An article in the Mining Technology Newsletter: "Five Things to Know about Investment Mining!" "It is quite good. I think there are still some aspects that are worth supplementing and improving. According to my own work experience, the contents will be written out for the reference of mining investors. At the same time, attach the original text.
1. Mineral resources are owned by the state, and mining rights holders are only the right to use. Under certain new regulations, mining rights can be banned (such as the recent protection of mineral rights in the region). (It can be seen that the recent western gold incident - no mining in the reserve, the western gold 82 million gold "drifting")

2. Pre-investigation and census are venture capital investments. The characteristics of risk exploration are “three years without opening, and ten years of eating open.” Investigating 20 to 30 mineral rights, which lasted 3 to 5 years, invested tens of millions, and may be incomplete. Therefore, there must be preparedness in mind, sufficient investment confidence and clear understanding.
Similarly, if you are lucky, it may be that the first prospecting project will have a good harvest.

3. Within the mineral rights, the prospecting target area (geochemical comprehensive anomaly) on the tall and large is delineated, and it is still far away from finding large mines.

4. Mineral rights exploration does not meet the law of proportionality between investment and output. Before enclosing a scale ore body, the more prospecting projects, the more scattered the ore body becomes, and the more the mineral rights become impaired. Similarly, if there is a large ore deposit, the value of the mineral rights added with prospecting will increase geometrically.

5. If you find a big rich mine, encryption engineering is a value-added process. A resource reserve increases; then the resource reserve level rises (the confidence of the 331+332 resource is 1,333 with a confidence of 0.5~0.8).

6. Prospecting exploration has become increasingly difficult. 1/200,000 regional geology work discovered a batch of mineral deposits. 1/5 million geological work discovered a batch of mineral deposits. From 2000 to 2015, other industries entered large-scale mining and discovered a large number of mineral deposits. Mineral deposits. So, don't expect it to happen overnight.

7. The current water content in China's geological exploration report is much larger. The report states that the reserve of resources is not equal to the actual amount ascertained. On the one hand, the technical treatment in the specification will double or decrease the result; on the other hand, there is still a limitless construction...
In practice, if you find that there is a big difference, you have to circulate again.

8. In the current mineral rights assessment in the Chinese market, the assessed value does not equal the actual value. A resource reserve is unreliable; changing the evaluation parameter again will increase or decrease the evaluation value by a factor of two.
It also said that at present, China's mineral rights assessment is particularly confusing, and it is one of the most under-represented industries. The same mineral rights, and the survey did not reinvest, if the government transfers or resources charges, the assessment value will be very low; if the financing of listing, will score very high results.

9. The same feasibility study is also not a reliable investment basis. A feasibility study report is based on the survey report; on the other hand, feasibility study can be changed according to the requirements of the mining owner. The mining owner requirements are feasible and the project is feasible.

10. Open technology and processing conditions must be verified on the spot, and sometimes very different. The representativeness of a sample is not determined, but it is man-made.

11. It is not that the more minerals the better, only the higher the better, the better. Complex components, the development and use of metallurgical technology are complex, high cost, and reduce competitiveness.

12. Investment in mineral rights projects, prospecting prospects is also an important factor. If you find a big mine again, the returns increase geometrically.

13. Mine construction does not have to be in place once, and it must be constructed in proper phases. The first phase is based on the principle of less investment, quick returns, and recovery of investment costs. Otherwise, the investment is large, the cost of capital is high, the recovery period is long, and there are many uncertainties, especially the uncertainty of government management. Local tyrants do not say much.

14. Mining projects should be far away from various government management areas, such as protected areas (natural reserves, water conservation areas, animal and plant protection areas, special protection areas), military control areas, scenic spots, and basic farmland areas, population centers, and special areas. Religious areas, Beijing-Tianjin-Hebei area, international tourist areas (Hainan), etc.

15. There are currently some mineral rights projects. Prospecting rights enclose the project (same mining right owner) with the right to mine, do not invest in mineral exploration right (difficult to continue, may be lost) that expires immediately, and do not invest most of resources outside the mining right. Amount of tantalum mining area (some provinces are difficult to merge).

16. Do not believe that foreign countries are full of gold, foreign mining investment risk is much greater than domestic. Foreign mining investment success cases are very few.

17. Mining companies should not completely believe in the geological team. Therefore, the mining company must not only configure technical personnel who are honest, reliable, and responsible, but also need to deploy some skilled and experienced technical personnel.

18. The mining market is divided between booms and depressions and changes over time. This may be the best time for mining investment.
 
[With the original text]

Real experience! 15 things you must know to invest in mining!
This article was actually written to myself and the team members of Kejian Mining Company. As for the Zhejiang bosses who currently invest in the mining industry, although I know you should know, I don’t know if you know or don’t know. Actually, you don’t know or really know, I don’t know.
1. Whether in China or abroad, the goal of a mining company is to discover large mines and rich mines. If not, it should be called a mining processing plant or a financial investment (speculation) company.
2. As the difficulty of prospecting continues to increase, the cost of prospecting continues to increase, and the efficiency and effectiveness of prospecting are continuously reduced. Therefore, in terms of risks and rewards, mineral exploration and development must be effective for investment and even during economic recession. Large-scale mineral deposits that can also be profitable are transferred, that is, when the other conditions are the same, the higher the grade of ore, the lower the mining cost the better.
3. According to the current level of technology, it is expected to discover five ore points from every 100 mineralization anomalies, of which only one of these five ore points is expected to become a mineral deposit with industrial mining value.
4. In a region, the total number of large, medium and small deposits is expected to be approximately 1:10:100.
5. It takes an average of 5 to 8 years to survey a large-scale metal deposit, and it takes an average of 2 years for the construction of a mine. The average cost does not say anything, anyway, ten million yuan as a unit.
6. At the time of ore prospecting, the proportions of the cost allocation for each phase are approximately - grassroots exploration: late - feasibility study: mine exploration = 20%: 30%: 50%
From planning to prospecting to mine construction to development, the cost of each step is getting higher and higher. If you have prepared a dollar for prospecting, please prepare at least 5 more for mine construction before making a profit.
7. Mineral products are divided into three types: raw ore, concentrate (after beneficiation and processing) and metal ingots (by smelting and processing).
The vast majority of the world’s major multinational mining companies are mainly engaged in the sale of one or more mineral raw materials in the form of concentrates. The last large multinational corporation that integrates mining and smelting operations—Noranda, Canada, was established in 2005. The highest price rise for mineral products was sold out due to operational difficulties.
8. The industrial indicators of the deposit mainly include the two aspects of ore quality and mining technical conditions.
Ore quality indicators include ore component content, ore industry type and technical grade, ore physical properties.
The technical indexes of ore mining include the recoverable thickness, the thickness of the rejecting stone, the ore-bearing ratio, the stripping ratio, and the minimum standard for mining.
Specific indicator options, depending on the type of deposit, the specific indicator values, due to different deposits.
9. Boundary grades, industrial grades, block grades, and mine grades are all important indicators of ore quality.
However, from the perspective of geological exploration, the most basic evaluation of a deposit is the critical grade of the deposit, that is, the grade of ore when the deposit is mined without compensation (market price of mineral product = production cost).
How to determine the cost of production?
The production cost of mineral products formed by a unit ore includes the costs of mining, transportation, management, non-operating expenses, mineral processing fees, and smelting and processing fees. ——If the mineral products are raw ore, only the first four items are included. If the mineral products are concentrates, the first five items are included. If the mineral products are metal ingots, all six items are included.
The market price of mineral products formed by a unit ore is not simply equal to the market price, and factors such as the recovery rate, ore recovery rate, smelting recovery rate, and metal content in mineral products should also be included in the discount. Why? The reason is simple. No technology can extract and sell every gram of metal in the mine.
However, from an investment point of view, the occupation of funds requires interest and profits. Therefore, the assessment of deposits should be based on the economic grade, that is, the market price of mineral products = (production cost + loan repayment and profit + minimum operating profit) The ore grade.
In general, the minimum operating profit rate is 15%, and the economic grade can be double the critical grade. The critical grade is to investigate the surrounding mines and look at the market.
10, when the local production is cheap and the price of metal is low, it is necessary to start looking for ore; when the metal price rises, it should start mining construction or expand production capacity; when the price rises to the top, the scale of production and profits have reached the maximum.
The Zhejiang people, on the contrary, do the opposite when the mineral rights auction price is the most expensive. When the metal demand is weak and the price falls, the mine is put into production.
11. Do not trust any data on ore grades, reserves, assessments, etc. provided by the person who sells the mineral rights to you. How large was the flood in South China in 2006, and how powerful the water in the Chinese mineral rights market was. It is imperative to take a look, measure, and check the reliability of mineral reserves, feasibility of construction conditions, feasibility of mining and processing technologies, market feasibility, environmental feasibility, and economic feasibility.
At present, projects launched on the Chinese mineral rights market are mostly inferred resources (333) or D+E reserves. The geological work level is actually very low, and the reliability of resources and the recoverability of reserves are all very poor—according to current mineral resources. Reserve calculation standards, (333)-class reserve accuracy of only 30% to 50%, D-class reserve accuracy of 40% to 60%, E-class reserve accuracy of 30% to 40%. - Therefore, when participating in the auction transfer of such projects, it must be multiplied by a risk factor in the assessment.
Baxter and Chisholm recommend a rough estimation formula for the value of exploration rights for mineral rights projects with such unreliable grades or tonnage values:
The value of prospecting rights in an exploration area = predicted metal reserves × metal prices × (0.1% to 1%)
I suggest using a lower limit of 0.1%. For example, for a gold mine, the estimated resource is 2 tons and the market price is 150 yuan per gram. The value of the prospecting right of this gold mine is 300,000. That is, if you go to auction or bid, you can bid up to 300,000.
However, due to the influx of hot money and the owners of Zhejiang and other places on the market, the price of mining right for exploration rights has soared.
- Don't worry, real investors will not care about missing one or two such "opportunities." You know, winning prospecting rights does not mean winning a mine. It is just the beginning of a long journey of investing in mineral exploration, mining rights, and building a mine. What's more, many exploration rights can only be legally applied only for a few hundred thousand dollars.
The standard for the use of exploration rights stipulated in the current “Regulations for the Management of the Registration of Mineral Resource Exploration Blocks” is: 100 yuan per square kilometer for the first year to the third year, and 100 yuan per square kilometer annually for the fourth year. Yuan, but the maximum must not exceed 500 yuan per square kilometer per year. According to the National Solid Mineral Prospecting Bulletin of the Ministry of Land and Resources, there were 8,751 exploration rights projects in the country in 2003, with an average registered area of 16.25 square kilometers and an average of 2,525 yuan for the use of exploration rights.
12. The deposit must have a certain scale to have economic significance. What is a "meaningful deposit"? The standard of the US Geological Survey in 1994 was at least 2 tons of gold, 85 tons of silver, 50,000 tons of copper, and 30,000 yuan respectively. Tons of lead and 50,000 tons of zinc. This standard is slightly higher (especially for base metals) for China's private investment in mining. I propose to adjust the value of the in-situ metal (ie, metal reserves × metal prices) of precious metal deposits such as gold and silver to exceed RMB 200 million. The in-situ metal value of copper, lead, zinc and other barium metal deposits exceeds 2 billion yuan.
13. The environmental problems caused by mining have become more and more significant. Every mining investor must have sufficient budget and emergency preparedness for changes in environmental protection policies. Introducing the most cost-effective method to solve the problem of mine wastewater and heavy metal pollution: to pass mine wastewater through artificial or natural fracture channels through carbonate-bearing rocks near the ore body. The reason is very simple. Most mine wastewaters are acidic. Carbonate-containing rocks, such as limestone, are alkaline. Acid-base reactions are neutral and pollution is naturally small. It is also good to let the wastewater flow through a small constructed wetland. As long as we pay enough attention and proper methods, environmental protection is actually not costly, but it can produce money.
14. With regard to the fluctuation of market demand and price of mineral products, there are various predictions on the market, telling a small story:
When the last round of global mineral prices rose sharply, that is, more than two decades ago, two professors of economics in the United States had an argument. One thinks that the mining products on the earth are getting less and less, and the price will certainly rise. One thinks that prices will increase. To a certain extent, people will be forced to use cheaper alternatives. With less demand, prices will naturally fall. So they took a bet and took out a sum of money each and bought an average of five metals, such as copper, lead and zinc. After ten years, the value of the goods in the hands of the company was in line with his prediction. The loser had to make up for the difference. . - The result is the one who predicted the price drop. The mining industry has ushered in a 20-year price drop.
Demand for common industrial minerals such as iron, copper, lead, zinc and aluminum in developed industrial countries such as the United States, Japan, and Europe has entered the cut-off period during the last wave of mineral price fluctuations. Currently, the supply of raw materials has mainly depended on the recycling of waste metals.
However, the big demand for mineral resources, such as China and India, which has raised the price of the world's mineral resources since 2002, will soon follow this path.
15. In the past two years, the prices of various mineral products have been rising or falling several times within a few years, rising or falling by 20% to 40% within a few months. I believe we have given everyone a deep impression. The price of mineral products is such that there is a strong periodicity, and as the global financial capital's involvement increases, this fluctuation has become larger and more frequent.
Therefore, if you want to establish a firm foothold in such storms, the only magic weapon is to be as firm as a rock - that is, your mine is bigger than others, richer than others, better than others, and your cost is always lower than others!