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In the development of mining projects, there is a period in between commitment of finance and production commencement. Risks are present in various aspects of development such that production start-up could be delayed, thereby affecting the value of the project. This paper demonstrates the application of convolution in the capital investment proble...
Citations
... Looking at the entire life cycle of the geological and mining projects, it should be remembered that it often takes many years from a discovery of a deposit to mass production [8], therefore the risk associated with them is usually multifaceted. The specificity of the works seems to justify the need for an individual approach to the problem of a proper selection of funding sources [12] and matching them to a specific stage of advancement in the whole life cycle. ...
The article presents an overview of the determinants of exploration works and the definition of the role of junior mines in those processes. Junior mines, as special purpose vehicles, focus on the stages of exploration and documenting of the deposits, without going into theoperational stage related to the exploitation. Due to their nature, those entities finance their activities with equity capital in the formof share issues on the capital markets, addressing their proprietory securities to investors who accept a high level of risk. The largeststock exchanges on which the exploration companies obtain the required funds have been identified, and the trends that complementcapital raising, concerning the involvement of private equity funds, have been presented.
... Long-run capacity expansion is achieved by developing new production capacity, and this typically takes place over a couple of years. The longer the lead time, the greater the risk to a project being completed on time and at the budgeted cost (Rademeyer et al. 2020a). This paper seeks to address the question of long-run capacity availability, i.e. the large-scale capacity that is yielded by project investment. ...
This paper investigates the implications for coal supply security for the domestic South African market when faced with weaker export demand. It expands on a previously introduced model of domestic coal trade, DOTRAMOD, by accounting for mining profit, the opening of new mines and the closing of loss-making mines. The results indicate that declining demand for exported coal would result in declining profits for multi-product mines. This would lead to the closure of some mines and reduced coal supply to domestic power producers. These results highlight the importance of the mine investment problem in commodity market studies.
... A decreasing cost per unit output with increased mine size favours the development of giant or 'world-class' deposits (Laznicka, 1999) with proven reserves that ensure an extended life of mine and an adequate return on investment. It frequently takes decades from initial discovery or an ore deposit through evidencing success to investors and to full-scale production (Rademeyer et al., 2020). To prove the economic viability of a deposit is a complex, expensive and protracted process, requiring adherence to reporting standards that recognise the interplay of geology, viable processing methods, and issues of access and supply infrastructures (energy, water, etc). ...
... These variables determine the amount of time required to restore the balance in the supply chain. For example, new and alternative types of ore deposits may take decades to develop, from initial exploration to the design of appropriate extraction and processing techniques, and subsequently to mine development and production (Rademeyer et al., 2020). Long-term access to raw materials is ensured but real or perceived (Renner and Wellmer, 2019) short-term business risk is not mitigated. ...
Large-scale mining of low-grade ores is energy-intensive and generates vast wastes. It has limited suitability for production of specialist metals that are required in relatively small quantities. An approach that limits environmental impact by restricting mining to high-grade deposits requires the investigation of small ore deposits as alternative sources of metals. The return on investment from small deposits is incompatible with the expensive surveys needed to secure investment and the high costs of managing risk. But increasing energy and transport costs may create space in the market for small-deposit mining with highly-competitive technological solutions. It can be argued that small-deposit mining is ethical because it must involve cooperation between mining companies and local residents who share a collective expectation and responsibility for their quality of life. However, small-deposit mining tends to be a limited, short-term initiative, which requires consideration of the extended ‘afterlife’ of mines. This manuscript is the culmination of five years of cross-sector dialogue and stakeholder engagement activities. It debates what constitutes a small deposit and describes the interactions between mining and manufacturing, investment, environment and society. It reaches the conclusion that technological innovations will support the re-emergence of small deposit mining as an important part of a diverse raw materials production sector. We do not suggest a return to past approaches, to mining of small, high-grade deposits, but a consideration of alternative narratives of localised, community-oriented mining processes, thus giving social, economic and environmental context to the needs of the present day.
