Mining - Industry

• It's highly risky
• Requires huge upfront capital expenditures
• Mines tend to be in remote locations
• Mines often tend to be in countries with significant political  & social risk (tax changes, social backlash, etc.)
• Miners are price takers - swings in prices can greatly impact the business

Mining Company Valuations

• The valuation of a mine can move rapidly based on some key drivers 
• How much ore is left to mine (mine life)
• % of valuable ore per ton
• Cost to mine a ton of ore
• Market price of the metal being mined

• The cost of energy has a huge impact on the mining industry
• One of the largest mining costs is energy - to move rock, crush it, drill, etc.
• For some ores the cost of energy can be 50% of the cost!
• The mining industry has become less labor intensive over time as technology has improved

Other Mining Tidbits

• As mining technology and metals prices have increased, deposits that were historically unprofitable can now be mined 
• Over time the average grade of mines goes down as easier-to-mine deposits are depleted. This requires prices to go go - so the higher costs associated with mining lower grades can be recovered
• Over time the timeline to get a new mine active has increased dramatically: all of the preparations, studies, permits, approvals, etc. can take 10-20 years