Smart Investment Strategy in Mining for Startups & On-the-Go
Reports that present broad, non-specific promises about mineral enrichments that are not yet economically viable at current prices might come across your desk. Drilling and exploration activities planned and executed without sufficient experience or theoretical knowledge of ore types may fail to deliver results. Misinterpreting all this data can lead to misguided startup or investment decisions, wasting more resources and time without realizing the mistakes being made.
"Sunk cost fallacy"
The sunk cost fallacy refers to the tendency for people to continue an endeavor because of previously invested resources (time, money, or effort), even if it is no longer viable. This fallacy stems from the difficulty people have in disregarding past investments. It leads to emotional rather than rational decisions. Rational decision-making should consider only future costs and benefits; past expenditures should not influence the decision. A well-known example is the continued investment in the Concorde project by the UK and France, despite significant technical and economic challenges, until it was eventually deemed commercially unsuccessful and retired in 2003.
Potential
Official claims made about 30 years ago suggested a potential of a few hundred tons of gold (Au) in Türkiye, and it was believed that no fish lived below 200 meters in the Black Sea, rendering our northern waters seemingly worthless. However, more than 500 tons of gold have been produced in these lands since the Republic’s establishment, and current publications indicate dosens times larger potential. Hydrocarbon (gas) reserves were discovered 1,400 meters below the seabed at a depth of 2,100 meters in the Black Sea. For those who believe the potential has only recently been realized, it is often observed that mining relies heavily on fate and luck, with fortune favoring the brave investor who is willing to pay the price.
“Know-how” is crucial for discoveries. Many companies are unaware of the commodity potential in their licenses, and successful examples, more visionary than the Roman Empire, perhaps even smarter.
Public Offering
With rising interest rates, mining companies find going public appealing to create easier access to capital and increase equity. Mining requires the interpretation of many disciplines under varying conditions. The valuation process for stock exchange listing and the periodic obligation to inform the public, as well as reliable data interpretation for license transactions, are critical. While obtaining credible and reliable reports and accrediting professionals who sign off on these data is not easy, it is possible.
Growth
The chances of a mining investor mastering all this technical information are slim; hence, the sector appears daunting to investors. Unlike other sectors, mining involves numerous parameters in profitability calculations, from production economy to national governance. Therefore, minimizing the risk of errors in decisions regarding obtaining mining licenses or projects is crucial. Vague answers to the question “Whom, what, and which report to trust?” are the biggest obstacles to the sector’s healthy growth. Only a few companies are on a growth trajectory; not all who appear successful truly are.
Protection From Fraud
Many nations have established organizations within a corporate framework by adopting widely known reporting standards like JORC, CIM and UMREK under the CRIRSCO umbrella. These organizations (NROs) aim to protect mining investors and stakeholders by publishing codes (JORC, NI 43-101, UMREK). Despite accrediting the professional competence and publication standards of these reports, it is impossible to monitor all data collection and publication. Deciding with the help of experienced personnel or independent consultants who will read the reports and data related to your project will protect you from many technical frauds.
Ethics and Transparency
With today’s technology and easy access to information, understanding the origins of ore deposits and creating accurate operational and processing plans is no longer a privilege. This rapidly accessible culture of communication enhances mining’s contribution to the international economy. Unfortunately, information pollution and the inability to control information are significant disadvantages. Professionals who will obtain, read, or create reports must guide the sector with principles of ethics and transparency, attracting more investors.
Loyalty
We were all students once. Professionalism should be a title acquired during one’s education. As paid internship programs become more common, the number of ready potential professionals or expats you can integrate into your business with minimal investment will increase. At this stage, let the juniors enjoy the taste of competition.
Progress
Mining investments, which are just outcomes based on interpretations until they regularly generate profit, should progress by setting technical goals for each department. As you achieve these rational goals, your motivation will increase, and you will become aware of what you are doing. Seeing numerically where you are on your strategic path will provide unique management ease.
Commodity price targets can help you retain licenses with resources you currently deem uneconomic. Without any additional action, achieving your target prices can turn these resources into reserves, yielding economic returns from your license.
Incentives
Accelerating permits to bring resources into the economy of nations will also increase the number of investors. As the number of projects increases, ensuring employment continuity will enhance quality across all mining sector departments, from occupational safety to ore processing. Increasing the number of personnel will expand the mining family and, by economically reaching large masses outside the sector, contribute to mining harmony with public.
Subjects discussed in this article may overlap with your mineral exploration, modeling, mining operation and business development issues and may provide solutions for those. However, remember that various factors specific to your business may bring about different challenges. Therefore, seek support from expert consultants to evaluate all data together in order to convert potential into profit most efficiently.
Should you have any questions regarding the articles or consulting services, please don’t hesitate to get in touch with us.
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