Mining Industries and other Industries
The mining industry is involved in the extraction of precious minerals and other geological materials. The extracted materials are transformed into a mineralized form that serves an economic benefit to the prospector or miner. Typical activities in the mining industry include metals production, metals investing, and metals trading.
Mining assets can be divided into two main categories:
Projects
Projects in the mining industry can be broken down into the exploration and feasibility stage, and the planning and construction phase.
Exploration and Feasibility:
The purpose of exploration is to find ores that are economically viable to mine. It begins with locating mineral anomalies, after which discovering and sampling confirms or denies that there is a find. It can be further proven through drilling programs and resource definition.Planning and Construction:
Once a potential mine is proven to be viable, the planning and construction phase begins with applying for and obtaining permits, continuing economic studies, and refining mine plans. Infrastructure development also takes place at this stage as mines are often located in remote areas that require construction of roads and electricity.
Operating Mines
Once the operation is ready to begin, the asset officially becomes an operating mine. During this phase, the ore is extracted, processed, and refined to produce metal. This section forms the bulk of the focus of the financial model for an operating mine. Once all the ore has been extracted, the mine closure process begins, which can last for several years. The process includes clean-up, reclamation, and environmental monitoring.
Mining Industry Reserves and Resources
A mining company’s main assets are its reserves and resources, which are the ones that contain economic materials that are viable to mine. It is important to be able to read a reserve and resource statement and understand what information needs to be pulled from it to make the financial model.