An introduction to Resources

When I look at a company in the resources sector, I carefully consider the quality of the resource that it's working on. Critically, I look at the scale and the grade of the resource, as well as the stage of its delineation.

Understanding where a company is on the value curve is central to understanding the valuation of a company.

Exploration isn't limited to finding more tons of ore, it's also about improving the understanding of each of those tons of ore. We will refer to the finding of the ore as expanding the envelope of mineralization. Once you've defined your envelope of study or your envelope of mineralization, you've got a kind of volume of ore.

Then delineation and de-risking is associated with better defining the quality within the parameters of each of those terms, within that volume of mineralization.

Can it be extracted? Is it in the inferred category? Is it in the measured or indicator category? How close is your drill spacing? What stage of delineation has it got to? This is critically important from the preliminary surveying.

At what point can you say that you've made a discovery? Do you know that this is going to be a mine? Companies get into all kinds of difficulties in terms of the weight of their valuations as it goes through the varying stages of the necessary feasibility studies (from the inferred resource to the bankable feasibility study, to a construction decision.)

You may not yet understand the requirements of what is precisely involved in the development of a mine. There are many intricate factors: how to handle the data, the team, the cost, the time associated with the development, or why they take so long, why they're so expensive and why they're so important.

I'll be looking at some of the factors that go into these considerations.