Changing times for Juniors

Delegates from the junior mining industry sector were given a fast paced run through on the A-Z of exploration and mining by MSA Group’s Managing Director Keith Scott at the Junior Indaba pre-conference seminar earlier today. 

Highlights of the session revealed fund sourcing alternatives, from the rise in private equity investment, streaming finance, to the more intriguing crowd sourcing option.

Low commodity pricing has seen bulk commodities taking the lion share of exploration spend. However with the onset of urbanisation and wealth creation in India and China, it is predicted that by 2050 there will be an additional 1.3 billion urban residents, and a significant rise in demand of iron and coal. 

World industry codes are prescriptive of juniors to be highly vigilant in the management of datasets, and to ensure that redundancy levels are put in place right from the start of any project, but there is an industry call for the codes to be more specific.

“Environmental and social plans are vital, and if implemented early on in project plans, will save juniors money, by avoiding significant delays and opportunity costs,” mentioned Scott.

For the junior sector, conversion rates from discovery to a mine are relatively low at1:1,000, coupled with the time required for prospecting, design to development taking up to, in some cases, 11 years, it is highly unlikely to discover and develop a mine in the same cycle. 

Scott reiterated that there have been significant changes for Juniors:

  • “There is an increase, in developed economies, in the recycling of metals, up to as much as 40% in platinum;
  • the global change in consumer demand has seen a shift from copper and optical cables, to Wi-Fi;
  • the use of technology is a major player in the dramatic reduction of operational costs;
  • the hunt to store and produce power is a driver that could revolutionise this industry, and as such fracking is fast becoming an industry trend, with increased demand on photovoltaic systems (solar panels). Since 1995 photovoltaic system production costs have reduced significantly from $7/watt down to today’s cost of a mere 50c/watt in power production;
  • improved skills and operation costs are evident in the shift towards employing contract miners, whilst burgeoning social and environmental issues are evident with the increase in artisanal mining in some African states;
  • beneficiation in-country is a major theme, opening up opportunities, yet in some instances difficult to deliver, for example, trying to produce steel cheaper than we can import it.

“The bottom line is that we are seeing the creation of factors for the next bull market, and juniors need to position themselves to take advantage of the current opportunities”, stated Scott.