Mining Mindset Clips: Scaling Up – Long-Term Challenges for Mining Companies

Ian Pearce:
One of the key issues many mining companies face is relying heavily on Net Present Value (NPV) as a driver. While NPV is an important metric, as scale increases, projects often appear more attractive. However, with increased size comes greater risk. For me, a more prudent approach is step-by-step scaling or gradual growth.

Two factors significantly impact our operations, which we can’t control. The first is the ore body itself. Nature provides the ore, and it is what it is. If the grade is high, that’s great, but if it isn’t, you can’t change that. This is a major uncertainty for mining. The second major uncertainty is metal prices, which have a massive effect on the business. Navigating these two factors is critical.

Flexibility is essential. You need to adapt your plans and understand how to adjust them, particularly in a downturn for metals. For example, during a downturn, you may need to push back or adjust production plans. This requires planning ahead, ensuring you have access to capital. You might achieve this through balance sheet management, such as having a revolver or debt structure for quick access to funding. Alternatively, when metal prices are high, consider accelerating some of your work to offset potential costs during unfavorable periods.

Another key focus is exploration. The moment you start mining, the ore body begins to decline. Replacing depleted reserves and resources is a critical, capital-intensive task. This cannot be treated as a routine budget item—it requires a committed, campaign-based approach.

Anya:
Yeah, that makes sense.

Ian Pearce:
Exactly. Long-term success in mining depends on balancing risk, flexibility, and ongoing investment in exploration to sustain and grow operations.