Why the Black Box
“I’m just comparing numbers and have quite a bit of experience, reading FS/PFS etc. since a few years, but sure I have to trust the official numbers and I know how many will fail / are already failing; it’s for sure a black box in a few parts until they really reach production, hopefully on time and on budget.”
The preceding quote from a recent conversation with an experienced industry investor stuck in my mind. He asked my opinion of a single-project company with an underground gold mine project in South America.
I took a quick look at the project’s feasibility study (FS) and found major problems. I suggested he should dig a bit deeper here and there; do some benchmarking, and consider the unrealistic construction schedule. He made the statement quoted above and went forward happy with his investment.
What our friend described as a “Black Box” is a series of engineering studies that span the gulf between discovery of a mineral deposit and a profitable mine.
Done correctly, the studies present an accurate picture of the economic potential for a mineral deposit. Done incorrectly, the studies might portray a hopeless deposit as a great bonanza, or disguise a great mine as a lost cause.
This blog is your key to the Black Box. I’ll post tools, information and opinions to help investors look past the lipstick on the pig, or to find the diamond in the rough. Pardon my clichés, I can’t help it.