Diversified platform of mining specific strategies
Timeframe: 1-3 years
Exploration begins once a mineralized region is targeted. The mineral exploration phase involves the search for and discovery of mineral deposits through prospecting and advanced exploration activities. Geologists look for mineral deposits over wide areas using geological mapping, remote sensing, and geochemical and geophysical surveys. When areas of potential are found specialists drill and sample rocks (to test for and analyze the concentration/proportion of minerals or metals of interest). The exploration phase involves the most risk, but technical proficiency, responsible stakeholder engagement, and capital markets experience can help improve the odds of success.
Timeframe: Subset of Exploration
Discovery is a moment in time when exploration yields success. A discovery happens when drilling intercepts potentially economic mineralization (at this early stage this is often established by benchmarking against similar but more advanced deposits). Discovery is followed by more advanced exploration to define the size, geometry, and grade of mineralization. These characteristics help determine the potential economics of a project, while understanding the type and origin of mineralization help drive additional exploration success. At this stage, exploration drilling to provide representative samples ramps up, while still supported by other techniques such as geochemical and geophysical surveys.
Timeframe: 1-3 years
After a discovery has occurred and there is evidence that a location may contain potentially mineable mineralization, the resource definition phase is meant to delineate and quantify the mineral deposit with greater accuracy. It aims to convert the "discovery" into a "resource". More detailed drilling and extensive sampling is completed along with advanced geostatistical modeling. This phase culminates with an estimate of tonnage and grade referred to as a resource statement or Mineral Resource which is used to make a go/no-go decision as to whether to advance to a Preliminary Economic Assessment (PEA), or scoping study.
Timeframe: 1-2 years | Accuracy: +/-50%
Once a promising deposit has been explored, discovered, and a resource statement completed, the scoping phase evaluates the potential economic viability of the project. A Preliminary Economic Assessment (PEA) study, also called a scoping or order of magnitude study, uses basic data with minimal engineering involvement to estimate mine size, equipment, workforce, processing, and ESG requirements. Preliminary metallurgical testing is also conducted to ascertain potential recoveries of the targeted commodities. If the PEA is favorable, a Pre-feasibility Study is conducted to explore implementation options and evaluate economic potential with a greater level of certainty.
Timeframe: 1-3 years | Accuracy: +/-25%
When the scoping phase results justify further investigation and investment, it is followed by the longer, costlier, and more detailed feasibility phase which begins with a pre-feasibility study (PFS). The PFS is conducted to assess engineering requirements, implementation options for extracting and processing minerals, and related capital and operating costs within 25% accuracy. It is a critical step towards identifying areas that require further investigation. This is the earliest that a Mineral Reserve can be defined and is an important step in the overall mining opportunity assessment. The next step is a feasibility study and these stages can overlap.
Timeframe: 1-3 years | Accuracy: +/-15%
Once the PFS is completed and an economically viable option is found and selected, a Feasibility Study is conducted to provide a more comprehensive technical and economic evaluation of the project to within 10% accuracy. The study includes defined resources and reserves, extensive metallurgical testing (and pilot testing where necessary), and ESG considerations, and sets out the plans for the mine. If a decision is made to move forward, pre-construction begins. The team creates a detailed plan to construct a working mine and starts to hire contractors for front-end engineering and design (FEED). The permitting process also starts in this phase, or earlier, and can take years to complete.
Timeframe: 3 months - 1 year
Once a feasibility study has been completed and released, which demonstrates the technical and economic viability of a mining project, the financing stage begins. Financing a mining project will involve numerous parties, including strategic partners, offtakers, streaming groups, equity and credit providers. Experienced mining investors will conduct extensive due diligence on all aspects of the project in order to validate the development plan set out in the feasibility study, and to examine all potential risks and opportunities of the project. There are a variety of funding solutions available to companies including, debt, equity and royalty and streamlined instruments.
Timeframe: 1-3 years
Once economic viability is established and financing is in place, detailed engineering and construction begins: building the infrastructure and facilities needed to extract, process, and transport mined minerals. If the site is in a remote location - which is not uncommon - the process typically starts with roadbuilding, which enables processing plants, worker housing, and equipment to be brought in. Just as important, a company must recruit and establish a strong management team with the right skillsets and hire a large workforce ready for operations. Significant planning and efforts are be made to minimize environmental and community impacts. As this phase ends, there's a commissioning process that involves testing equipment, water systems, and performance testing to transition from construction to operations, along with a training transfer from the construction to operations group.
Timeframe: 1-5 years
fund strategies: RCF innovation
Although it may extend over decades, mining is a temporary use of land. Closure planning must be prioritized at an early stage of mine development to ensure an overall positive legacy. It is a fully integrated, dynamic, and iterative process that takes into account environmental, social, and economic considerations. Strategic closure planning and cost estimation is integrated into operational activities, based on defined principles, objectives, and a post-closure vision. The goal is to restore mined land back to a state that can support a range of post-mining uses, from biodiversity habitat to economic diversification.
*The video is part of a group of case studies created to illustrate our investment process. It is presented here to illustrate several tools used in the scoping phase. Past performance is not indicative of future results. There can be no assurance that operations or processes described in the video will continue, and such processes may change, even materially. The actual investment process for any or all of RCF’s investments may differ materially from the process described in the video.
Certain information contained herein relating to any goals, targets, intentions, or expectations with respect to Environmental, Social and Governance (“ESG”) considerations is subject to change, and no assurance can be given that such goals, targets, intentions, or expectations will be met. There can be no assurance that RCF’s ESG policies and procedures as described herein will continue; such policies and procedures could change, even materially, or may not be applied to a particular investment. RCF is permitted to determine in its discretion that it is not feasible or practical to implement or complete certain of its ESG initiatives, policies, and procedures based on cost, timing, or other considerations.
Statements about ESG initiatives or practices related to portfolio companies do not apply in every instance and depend on factors including, but not limited to, the relevance or implementation status of an ESG initiative to or within the portfolio company; the nature and/or extent of investment in, ownership of or, control or influence exercised by RCF with respect to the portfolio company; and other factors as determined by investment teams, corporate groups, asset management teams, portfolio operations teams, companies, investments, and/or businesses on a case-by-case basis. ESG factors are only some of the many factors RCF considers in making an investment, and there is no guarantee that RCF will make investments in companies that create positive ESG impact or that consideration of ESG factors will enhance long term value and financial returns for limited partners.
To the extent RCF engages with portfolio companies on ESG-related practices and potential enhancements thereto, there is no guarantee that such engagements will improve the financial or ESG performance of the investment. In addition, the act of selecting and evaluating material ESG factors is subjective by nature, and there is no guarantee that the criteria utilized or judgment exercised by RCF will reflect the beliefs or values, internal policies or preferred practices of investors, other asset managers or with market trends.
This material is provided for educational purposes only and should not be construed as research. The information presented is not a complete analysis of the mining landscape.
The opinions expressed may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Resource Capital Funds and/or its affiliates (together, “RCF”) to be reliable. No representation is made that this information is accurate or complete. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.
None of the information constitutes a recommendation by RCF, or an offer to sell, or a solicitation of any offer to buy or sell any securities, product or service. The information is not intended to provide investment advice. RCF does not guarantee the suitability or potential value of any particular investment. The information contained herein may not be relied upon by you in evaluating the merits of any investment.
Investing involves risk, including possible loss of principal.