SME Guide For Reporting Exploration Information, Mineral Resources and Mineral Reserves

The 2017 SME Guide for Reporting Exploration Results, Mineral Resources, and Mineral Reserves has been adopted by the Society for Mining, Metallurgy, and Exploration, Inc. (SME) and is therefore strongly recommended to be used by members of this organization.

The Guide is recommended as a minimum standard for reporting Exploration Results, Mineral Resources and Mineral Reserves for public and private purposes. In terms of the Guide, Public Reports are reports prepared for the purpose of informing investors or potential investors and their advisers on Exploration Results, Mineral Resources or Mineral Reserves.

Transition into a new mobility: US National Academies perspectives

The trend towards electrification, especially in mobility, is a major priority in the European Union.  Electrical networks’ management, batteries’ technologies and raw materials  – e.g. Co, Li and REE, generally considered critical by the EU, US and Japan and lifecycle CO2 emissions of electrical vehicles are now core issues the European Union and the focus of intense research and development in Europe’s more advanced economies, e.g. Germany, Sweden, Finland and Norway (outside the EU but with close economic and geographical ties to the Union and arguably the country with the highest electric vehicles adoption rate).

Despite being home to the iconic Tesla and California’s long-term continuous push towards low emission vehicles, the US are (wrongly, possibly) perceived today as not being in the forefront of the transition towards new-technology vehicles. Yet, the theme is also being actively discussed, perhaps in a more (typically American) open and pragmatic perspective, a particular technology having not been elected.

The (United States) National Academies of Sciences, Engineering, and Medicine is organizing a study to assess technologies for improving the fuel economy of light-duty vehicles. The study committee will author a report identifying fuel economy technologies, estimating the potential cost of fuel economy improvements and the barriers to deploying technologies in the 2025 to 2035 time frame.

You are invited to participate in the second study committee meeting on July 16, 2018 from 1-5:30pm ET in Washington, D.C. If you are unable to attend in person, we invite you to register for the webcast. Government, industry and non-governmental experts will address the committee on its statement of task during this information gathering session.

For those able to attend, registration is needed: Registration

The (US) National Academies Press has also made available several publication on related issues:

  • Assessment of Fuel Economy Technologies for Light-Duty Vehicles.
    National Research Council. 2011.
    Washington, DC: The National Academies Press.
    https://doi.org/10.17226/12924.

    Various combinations of commercially available technologies could greatly reduce fuel consumption in passenger cars, sport-utility vehicles, minivans, and other light-duty vehicles without compromising vehicle performance or safety. Assessment of Technologies for Improving Light Duty Vehicle Fuel Economy estimates the potential fuel savings and costs to consumers of available technology combinations for three types of engines: spark-ignition gasoline, compression-ignition diesel, and hybrid.

  • Cost, Effectiveness, and Deployment of Fuel Economy Technologies for Light-Duty Vehicles.
    National Research Council. 2015.
    Washington, DC: The National Academies Press.
    https://doi.org/10.17226/21744.

    The light-duty vehicle fleet is expected to undergo substantial technological changes over the next several decades. New powertrain designs, alternative fuels, advanced materials and significant changes to the vehicle body are being driven by increasingly stringent fuel economy and greenhouse gas emission standards. By the end of the next decade, cars and light-duty trucks will be more fuel efficient, weigh less, emit less air pollutants, have more safety features, and will be more expensive to purchase relative to current vehicles. Though the gasoline-powered spark ignition engine will continue to be the dominant powertrain configuration even through 2030, such vehicles will be equipped with advanced technologies, materials, electronics and controls, and aerodynamics. And by 2030, the deployment of alternative methods to propel and fuel vehicles and alternative modes of transportation, including autonomous vehicles, will be well underway. What are these new technologies – how will they work, and will some technologies be more effective than others?

  • Review of the Research Program of the U.S. DRIVE Partnership: Fifth Report.
    National Academies of Sciences, Engineering, and Medicine. 2017.
    Washington, DC: The National Academies Press.
    https://doi.org/10.17226/24717.

    Review of the Research Program of the U.S. DRIVE Partnership: Fifth Report follows on four previous reviews of the FreedomCAR and Fuel Partnership, which was the predecessor of the U.S. DRIVE Partnership. The U.S. DRIVE (Driving Research and Innovation for Vehicle Efficiency and Energy Sustainability) vision, according to the charter of the Partnership, is this: American consumers have a broad range of affordable personal transportation choices that reduce petroleum consumption and significantly reduce harmful emissions from the transportation sector. Its mission is as follows: accelerate the development of pre-competitive and innovative technologies to enable a full range of efficient and clean advanced light-duty vehicles (LDVs), as well as related energy infrastructure. The Partnership focuses on precompetitive research and development (R&D) that can help to accelerate the emergence of advanced technologies to be commercialization-feasible.

  • Transitions to Alternative Vehicles and Fuels.
    National Research Council. 2013.
    Washington, DC: The National Academies Press.
    https://doi.org/10.17226/18264.

    For a century, almost all light-duty vehicles (LDVs) have been powered by internal combustion engines operating on petroleum fuels. Energy security concerns about petroleum imports and the effect of greenhouse gas (GHG) emissions on global climate are driving interest in alternatives. Transitions to Alternative Vehicles and Fuels assesses the potential for reducing petroleum consumption and GHG emissions by 80 percent across the U.S. LDV fleet by 2050, relative to 2005.

  • Overcoming Barriers to Deployment of Plug-in Electric Vehicles.
    Transportation Research Board and National Research Council. 2015.
    Washington, DC: The National Academies Press.
    https://doi.org/10.17226/21725.

    In the past few years, interest in plug-in electric vehicles (PEVs) has grown. Advances in battery and other technologies, new federal standards for carbon-dioxide emissions and fuel economy, state zero-emission-vehicle requirements, and the current administration’s goal of putting millions of alternative-fuel vehicles on the road have all highlighted PEVs as a transportation alternative. Consumers are also beginning to recognize the advantages of PEVs over conventional vehicles, such as lower operating costs, smoother operation, and better acceleration; the ability to fuel up at home; and zero tailpipe emissions when the vehicle operates solely on its battery. There are, however, barriers to PEV deployment, including the vehicle cost, the short all-electric driving range, the long battery charging time, uncertainties about battery life, the few choices of vehicle models, and the need for a charging infrastructure to support PEVs. What should industry do to improve the performance of PEVs and make them more attractive to consumers?

  • Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles.
    Transportation Research Board and National Research Council. 2010.
    Washington, DC: The National Academies Press.
    https://doi.org/10.17226/12845.

    Vehicles evaluates various technologies and methods that could improve the fuel economy of medium- and heavy-duty vehicles, such as tractor-trailers, transit buses, and work trucks. The book also recommends approaches that federal agencies could use to regulate these vehicles’ fuel consumption. Currently there are no fuel consumption standards for such vehicles, which account for about 26 percent of the transportation fuel used in the U.S.

  • Reducing the Fuel Consumption and Greenhouse Gas Emissions of Medium- and Heavy-Duty Vehicles, Phase Two: First Report.
    Transportation Research Board and National Research Council. 2014.
    Washington, DC: The National Academies Press.
    https://doi.org/10.17226/18736.

    Medium- and heavy-duty trucks, motor coaches, and transit buses – collectively, “medium- and heavy-duty vehicles”, or MHDVs – are used in every sector of the economy. The fuel consumption and greenhouse gas emissions of MHDVs have become a focus of legislative and regulatory action in the past few years. Reducing the Fuel Consumption and Greenhouse Gas Emissions of Medium- and Heavy-Duty Vehicles, Phase Two is a follow-on to the National Research Council’s 2010 report, Technologies and Approaches to Reducing the Fuel Consumption of Medium-and Heavy-Duty Vehicles. That report provided a series of findings and recommendations on the development of regulations for reducing fuel consumption of MHDVs.

  • Strategies to Advance Automated and Connected Vehicles.
    National Academies of Sciences, Engineering, and Medicine. 2017.
    Washington, DC: The National Academies Press.
    https://doi.org/10.17226/24873.

    TRB’s National Cooperative Highway Research Program (NCHRP) has released Strategies to Advance Automated and Connected Vehicles: Briefing Document. It is intended for state, regional, and local agency and political decision makers who are framing public policy making for these transformational technologies. The briefing document makes the case for taking action in spite of uncertainties and presents 18 policy and planning strategies that may be useful in advancing societal goals.

  • Liquid Transportation Fuels from Coal and Biomass: Technological Status, Costs, and Environmental Impacts.
    National Academy of Sciences, National Academy of Engineering, and National Research Council. 2009.
    Washington, DC: The National Academies Press.
    https://doi.org/10.17226/12620.

    TRB’s National Cooperative Highway Research Program (NCHRP) has released Strategies to Advance Automated and Connected Vehicles: Briefing Document. It is intended for state, regional, and local agency and political decision makers who are framing public policy making for these transformational technologies. The briefing document makes the case for taking action in spite of uncertainties and presents 18 policy and planning strategies that may be useful in advancing societal goals.

     

 

2017 diamond flows and what lies ahead

IDEX just reported on the 2017 Diamond Pipeline in the latest number of their online magazine. The 2017 update of IDEX’s conceptual map is an insert of a wider analysis of the current state of the diamond industry. It’s always worthwhile to read informed analysis; don’t miss it at http://www.idexonline.com/Magazine.html.

IDEX’s Magazine view is somber, considering 2017 as the calm before the storm. “The industry is heading into a period where the next few years will see some of the fundamental operating principles of the industry undergo changes“. The main industry drivers, in their opinion are the

  • industry financing,
  • tightening diamond supplies (apparently good news for me, as my company is active in the exploration and evaluation of diamond deposits especially in Angola),
  • lab-grown diamonds (synthetics) – our favorite villain since I remember,
  • compliance and the
  • data tsunami (with the potential to reshape the industry) – see our post of a few weeks ago on gold, gold, gold, crypto coins, blockchain and diamonds.

I am an optimist: changes are just a fact of life. There will be those that won’t adapt, others will. To be one of the laters, keep checking your markets’ pulse, keep changing.

gold, gold, gold, crypto coins, blockchain and diamonds

What happened, what may happen

For those interested in the yellow metal, the World Gold Council recently released two documents on the 2017 gold market events and on the outlook for 2018. We all now how forecasts work (I have just read and quote “if you have to forecast, forecast a lot“). Even so, the more you read and know, the better (provided you have a critical knowledgeable mind). The documents are available for download at WGC’s website or from here:

In another issue, a World Gold Council report states that:

  • Cryptocurrencies are no substitute for gold. In a summary of their report, WGC says”Bitcoin’s parabolic price rise was the big story of 2017 – putting the spotlight on the cryptocurrency market. While gold’s performance was a solid 13%, it was a fraction of the 13-fold increase of bitcoin by the end of the year.
    Some commentators went as far as to claim cryptocurrencies could replace gold. Cryptocurrencies may become an established part of the financial system. But, in our view, gold is very different from cryptocurrencies, as gold:

    • is less volatile
    • has a more liquid market
    • trades in an established regulatory framework
    • has a well understood role in an investment portfolio
    • has little overlap with cryptocurrencies on many sources of demand and supply. 

    These characteristics underpin gold’s role as a mainstream financial asset that will likely continue to resonate in today’s digital world.

Diamonds as an investment is no longer news; it’s been around since the oil crises of the seventies. There has been some evolution recently, related to the blockchain technology and crypto coins:

  • De Beers, has announced that “it is progressing development of the first blockchain technology initiative to span the diamond value chain and provide a single, tamper-proof and permanent digital record for every diamond registered on the platform.” Read more here, at IDEX.
  • The Israel Diamond Exchange (IDE) unveiled a new diamond-backed digital coin at IDWI (international Diamond Week in Israel). “The Israel Diamond Exchange and startup CARATS.IO have unveiled a new diamond-based crypto currency called CDC (Carats.io Diamond Currency), which they created together. The new coin was unveiled yesterday (Monday) at the International Diamond Week in Israel (IDWI – February 5 – 7, 2018). The trade in the crypto currency will be based on a new index, presented yesterday for the first time, which will reflect the daily trends in the diamond trade at the IDE. The index will be updated daily on big LED screens, which will be set at the Trading Hall. The index will reflect diamond prices set according to 14 parameters for comparing diamond prices”. To know more, just read here, at IDE’s website.
    According to Founder and CEO Avishai Shoushan, CARATS.IO’s extensive ecosystem of products will elevate the entire diamond industry. CARATS.IO is creating two separate cryptocurrencies, each backed by diamonds purchased on the Israel Diamond Exchange. One coin, called CUT (Carat Utility Token), will be used specifically in B2B transactions between eligible diamond traders. This currency will enable safe peer-to-peer transactions, altogether eliminating the need for financial intermediaries. The second currency, called CARAT, is meant for the wider market of financial institutions and digital currency investors. Both currencies will be backed by diamonds, with a market cap coverage of 25 percent, significantly reducing their speculative level of investment.“, in previous news.

Nova Edição do Curso sobre Avaliação de Jazigos e outros Activos Minerais

IST (FUNDEC – 21, 22 e 23 de Junho 2017) – Luís Chambel (Sínese) e Jorge de Sousa (IST)

O curso destina-se a engenheiros de minas e geólogos, estudantes de licenciaturas e mestrados nas áreas da engenharia de minas e geologia, gestores de empresas mineiras, analistas de bancos e empresas do sector financeiro com atividade no sector dos recursos minerais.

Para obter o programa do curso, clique aqui: programa-avaliacao-jazigos_jun2017.

A ficha de inscrição pode ser obtida aqui: ficha-de inscrição-avaliacao-jazigos_jun2017

Após um superciclo de expansão de produção (preços e volumes), a indústria mineral encontra-se numa fase caracterizada pela incerteza quanto às perspectivas futuras, por uma tendência geral de baixa de produção e acréscimo da volatilidade de preços. As decisões de investimento ou desinvestimento ou financiamento dum projeto de prospecção ou exploração de um depósito mineral são críticas em qualquer fase do ciclo económico; são especialmente relevantes em situações como as atuais.

Aquelas decisões baseiam-se, em última análise, na capacidade de avaliar corretamente os jazigos e minas, isto é, de estimar custos (OPEX e CAPEX), receitas e risco associados à mineração do jazigo com base nas características da mineralização (e.g. volume, teor e preço unitário da mineralização e suas distribuições espaciais) e do maciço (e.g. hidrogeologia, geotecnia) e nas condições operacionais e de mercado (atuais e previsíveis).

O curso tem como objectivo fornecer aos participantes as bases teórico-práticas necessárias para avaliar jazigos e outros ativos minerais. Com este curso, os formandos desenvolverão competências para calcular o valor de jazigos e outros ativos minerais, estimando, classificando e reportando os recursos e reservas de jazigos minerais aplicando padrões internacionais. O curso apresenta de forma interligada um conjunto de metodologias, conceitos e ferramentas úteis na avaliação de jazigos e ativos minerais, nomeadamente:

  • Modelo DCF (discounted cash flow)
  • Normas internacionais – NI – 43.101 e CIM (Canadá), PERC (União Europeia), Nações Unidas, SME (Estados Unidos).
  • Métodos quantitativos, estatísticos e geoestatísticos de cálculo de recursos e reservas.
  • Métodos de avaliação de jazigos e concessões.
  • QA/QC, competent/qualified person.
  • Avaliação de risco.

O curso é apresentado recorrendo a casos práticos de avaliação de jazigos e outros activos minerais, nacionais e internacionais.

Para obter mais informações, contactar luischambel@sinese.pt.

wrong, something is very wrong

RISK UNDERVALUATION IN MINERAL PROJECTS

Reporting to markets should (have to!) be complete, independent and competent.

Risk is a key factor; in most cases, along with commodity price, the most important variable defining a project’s value. The importance of a good estimate of the risk measure (the discount rate in DCF models) cannot be overemphasized.

Yet, something is wrong, very wrong:

  • In most cases (in a sample of 77 documents reporting pre-feasibility, feasibility studies and valuation exercises of operating assets), the magical discount rates used in DCF are 5% and 8%, accounting for 26% and 27% of the cases (10% accounts for 17%). In 75% of the analised cases, the used discount rate is ≤ 8%. Let’s say you are an investor, would you accept a lower than 8% rate in most mineral projects?
  • The 5% magical number is pervasive in gold projects. A new rule can almost be written; IF gold THEN 5%.
  • Reports include countless pages of technical minutia and detail of doubtful utility for the average investor; yet only a handful of them has any discussion or justification of the chosen discount rate.
  • Country risk is irrelevant; I will grant that the 77 sample is relatively small but the anecdotal evidence shows that the same risk is attributed to projects in the US and Canada or in Burkina Faso and Colombia.

Please bear in mind these are preliminary results; as more data is compiled, new trends may develop. Although I tried to have a random sample, diamond and gold projects may be overrepresented (20 and 21 out of 77, respectively).

I will present these and other results at SME’s Mining Finance Conference in NYC on May 1 and 2, a little more than a week from now. If you are attending, I would like to discuss in person the reasons behind this and how should this (can it?) be remediated – or shouldn’t reporting to markets be complete, independent and competent?

Being a member of SME and of the Society of Economic Geologists – SEG I will try to discuss this issue within these professional organisations. Your comments (in person or through online fora) are always welcome.

Current Trends in Mining Finance Conference, New York 2017

SME – Society for Mining, Metallurgy, and Exploration
5th Annual Current Trends in Mining Finance (CTMF) Conference
New York, April 30th – May 3rd, 2017

Managing through the Cycle,
Investing for the Future

SME_HORZ

Intended for senior executives and mining industry specialists, bankers, financial analysts, investors, portfolio managers, and engineers, the CTMF Conference bring influential experts together to discuss opportunities, current trends and issues that affect mining and project finance, investment, raising capital, and project management, smart use of data and technology to manage project costs and risks.

The New York Section of the Society for Mining, Metallurgy & Exploration is the host and organizer of the SME’s annual Current Trends in Mining Finance Conference. In the heart of New York (where else?), the CTMF Conference format encourages networking and discussions  with colleagues, fellow professionals and key experts – at the Sunday Dinner, breakfasts, breaks, lunches and evening receptions and workshops.

Read the 2017 Conference’s Agenda here.
Please note, schedule and content is subject to change.
To check for any updates, revisit the Conference’s website.
Register here. Questions, comments, suggestions: Tim Alch.

The organisation thanks Shearman & Sterling LLP, the host of the 2017 CTMF Conference again at its conference facilities in  Midtown Manhattan. We also thank the Government of Quebec as a returning as Sponsor of the Monday May 1st Lunch – a Senior Official from Quebec will be a Key Note speaker.

Quebec will  also host an evening reception on Monday May 1st at their offices in Rockefeller Center to which  conference delegates will be invited.
Quebec is also returning with a delegation of mining companies.

At the dinner on Sunday April 30th, 2017 Neal Rigby, PhD, CEng, AIME, MIMMM, Corporate Consultant (Mining) at SRK Consulting will be one of two Guest Speakers. The Sunday dinner – after two pre-conference workshops – is an enjoyable time to meet others, including members of the New York finance, investment and analyst community.

 SME also thanks the other sponsors including:

Newmont Mining Corporation, EnviroSuite, Dassault Systemes, SRK Consulting,
Ernst & Young LLP, Hatch Ltd., Matamec Explorations,
Nemaska Lithium, Abernathy MacGregor, Golder Associates,
BDO USA LLP, Agapito Associates and others

Contact Tim Alch if you have questions and or would like to join in the support of CTMF with these  and other leading firms. Start improving your ROI by registering before March 31st: REGISTRATION.

Registration includes breakfasts, lunches and receptions on Monday, May 1st and Tuesday, May 2nd. The dinner on Sunday, April 30th and workshops are separate fees.

Gold trends last year

For those that missed it, World Gold Council released a report a few days ago about the gold trends in 2016. World Gold Council report highlights:

  • 2016 was the second best year for ETFs on record. Global demand for gold-backed ETFs and similar products was 531.9t – the highest since 2009. Q4 saw outflows.

  • The gold price ended the year up 8%. Having risen 25% by the end of September, gold relinquished some of its gains in Q4 following Trump’s conciliatory acceptance speech and the FOMC’s interest rate rise.
  • 2016 saw a 7-year low for jewellery demand.bRising prices for much of the year, regulatory and fiscal hurdles in India and China’s softening economy were key reasons for weakness in the sector.
  • India’s shock demonetisation policy brought the market to a virtual standstill. An initial rush for gold following the policy announcement came to a swift halt in the ensuing cash crunch.

You may download the full report report here.

Updated editions of all Blue Books of gemmological standards and nomenclature on CIBJO website

The six CIBJO Blue Books are definitive sets of grading standards and nomenclature for diamonds, coloured gemstones, pearls, coral, precious metals, and gemmological laboratories. They are compiled and then are consistently reviewed and updated by the relevant CIBJO Commissions, whose members include representatives of trade organisations and laboratories active in the respective areas of the industry. In the almost complete absence of jewellery industry standards endorsed by the International Standards Organisation (ISO), the CIBJO Blue Books are the most widely accepted set of globally accepted standards.

The updated versions can be downloaded from the following page on the CIBJO website: http://www.cibjo.org/introduction-to-the-blue-books/.

For individuals who are not members of a CIBJO-member organisation, each individual download will cost 9.90 Swiss francs. All six Blue Books (Diamond Book, Gemstone Book, Pearl Book, Coral Book, Precious Metals Book and Gemmological Laboratories Book) can be downloaded as a single package at a discounted rate of 49.90 Swiss francs. For individuals who are members of an organisation that belongs to CIBJO, he or she is entitled to receive the CIBJO Blue Books free of charge. They should contact the organisation of which they are members to arrange delivery of the relevant Blue Books by email.

(excerpts from a FEBRUARY 13, 2016 CIBJO press release – the underlining is ours)