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Managing Expectations - From Buyer Beware to Buyer Be Aware

Peter Fairfield
Tuesday, March 8, 2016
First presented: 
AusIMM Project Evaluation Conference
Project Evaluation

This paper reflects on the author’s experiences in undertaking mining studies and reviewing mining projects and technical reports, particularly over the past five years, and the impact of recent changes in reporting standards and listing requirements pertaining to mining-related evaluation and valuation exercises. It also discusses contemporary changes in the expectations of the investment community and the implications for the role of the technical specialist in providing advice to such stakeholders.

Not for the first time in history, the resources industry has experienced a significant downturn after a period of strong, sustained growth in line with the traditional view of the cyclical nature of commodity markets. The resource industry is currently faced with capital austerity in the wake of projects ‘failing’ (not delivering to expectations). In response, the industry has experienced changes in investment behaviour (slowing of investment) and an increasing regulatory burden as stakeholders seek a greater understanding of mining project risks.

This paper discusses this response and uses case studies to highlight the key learnings (perhaps re-learnt) by the industry. It also discusses the challenges faced by technical specialists in communicating the results of technical and valuation studies to the investment community.

As investors seek to take advantage of the current stage in the investment cycle, the key challenge of the technical specialist is to effectively communicate the uncertainty in technical assumptions, risks and opportunities that drive project value.

Feature Author

Peter Fairfield

Peter Fairfield is a mining engineer with over 27 years’ experience.  He has strong technical and operational background, having held on-site roles and head office roles for 19 years in underground metal mines throughout Australia and the United States, General Manager Technical Services, Manager Mining and Senior Mining Engineer.  Peter’s experience includes providing technical and operational service and support, operations management, study management and preparing independent technical reports.  Peter has added evaluation and valuation skills during has eight years in consulting and has been a member of and led SRK multi-disciplinary review teams on a number of Australian and international mining projects across the base and precious metals commodities.

Principal Consultant (Mining and Project Evaluation)
BEng (Mining), FAusIMM CP(Mining)
SRK Melbourne
SRK North America