideration has been made of the division of cash flows accruing to various owners over the life of the project. This omission will not affect the comparative nature of the analysis. This discussion assumes that the reader is familiar with present value as a concept and as a tool in capital budgeting. Finance theory has embraced NPV analysis as the correct way to evaluate capital budgeting alternatives. Many articles have been written expounding the virtues of NPV over other capital budgeting methods, such as Internal Rate of Return (IRR), Payback, Accounting Rate of Return, and others. It is not the purpose of this article to review all of the literature in this area; suffice it to say that in academic circles NPV concepts are accepted as the norm. A survey by Schall, Sundem, and Geijsbeck (1978) indicates that major US companies are finally following in academia's footsteps. Fifty-six percent of the companies responding to the survey use NPV techniques in their capital budgeting process. Further, some 86% of the companies surveyed use discounted cash flow methods (NPV or IRR) for capital budgeting decisions. This compares with a survey by Klammer (1972) that showed 57% of companies using both techniques, a considerable increase in seven years. With the increasing use of NPV techniques in industry, there are certain uses in common practice that can give misleading results. Five common errors in NPV analysis of large projects are: • No distinction is made between real and nominal cashflows. • The discount rate(s) used in the NPV analysis is not formally adjusted for risk. • There is no distinction of possible differences in the riskiness of different project cash flows; i.e., revenue vs. depreciation. • There is no recognition of the cash benefits to the project from interest tax shields (interest payments on the project's debt that are tax deductible). • There is no clear recognition of subsidies to the project from concessionary debt financing. No Distinction Between Real and Nominal Cash Flows Often, expected cash flows for a project are stated as a mixture of real (in constant dollars) and nominal (in current dollars) cash flows. For example, expected revenue cash flows may be stated in real terms and depreciation may be stated in nominal terms. If cash flows are added together to give an after tax cash flow, and this single cash stream is discounted, care must be taken to ensure that cash flows are consistently stated. All cash flows should either be stated in nominal terms or in real terms. In addition, the discount rate used must be stated in the same terms as the cash flows being discounted. Real cash flows must be discounted using real discount rates and nominal cash flows using nominal discount rates. Discount Rate Not Adjusted Numerous methods for obtaining discount rates are used in common practice. Schall and others

Jan 6, 1983

By Hugh Douglas

This paper discusses the financial health of the U.S. mining industry and its ability to meet the future raw material requirements of this country in the context of resource independence. The title of this paper begs several questions, and three will be raised here. The answers to them will form the basis for discussion. The three questions are: What does one mean by resource independence. How is the U.S. mining industry defined. How is financial health measured.

Jan 1, 1977

In constructing a financial model of a project significant effort is expended on capital and operating cost estimation, commodity price forecasts, and choice of discount rates while uncertainty in the primary input, the reserve, is often completely overlooked. The aim of this paper is to highlight the impact of uncertainty in the resource/reserve estimation process on the assessment of the financial performance of a project. Four qualitative processes have an impact on resource/reserve uncertainty. These stages are: 1.Ore definition 2.Geological interpretation 3.Resource estimation 4.Ore reserve estimation and mine planning. Each stage contains a number of tasks that may be considered as key performance activities (KPAs). Optimizing the manner in which these KPAs are completed can remove a great deal of uncertainty and error from the resource/reserve process. Examination of these KPAs within a company can also provide an insight to the quality of the information underlying the project. This will allow the company to identify any shortcomings in the data and to assess the resulting risks (Gilfillan, 1998). A hypothetical financial model based on a gold operation has been used to estimate the potential effect of resource/reserve uncertainty on revenue. Monte Carlo simulation has been employed to simulate a number of hypothetical scenarios: 1.a base case scenario which assumes no major errors or biases, but contains realistic margins for uncertainty that would exist in any project where work is being completed to the limit of best endeavours 2.a poor sampling scenario which assumes poor sampling practice and lack of understanding of sample preparation 3.a poor resource estimation scenario which assumes poor modelling and inappropriate choice of interpolation technique, and 4. a ?typical? scenario which represents a project where the majority of KPAs are not performed as best as they could be. The results show that realistic uncertainty ranges can generate changes in the estimate of potential revenue of plus or minus 30%.Therefore, it is important to allow for errors in these processes in any financial analysis or feasibility study. It is recommended that, when building a financial model, are view of relevant resource/reserve KPAs be carried out and appropriate ranges for uncertainty be applied to provide a range of potential outcomes. These outcomes can then be factored into the detailed cash flow analysis in order to ensure that technical uncertainty is built into financial decisions.

Jan 1, 1999

By Peter J. Maxworthy

INTRODUCTION There is no hard and fast rule on whether functions within a company, diversified or otherwise, should be strongly centralized or decentralized. In all diverse organizations, there are certain basic functions which remain common (or central) to each element of the business, viz: Personnel Management Cash Management Taxation Management Legal Planning Accounting Standards It would follow that each of these common factors requires some supervision at a central level to ensure that overall group objectives are met. It is true that other functions including: Industrial Relations Marketing and Distribution Production Research and Development Purchasing Management Accounting may also be common to each element of the organization. However, there is far less commonality in the degree to which these functions are central to the efficient performance and financial well-being of the business. Role of Operating Units The resources of operating centers may be viewed as a bank of funds, the nature of which can be changed from time to time, but the employment of which must provide for ongoing increases in the net worth of the total enterprise expressed in terms of market values. Operating units are required to continually review products, methods, and opportunities and to monitor avenues for incremental investment--all with a view to attaining the necessary additive net present value of future cash flows of the enterprise. Operating units should be permitted sufficient autonomy to enable the best use to be made of the skills and experience of the people it employs in order to produce a return appropriate to the value of assets employed. Role of Head Office The head office will typically comprise a specialist group--the leaner the better if one strongly adopts the decentralist approach--often acting as Service Centers but also performing a control function in the corporate sense. The head office function is a cost center. It may be instrumental in developing strategies for increasing revenues or reducing costs on a group scale, but it does not generate revenue. Every dollar spent on this function is an extra dollar to be generated by the operating centers in order to achieve an increase in corporate wealth. TREASURY MANAGEMENT Treasury management is concerned with the provision of finance, cash-flow management, and risk analysis. Each decision taken within the enterprise has a cash implication. It follows that a well-integrated central Treasury function can, in all likelihood, produce economic benefits. The degree to which the function should be centralized depends largely upon the unique nature of the operating units it is servicing. Levels of ownership, the calibre of unit operating managers, and the nature and geographic distribution of the business are all factors determining the degree to which the Treasury function is centralized. In the case of Peko-Wallsend, the Treasury Department is small, comprising four people. While divisional cash-flow management is largely decentralized, Treasury is responsible for the daily management of funds surplus to the immediate needs of operating units. Treasury also operates as central banker and provides funds to

Jan 1, 1985

By S G. Gemell

"The financial model is an integral component of any project evaluation based on mineral resources, ore reserves and (at least internally) exploration targets. Given the unity of purpose for preparing financial models for project evaluation purposes, the diversity of both format and content of the finalised models is surprising. Many models are prepared by staff or consultants who are comfortable with a particular format that may be used for other purposes, such as budget preparation or financial reporting. It is natural in these situations that the practitioner will take these models and adapt them to the purpose. The end result may or may not succeed in providing a clear, accurate and sufficiently detailed view of the project’s economic viability.When preparing a model, the practitioner should be cognisant of the interpretation and review, or audit, process. The auditor may be a consultant or employee of a bank, potential equity provider or of the project sponsor itself. Depending upon the scale of the project and the level of participation of the entity that the auditor represents, the financial model will be interrogated more or less rigorously. In any event, the end user will require the model to permit easy change of inputs and will wish to confirm that such change is appropriately and thoroughly transmitted throughout.Accordingly, there are some ‘dos and don’ts’ that can be readily applied in the creation of the financial model that will greatly assist the end user, not just in the change of inputs, but also in reviewing the model’s integrity. The less time and effort required by an auditor in this regard is reflected directly in the cost of the review process.CITATION:Gemell, S G, 2016. Financial modelling with the auditor in mind, in Proceedings Project Evaluation 2016, pp 172–180 (The Australasian Institute of Mining and Metallurgy: Melbourne)."

Mar 8, 2016

By Jr. Winters

The United States continues to be the largest producer and consumer of copper in the world. Table 1 on the following page shows several production statistics for 1974, the most recent year which the non-communist world copper industry might consider a good year, and for 1976 and 1977. In 1974 an estimated 24 percent of the non-communist world's newly mined copper was mined in the United States, and. 87 to 89 percent of that was from the western porphyry coppers. In 1976 U. S. new mine production was down to 22 percent of the non-communist world's newly mined copper, and the percentage of U. S. new mine production supplied by the porphyry coppers had risen to 89 to 91 percent. In 1977 the statistics remained the same as in 1976. U. S. porphyry copper production represented about 65 percent of U. S. refined copper consumption in 1974, rose to 75 percent in 1976, and dropped back to 61 percent in 1977 as imports of foreign copper into the United States began to swell.

Jan 1, 1978

By David M. Koogler

If you are contemplating starting a small coal mining operation there is a good possi¬bility that you can not afford it. If you, have already started, you may be on the road to bankruptcy. If you are a small but well established operator you may be trading dollars, or even dissipating your capital, equipment and other assets. A bleak outlook? Yes! Meant to be discouraging? No! Just a reminder that, with todays costs of doing business, high interest rates, rapidly increasing costs and decreasing sales prices, a small businessman/miner had best watch closely or he will be mired in something worse than a soft bottom - namely a cash and credit shortage, and in too many instances In recent times, bankruptcy. We will not dwell on what happens once you are that far gone, though I could cite a good example. But, let us look at what should be done to avoid such a catastrophe.

Jan 1, 1981

The visible portion of accounting-record keeping and preparation of financial statements-suggests a lack of sophistication and imagination. In reality, accounting is based on a large body of theory. Accountants philosophize, theorize, judge, create, and deliberate as a significant part of their professional practice. The subjective aspects that are so critical to current accounting practice, such as searching for truth and fact, judging what is fair presentation, and considering the behavior induced by presentations, are often overshadowed by the appearance of exactitude, precision, and objectivity that accompanies the use of numbers to express the financial results of the enterprise. * Fundamental accounting principles are hypothesized in the same manner as mathematical principles. These principles are justified by acceptability and intuition. Accounting theory is built upon these hypotheses, resulting in a coherent set of standards and rules. Although it does not specifically address every situation that may be encountered, this conceptual frame- work enables the manager or analyst to resolve specific situations. This framework also aids in the understanding and confidence in financial statements and ensures comparability between statements from different companies. This framework is referred to as "generally accepted accounting principles," or GAAP.

Jan 1, 1999

By M. Somppi, D. Weirmeir, Z. Yamak

"Milling operations commonly employ activated carbon to capture complexed gold from lixiviants in leaching processes. As the carbon moves through pipes, pumps, vessels, kilns and other processes in the gold leaching circuit, this consumable may experience losses by various mechanisms like attrition, breakage, and rupturing. Whenever possible, capturing the fine gold-bearing carbon portion of this stream could provide value to milling operations at low capital cost and manageable financial risk. Identifying, testing, and validating the successful payback of a low-tech flocculant system is described. However, the work more closely explores a Monte Carlo risk-based methodology for understanding the potential payback of this project at various confidence levels – an approach that many improvement projects can follow where some level of uncertainty exists.INTRODUCTION Gold milling operations commonly employ activated carbon to adsorb gold from solutions. Normal handling causes the carbon particles from this material to abrade, break, rupture to a size that becomes too small for further use in the process. Operations often concentrate on capturing the fine particles because gold is associated with the carbon and this metal content can be a valuable revenue stream for toll processing. However, the small particle sizes become difficult to separate from the process and can ultimately leave the facility in the waste stream. Hence, operations often place a great deal of care in capturing as much fine carbon as possible by a variety of methods including using screens, settling tanks, and chemical methods. Retrofitting a circuit to capture more carbon fines is common but can expose the operation to financial risk. Approaching this potential improvement by leveraging a Monte Carlo methodology can be effective in understanding the risk and the associated payback of a project at various confidence levels. This method provides a strong framework for capital go-no-go decisions and the structure to validate the potential project success before implementation."

Jan 1, 2019

By Barnett DW

Financial risk analysis provides the tools to examine the uncertainty of capital decisions in new mining ventures. This paper explores the methodology by which financial risks can be studied and quantified. The most commonly used risk evaluation methods, such as sensitivity analysis and discount rate adjustment, are presented as an introduction to a more comprehensive discussion of stochastic methods of discounted cash flow analysis using Monte Carlo sampling. The discussion is illustrated with examples of a stochastic discounted cash flow. The advantages of Monte Carlo sampling in risk analysis are discussed together with its problems, particularly those originating from the correlation amongst the variables that determine the economic output of a mining venture, and the difficulties created by insufficient data, imperfect knowledge and complexity. The paper also surveys the most commonly used software used in risk analysis.

Jan 1, 1994

ASSETS CAPITAL ASSETS Equity in United Engineering Society's Land and Buildings $486,792 79 Library 40,000 00 $526,792 79 INVESTMENTS Jas Douglas Fund-Schedule #2 $ 99,966 40 Life Membership Fund-Schedule #3 9,415 63 R W Hunt Medal Fund-Schedule #4 7,489 09 116,871 12 INVENTORIES Paper Account .305 10

Jan 1, 1923

[ASSETS CAPITAL ASSETS: Equity in United Engineering Society's Land and Buildings $486,792.79 Library 40,000.00 $526,792.79 INVESTMENTS: Jas. Douglas Fund-Schedule #2 $ 99,966.40 Life Membership Fund-Schedule #3 9,415.63 R. W. Hunt Medal Fund-Schedule #4 7,489.09 116,871.12 INVENTORIES: Paper Account 305.10] [ ]

Jan 1, 1925

By Peter J. Szabo

The mining executive works in a cyclical industry. His employment is subject to the vagaries of the marketplace. Boom and bust has always been the industry's story. "Big oil" failed in its mining effort. This left emotional and financial scars on many mining families. One must remember that mining executives always play a high-stakes game. Given the cyclical nature of the mining industry, mining executives need to take care of their own financial security. The mining executive that does not plan for his financial security in this cyclical business is playing Russian Roulette with his future. Take a look at those people who have reached their later years with the mining industry. One usually finds three categories of people. Those few in the first group have been fortunate enough to have worked for one company. They have survived the winnowing process of cyclicality, political problems, and takeovers. They have reached normal retirement age. For them, the retirement years are usually comfortable. People in the second group have worked for those same mining companies. But these people have been forced out by early retirement. Or they have been laid off for cyclical, takeover, or political reasons. The third group includes those who have held many positions in the mining industry. Probably not until their later years are they fully vested, if at all, in a pension program. The first small group, then, is the exception. The others, unless they have taken care of their financial security, are doomed to later years of financial problems, stress, and unhappiness. Too late in life, many realize the harsh realities of failure to plan and implement a personal financial program. Mining executives go to some of the world's leading mining schools, to learn how to make money. The curriculum is technically strong. Most mining graduates are familiar with the intricacies of discounted cash flow, present value, and the Hoskold formula. But few of these same mining schools require courses on personal financial planning. Such courses could give mining students a realistic foundation and the mechanisms with which to cope with their cyclical profession. An executive has only three sources of money. He can make money at work. He can put his money to work. Or he can get money from charities, such as government programs. Of these three sources of money, money at work has the best chance of providing financial security in later years. The mining executive must think of the day when he will be too old to work and contribute to the market place. At this point, the quantity and quality of his investments will determine whether his later years will be secure. Along with the Mining Engineering Handbook, two key books should be included in the mining executive's library. These are Venita Van Caspel's The Power of Money Dynamics and Benjamin J. Stein's Financial Passages. These books contain the basic concepts of personal financial planning so critical to an individual's financial survival. Venita points out the simple formula that is the key to financial independence: Time + Money + American Free Enterprise (Rate of Return) = Opportunity to Become Financially Independent Chart 1 shows that this is not a trite formula. The chart shows the dramatic effects of compounding over time. The chart also shows at various yields what a $2000 a year Individual Retirement Account (IRA) contribution will accumulate. Chart 1 (from Money magazine) is based on the future value of an ordinary annuity. It shows that the key to amassing a small fortune by the time a person reaches his 50s is starting to save methodically in his 20s. This, coupled with the highest yields consistent with safety of principal will ensure financial security. There are significant effects from compounding money over time. Every year the decision is put off to save for later years will cost a person dearly by the time he reaches his 50s. For example, consider the decision to put off for one year a $2000 IRA investment at a 12% return. Starting it at age 31 instead of 30 will cost the executive almost $100,000 by age 65. What if the executive waits until age 35 to get started with his $2000 a year investment? He will then lose nearly $400,000 by age 65. Stated another way, the executive costs himself this $400,000 simply because he did not invest $167 a month for five years. $167 a month - that's less than an inexpensive second car payment. This $400,000 pool of money could provide the executive a $40,000 a year income at age 65, assuming a 10% return on invest-

Jan 11, 1985

By José Claro

El presente texto señala algunos aspectos respecto al financiamiento de inversiones en la minería. Para ello, se revisa las condiciones adecuadas para la comercialización de su producto a través de tres premisas: La primera, refiere los préstamos otorgados por los gobiernos de países desarrollados y sus agencias financieras para nuevas producciones mineras; la segunda, considera los préstamos de futuros compradores como una fuente importante de financiamiento y la tercera, refiere a los bancos comerciales, cuyos préstamos permiten mayor agilidad en su utilización, aunque es cada vez más dificil encontrarlos a tipos de interés y plazos adecuados. Asimismo, otra modalidad frecuente en el caso de financiamiento, es que la misma empresa minera o sus accionistas intervengan en la capitalización de la nueva empresa minera a través de préstamos o cuasi capital, de forma que se recupere la inversión a través del pago de préstamos e intereses, en lugar de recibir las utilidades en forma de dividendos sujetos a impuestos.

Mar 1, 1971

By D. A. Karvonen

Although the economy in the Province of Saskatchewan has historically been agriculturally oriented, a major new source of wealth has been realized through natural resources such as petroleum and natural gas, coal and uranium and since the 1960's - potash. Potash or potassium chloride, in the form in which it is presently produced in Saskatchewan is used primarily as fertilizer, a source of potassium, one of three essential elements required for healthy plant growth with about 5 percent of production sold to the chemical industry for use in such products as soap and liquid detergent, glass and ceramics, textiles and some pharmaceuticals. Saskatchewan is estimated to have approximately 40 percent of known world potash reserves and its ten active mines account for some 25% of annual world production. The development of this resource was recognized to be important to the development of Saskathcewan. In an effort to guarantee a fair and lasting economic benefit to the Province of Saskatchewan the Potash Corporation of Saskatchewan (PCS) was created on February 4, 1975 through an Order-in-Council under the Crown Corporation's Act and later on April 1, 1976, the Potash Corporation Act provided for its continuation. PCS was given the mandate to acquire ownership of a significant portion of the potash mining capacity in Saskatchewan and to establish an organization capable of operating the facilities, marketing the product and conducting all of the other activities necessary for a successful corporation competing in the world potash industry.

Jan 1, 1983

By Douglas A. Karvonen

INTRODUCTION Although the economy in the Province of Saskatchewan has historically been agriculturally oriented, a major source of wealth has been realized through natural resources such as petroleum and natural gas, coal and uranium and since the 1960's - potash. Potash or potassium chloride, in the form in which it is presently produced in Saskatchewan, is used primarily as fertilizer, a source of potassium, one of three essential elements required for healthy plant growth, with about 5% of production sold to the chemical industry for use in such products as soap and liquid detergent, glass and ceramics, textiles and some pharmaceuticals. Saskatchewan is estimated to have approximately 40% of known world potash reserves and its ten active mines account for some 25% of annual world production. POTASH CORPORATION OF SASKATCHEWAN In an effort to guarantee a fair and lasting economic benefit to the Province of Saskatchewan, the Potash Corporation of Saskatchewan (PCS) was created on February 4, 1975 through an Order-in-Council under the Crown Corporation's Act and later on April 1, 1976, the Potash Corporation Act provided for its continuation. PCS was given the mandate to acquire ownership of a significant portion of the potash mining capacity in Saskatchewan and to establish an organization capable of operating the facilities, marketing the product, and conducting all of the other activities necessary for a successful corporation competing in the world potash industry. The corporation is the largest potash producing and selling organization in the Western World - or third largest in the world. (See also Figure 1). PCS through its wholly-owned subsidiary, PCS Mining, has acquired a whole or partial interest in five geographically distinct producing properties or divisions, representing today more than 40% of Saskatchewan's potash producing capacity. The acquisition of each division was followed by a program designed to exploit and maximize the particular opportunities at each minesite for increased production. To that end, PCS Mining has taken an active lead in expanding to meet future demand and has implemented expansion programs at all properties except for its Esterhazy Division where it has a long-term processing agreement with International Minerals & Chemical Corporation (Canada) Limited. Through its wholly-owned subsidiaries, PCS Mining, PCS Sales and PCS Transport, this provincial crown corporation has the ability to operate as a producer and marketer of Saskatchewan's potash. In certain instances PCS, the parent company, assists in the financing of various projects undertaken by the subsidiaries and in other cases the subsidiary involved arranges its own financing. POTASH RESERVES As a background to the specific issue of financing, it is helpful to describe briefly the nature of the deposit which supports the industry - our collateral, if you like. The potash beds underlying Saskatchewan are sedimentary rock deposits formed by the gradual evaporation of an inland sea during the Middle Devonian period roughly 400 million years ago. Now known as the Prairie Evaporite, this formation stretches from North Dakota and Northeast Montana through Southern Saskatchewan into North-Central Alberta. These beds lie at mining depths ranging from 950 - 1000m (3,000 ft) below the surface, where conventional mining methods can be used, and to 1,650m (5,000 ft), where solution mining must be

Jan 1, 1985

By James H. Boettcher

In the second quarter of 1979, ASL Inc. inquired whether Crocker National Bank ("CNB") would provide $4 million in term loan financing to help ASL acquire the outstanding shares of the S&S Coal Company in West Virginia. ASL had, prior to approaching CNB, sought financing with the assistance of a financial advisor from a number of commercial banks without success. A summary of the initial terms requested by ASL is shown in Table I compared with the actual terms the transaction closed with. It is not difficult to note that the two sets of terms differ significantly. This is often the case when financing requests based on the expectations and vision of a mine developer are juxtaposed with more pragmatic requirements of a commercial bank. The "art" and fun of structuring financing plans for mining ventures (highly leveraged acquisitions or grass roots) comes in working with mine developers to arrive at a final financial structure that meets their objectives and constraints as well as those of the bank or other financial institution providing much of the financing. This article briefly describes the process we went through with ASL beginning with the terms they requested initially and ending with the ones on which the transaction was finally closed.

Jan 1, 1981

By Robert Halupka

The industrial minerals sector represents a broad range of products involving a variety of technologies serving a diversity of markets and end uses. Unit values of products vary widely, reflecting the peculiarities of each product/market sector. Generalizations are therefore understandably difficult to make and borrowers may need to take extra time to "educate" lenders on the key aspects of their business and industry sub-sector. This paper will examine the factors and the thinking that lenders apply when considering financing proposals to companies in the industrial minerals sector. If you understand the lender's perspective and their concerns, then you can make better use of your own time and resources when arranging financing for your company or project.

Jan 1, 2001

"Investment in diamond exploration has been declining over the past decade, in spite of positive long-term industry fundamentals and a growing interest in diamonds as an investment category. The lack of new significant discoveries in recent years has eroded investor confidence, yet no new discoveries are possible without investment in exploration. Junior ‘mine finders’ have been the hardest hit. Their agility, tenacity, and appetite for risk are not sufficient to attract the funding required, even at the greenfield stage. Developing new discoveries into mineral resources can be crippling without solid financial support. Junior incubators could play a crucial role, especially at the project evaluation stage – but where are they? Alternatives to traditional funding mechanisms have become available, many still untested in the junior diamond exploration space. Valuable lessons can be drawn from the past and used to inform emerging new strategies. IntroductionDiamonds are the ultimate expression of love. Their ancient and timeless allure continues to influence consumer emotions and behaviours across continents, cultures and age groups. Analysts are predicting a sustained supplydemand shortfall in the years ahead which will trend diamond prices generally upwards. With positive long-term industry fundamentals, one cannot help but wonder why funding for diamond exploration and development projects is so scarce.Investment in exploration across commodities – including diamonds – has been declining for a number of years, reaching a historic eleven-year low early in 2017. The lack of major diamond discoveries in recent years has done little to strengthen the case for investing in diamond projects, yet no new discoveries can be made without investment in exploration.Global estimates of known carats in the ground stand currently at 2.5 billion carats, which equates to around 18 years of production at current levels of 140 million carats (mct) per annum. Sustainable replenishment of depleting diamond resources is possible only through the development of new discoveries. This is what junior explorers are best at – but they need investors to fund their evaluation activities from early in the project development continuum."

Feb 1, 2019