Mining Mindset Clips: Guidance for Project Financing Amid Price Swings - Myroslav Chwaluk

Ultimately, mining projects are going to be judged on whether they make money or not. Because if you actually develop an asset, is the price you can sell your material for more than what it cost for you to make it?

So if you are trying to raise capital and you are using very aggressive assumptions to try and find a project - that's where we can advise. And I think it's incumbent upon qualified persons as well to advise, to make sure you're using reasonable prices for your commodity price assumptions in your future.

That gets interrogated all the time. We have a lot of experience - companies want to make their project look as good as possible, and we want to make sure that they're able to not get in trouble with the regulator, and that shareholders don't come around and say "you sold this as a bill of goods in the future that wasn't true."

We know through our dealings with the regulators where they're going to press on commodity price assumptions, looking at market metrics and expert commentary.

But at the same time, that's also a very important qualified person's role. A lot of times qualified persons will outsource that - like if they're at a feasibility or economic study stage - to some sort of other expert on pricing, because a geologist might not be the best person to assess the price of cobalt in five years.

Now, when it's an operator, the key is just making your costs as low as possible in a low commodity price environment. If the price was high at the time they made their investment decisions and then at the operating time the price is low, they have to lower costs - whether it's putting their mine on care and maintenance. And then that could have a series of effects on their debt, all sorts of effects. But that's an operational decision to lower your costs. And I think that's the principal concern.