Randgold’s Bristow on all-in sustaining cost vs cash costs, and the gold industry is bust at $1300

all-in vs cash

Photo: Miningglobal.com

Do you agree with Mark Bristow on the issue of all in sustaining cost (AICS) vs cash cost?

The gold mining industry was fundamentally broke at a gold price of $1 300/oz, Randgold Resources CEO Dr Mark Bristow said on Wednesday.Speaking to journalists at a media lunch, Bristow said the industry was unable to make returns at that low level of gold price range.

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Mick Davis and resource investing: 2

As promised, here is the second article on Mick Davis. Again, it is a great read for a little glimpse into the investing and business development side of the mining industry. This article focuses more on his current venture, X2 Resources and its development. Have a read and let me know what you think.

X2 Resources

Building another resource giant? Photo: X2 Resources

One of the best quotes about Mick Davis, the founder CEO of Xstrata, comes from former JP Morgan banker Ian Hannam who assisted with a number of transactions for Davis.

He said: “There are four people who claim they brought Billiton to London: [Brian] Gilbertson, myself, Adrian Coates [a well-known banker in London, then at HSBC] and Davis. The answer is – it was Davis. He saw the opportunity and managed to persuade Gilbertson that it would create a platform to build a new company to rival Rio [Tinto]”. Continue reading

Mick Davis and resource investing

I came across two interesting articles recently published on the South African mining news website Miningmx about Mick Davis, his past and a bit on his new venture, X2 Resources. Many of you might followed him at Xstrata and the subsequent merger with Glencore, or maybe you followed the listing of Billiton on the LSE and its merger with BHP. These two articles give quite interesting insight into the investor and business development side of the mining industry, worth a read for any geologist. The first of the two articles, written by David McKay follows.

New mining giant on the way?

New mining giant on the way? Photo: X2 Resources

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Make sure you’ve had your breakfast before watching this safety training video!

I had to re-post this video. It recently appeared on Australian Mining‘s website. It’s German, and from the 80’s… the video, that is. It is a bit long (9 odd minutes) but do yourself a favour and watch to the end. If ever there was going to be a forklift apocalypse, this is what it would look like. Enjoy!

Top 5 things to watch for at this year’s African Mining Indaba

Today was the first day of the 20th Investing in Africa Mining Indaba. This year will once again see the influential mining houses, government, labour and other stakeholders converge in Cape Town until Thursday this week. If you have any interest in the African mining industry, companies that operate in Africa or you are an African it will do you well to keep at least one eye on proceedings this week. After all, many, if not most African economies are dominated by natural resource-based contributions to GDP. Therefore, what affects mining in Africa will probably affect Africa as a whole.

Lighting in the air over SA mining

The Union Platinum Mine, South Africa. (Photo: Flickr Anglo American Feed)

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Breaking down the feasibility process: Should we wait until the final feasibility study to consider business factors?

So far we have looked at the scoping and the pre-feasibility phases of the feasibility process. Of all the possible scenarios considered during the pre-feasibility study, the best scenario is selected and only it is then taken forward as the foundation for the final (a.k.a. definitive) feasibility study. This scenario will include the best understanding of the geological model and the accompanying resource estimation, details around the mining and recovery method, to which then a more accurate costing estimation, market understanding and execution strategy is applied to answer the fundamental question: “What will it be?” What will this resource be? What will this investment be? This question is broad (covering all aspects of the project in as much depth as possible) yet singular in focus (all things considered, including unconsidered things!, is this a feasible investment?).

Sick wave!

It just seemed very feasible to include this awesome photo in this post!

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Breaking down the feasibility process: One simple graph that explains pre-feasibility

The feasibility study process is critical in mineral exploration as it is the best opportunity the project owner will have to define what the project could, should and will be. In my previous post, we looked at the scoping phase of the feasibility process and how it is responsible for answering the question: “What could the project be?”. The next phase of the process is known as the pre-feasibility study and addresses the question: “What should the project be?” This is arguably the most important study in the feasibility process for any organisation. I will explain why I hold this opinion, but let’s first define the practicalities of the pre-feasibility study.

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Breaking down the feasibility process: The Scoping Phase

The feasibility assessment process is important as it is the fundamental way in which project potential, and essentially, value is assessed and further more allows the quantification of risk associated with this value. Importantly, each step of the study process, from scoping and desk study phase through to final bankable feasibility, should incrementally and realistically add value to the project and so secure potential for return on investment. When the process is not well defined, adhered to, or critical decision gates held in low regard, value can either be destroyed or value can be misrepresented (inflated).

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Friday treat: Sit down chat and advice from Anglo ex-CEO

Rick Menell gives an interview and chats about the birth and development Anglo Vaal Corporation, how he became a geologist, his stint as a Wall Street banker, outlook on South Africa and some advice to young geologist. The interview is shared here as a play list of short videos. He is a 35 year mining veteran that headed the Anglo Vaal Corp and Teal Exploration amongst other things. There is a brief biography included below. Enjoy the video and the weekend!

‘Rick Menell “trained as an exploration geologist and worked as an investment banker with JP Morgan in New York and Melbourne. He also worked as an executive director of Delta Gold in Australia. He worked with Anglovaal Mining from 1992 – 2006, becoming CEO in 1999 and executive chairman in 2002 before his current position at Teal Exploration & Mining, Inc. He is also deputy chairman of Harmony Gold Mining Company Limited, Chairman of the South African Tourism Board, a director of the Standard Bank Group and Mutual & Federal, and chairman of Village Main Reef Gold Mining Company (1934) Limited. He is a director of the Chamber of Mines where he was president from 1999 to 2001. Richard Menell was appointed a Weir Group “non-executive director in April 2009. Richard was previously an investment banker with JP Morgan in New York and Australia and an executive director of gold producer Delta Gold in Australia. He returned to South Africa in 1992 to join the Anglovaal Group and was appointed chief executive of Anglovaal Mining in 1996 and executive chairman in 2002. He was president and chief executive of TEAL Exploration & Mining Inc from 2005 until 2008. He was also formerly chairman of Avgold Ltd (1996-2004) and Bateman Engineering BV (2005-2009) and director of Mutual & Federal Insurance Company Ltd (1996 -2010) and Standard Bank Group Ltd (1997-2011). Richard is currently a director of Gold Fields Ltd in South Africa and a senior advisor to Credit Suisse. He is a fellow of the Geological Society (London), and both the Australasian and South African Institute of Mining and Metallurgy.’

Geology and feasibility: 50/50 or 50% better?

When talking about feasibility studies and more particularly their failures, it is important to define what exactly a failure is. It is important for a number of reason but a particular one that comes to mind is that not knowing about, or not admitting, a problem or failure almost certainly leads to cost escalation later down the road. So how do you know when your feasibility study has failed? I am aware of the fact that in some circumstances it might be difficult to distinguish between feasibility study failure and project implementation failure but often the implementation and execution has its roots in feasibility problems.

The massive landslide at Kennecott Utah Copper's Bingham Canyon Mine occurred on April 11, 2013. Image courtesy of KSL

The massive landslide at Kennecott Utah Copper’s Bingham Canyon Mine occurred on April 11, 2013. Image courtesy of KSL

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