Clearing the Clutter: Mining Research, the NI 43-101, and Due Diligence
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Clearing the Clutter: Mining Research, the NI 43-101, and Due Diligence

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The following content is sponsored by Prospector Portal

Mining Research NI 43-101

Mining Research NI 43-101

Clearing the Clutter of Research: NI 43-101 and Due Diligence

Mining companies offer the potential for great investment returns, but they also carry many risks because of the complex science behind mining and mineral exploration. This complexity can deceive, so it is important to have standards on how companies report the technical data.

This infographic comes to us from Prospector Portal and takes a look at the events that led to the creation of the the NI 43-101, and the variety of information a mining project generates.

Why Does Mining Research Matter?

Bre-X and the Creation of the NI 43-101

The 1997 PDAC was the peak for one mineral exploration company, Bre-X. The annual event in Toronto serves as the gathering point for the global mining industry to raise capital, sell services, and highlight successes. It was there that Bre-X received an award for finding one of the largest gold deposits in the world, the Busang gold deposit in Indonesia.

Soon after the conference, Bre-X’s exploration manager fell to his death from a helicopter. There was mounting evidence that the junior’s project was a hoax and that the company’s geologist salted samples with gold from other sources.

In May 1997, the Toronto Stock Exchange (TSE) delisted Bre-X, vaporizing $3 billion in value as the company’s shares became worthless. The fraud deceived investors and undermined confidence in financial markets.

The TSE and the Ontario Securities Commission established the Mining Standards Task Force. This task force recommended stricter disclosure of drill results to ensure accuracy and a requirement to have a qualified geoscientist back up the technical data.

These recommendations culminated in the creation of the National Instrument 43-101 Standards for Disclosure of Mineral Projects.

How the NI 43-101 Can Answer Questions

Understanding the Due Diligence Process

Along with providing clear definitions for mining terms, the NI 43-101 outlines the necessary information for the technical reports in several sections. Each section can help to answer some questions that could arise when researching a company.

  1. Accessibility, Climate, Local Resources, Infrastructure, and Physiography:
    Is a mining project logistically viable at this property’s location?

    This portion of the NI 43-101 describes the topography, elevation, and vegetation around the property, along with the means of access, proximity to a population center, and the nature of transport to and from the site. In addition, the report can contain potential climate impacts on the length of operating season, and the availability of power, water, and personnel.
  2. Property Description and Location:
    Are there any potential ownership or issuance problems with the property?

    In this section, you will find information about the location and area of the property, type of mineral tenure, and the company’s ownership along with any obligations to retain the property. This section must also include any other risks that can affect access, title, or the right and ability to perform work on the property.
  3. History
    What is the property’s history of development and production?

    The history of the project outlines prior ownership and changes of ownership of the property, along with the work and results of previous exploration and development work at the property. Companies include historical mineral resource and mineral reserve estimates and any past production from the property.
  4. Drilling
    What kind of drilling will take place, and what are the results?

    This section includes the type and extent of drilling, procedures followed, and a summary of results. These factors could impact the accuracy and reliability of the results.
  5. Mineral Resource Estimates
    How are the mineral resource estimates derived, and what factors are affecting those estimates?

    This section outlines the key assumptions and methods used to estimate mineral resources. There is a report of the individual grade of each metal or mineral, along with relevant factors used to estimate this. There is also an outline of any external factors that affect mineral resource estimates such as taxation, environmental, or political.
  6. Economic Analysis
    What is the economic forecast for this property?

    This includes any economic analysis for the project such as cash flow forecasts, net present value, and internal rate of return, along with summaries of taxes, royalties, or other interests applicable.

Mining and mineral exploration companies regularly disclose NI 43-101 reports as new information comes in. Management will file any material information on a system called SEDAR. However, SEDAR is an older format that makes the process difficult to search for specific information.

Clearing the Clutter to Know Your Risks

There are many factors that affect an investment decision, especially in the mining industry. This complexity can lead to volatile returns as one of the many variety of factors can affect the outcomes of a mineral project. The first step in understanding these risks is to know where to find the information in the NI 43-101.

“People aren’t allowed to just calculate resources on the back of an envelope anymore…You look at the resource boom we’re going through. The companies that don’t follow the rules, they stand out.”
– Maureen Jensen, Former Chair of the Ontario Securities Commission, 2007

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Visualizing the Global Silver Supply Chain

Nearly 50% of global silver production comes from South and Central America. Here’s a look at the global silver supply chain.

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silver supply chain

Visualizing the Global Silver Supply Chain

Although silver is widely known as a precious metal, its industrial uses accounted for more than 50% of silver demand in 2020.

From jewelry to electronics, various industries utilize silver’s high conductivity, aesthetic appeal, and other properties in different ways. With the adoption of electric vehicles, 5G networks, and solar panels, the world is embracing more technologies that rely on silver.

But behind all this silver are the companies that mine and refine the precious metal before it reaches other industries.

The above infographic from Blackrock Silver outlines silver’s global supply chain and brings the future of silver supply into the spotlight.

The Top 20 Countries for Silver Mining

Although silver miners operate in many countries across the globe, the majority of silver comes from a few regions.

RankCountry2020 Production (million ounces)% of Total
1Mexico 🇲🇽 178.122.7%
2Peru 🇵🇪 109.714.0%
3China 🇨🇳 108.613.8%
4Chile 🇨🇱 47.46.0%
5Australia 🇦🇺 43.85.6%
6Russia 🇷🇺 42.55.4%
7Poland 🇵🇱 39.45.0%
8United States 🇺🇸 31.74.0%
9Bolivia 🇧🇴 29.93.8%
10Argentina 🇦🇷 22.92.9%
11India 🇮🇳 21.62.8%
12Kazakhstan 🇰🇿 17.32.2%
13Sweden 🇸🇪 13.41.7%
14Canada 🇨🇦 9.31.2%
15Morocco 🇲🇦 8.41.1%
16Indonesia 🇮🇩 8.31.1%
17Uzbekistan 🇺🇿 6.30.8%
18Papua New Guinea 🇵🇬 4.20.5%
19Dominican Republic 🇩🇴 3.80.5%
20Turkey 🇹🇷 3.60.5%
N/ARest of the World 🌎 34.24.4%
N/ATotal784.4100%

Mexico, Peru, and China—the top three producers—combined for just over 50% of global silver production in 2020. South and Central American countries, including Mexico and Peru, produced around 390 million ounces—roughly half of the 784 million ounces mined globally.

Silver currency backed China’s entire economy at one point in history. Today, China is not only the third-largest silver producer but also the third-largest largest consumer of silver jewelry.

Poland is one of only three European countries in the mix. More than 99% of Poland’s silver comes from the KGHM Polska Miedź Mine, the world’s largest silver mining operation.

While silver’s supply chain spans all four hemispheres, concentrated production in a few countries puts it at risk of disruptions.

The Sustainability of Silver’s Supply Chain

The mining industry can often be subject to political crossfire in jurisdictions that aren’t safe or politically stable. Mexico, Chile, and Peru—three of the top five silver-producing nations—have the highest number of mining conflicts in Latin America.

Alongside production in politically unstable jurisdictions, the lack of silver-primary mines reinforces the need for a sustainable silver supply chain. According to the World Silver Survey, only 27% of silver comes from silver-primary mines. The other 73% is a by-product of mining for other metals like copper, zinc, gold, and others.

As the industrial demand for silver rises, primary sources of silver in stable jurisdictions will become more valuable—and Nevada is one such jurisdiction.

Nevada: The Silver State

Nevada, known as the Silver State, was once the pinnacle of silver mining in the United States.

The discovery of the Comstock Lode in 1859, one of America’s richest silver deposits, spurred a silver rush in Nevada. But after the Comstock Lode mines began declining around 1874, it was the Tonopah district that brought Nevada’s silver production back to life.

Tonopah is a silver-primary district with a 100:1 silver-to-gold ratio. It also boasts 174 million ounces of historical silver production under its belt. Furthermore, between 1900 and 1950, Tonopah produced high-grade silver with an average grade of 1,384 grams per tonne. However, the Second World War brought a stop to mining in Tonopah, with plenty of silver left to discover.

Today, Nevada is the second-largest silver-producing state in the U.S. and the Tonopah district offers the opportunity to revive a secure and stable source of primary silver production for the future.

Blackrock Silver is working to bring silver back to the Silver State with exploration at its flagship Tonopah West project in Nevada.

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A Complete Visual Guide to Carbon Markets

Carbon markets are booming. But how do they work? In this infographic, we show how carbon markets are advancing corporate climate ambitions.

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Carbon Markets

A Complete Visual Guide to Carbon Markets

Carbon markets enable the trading of carbon credits, also referred to as carbon offsets.

One carbon credit is equivalent to one metric ton of greenhouse gas (GHG) emissions. Going further, carbon markets help companies offset their emissions and work towards their climate goals. But how exactly do carbon markets work?

In this infographic from Carbon Streaming Corporation, we look at the fundamentals of carbon markets and why they show significant growth potential.

What Are Carbon Markets?

For many companies, such as Microsoft, Delta, Shell and Gucci, carbon markets play an important role in offsetting their impact on the environment and meeting climate targets.

Companies buy a carbon credit, which funds a GHG reduction project such as reforestation. This allows the company to offset their GHG emissions. There are two main types of carbon markets, based on whether emission reductions are mandatory, or voluntary:

Compliance Markets:
Mandatory systems regulated by government organizations to cap emissions for specific industries.

Voluntary Carbon Markets:
Where carbon credits can be purchased by those that voluntarily want to offset their emissions.

As demand to cut emissions intensifies, voluntary carbon market volume has grown five-fold in less than five years.

Drivers of Carbon Market Demand

What factors are behind this surge in volume?

  • Paris Agreement: Companies seeking alignment with these goals.
  • Technological Gaps: Companies are limited by technologies that are available at scale and not cost-prohibitive.
  • Time Gaps: Companies do not have the means to eliminate all emissions today.
  • Shareholder Pressure: Companies are facing pressure from shareholders to address their emissions.

For these reasons, carbon markets are a useful tool in decarbonizing the global economy.

Voluntary Markets 101

To start, there are four key participants in voluntary carbon markets:

  • Project Developers: Teams who design and implement carbon offset projects that generate carbon credits.
  • Standards Bodies: Organizations that certify and set the criteria for carbon offsets e.g. Verra and the Gold Standard.
  • Brokers: Intermediaries facilitating carbon credit transactions between buyers and project developers.
  • End Buyers: Entities such as individuals or corporations looking to offset their carbon emissions through purchasing carbon credits.

Secondly, carbon offset projects fall within one of two main categories.

Avoidance / reduction projects prevent or reduce the release of carbon into the atmosphere. These may include avoided deforestation or projects that preserve biomass.

Removal / sequestration projects, on the other hand, remove carbon from the atmosphere, where projects may focus on reforestation or direct air capture.

In addition, carbon offset projects may offer co-benefits, which provide advantages that go beyond carbon reduction.

What are Co-Benefits?

When a carbon project offers co-benefits, it means that they provide features on top of carbon credits, such as environmental or economic characteristics, that may align with UN Sustainable Development Goals (SDGs).

Here are some examples of co-benefits a project may offer:

  • Biodiversity: Protecting local wildlife that would otherwise be endangered through deforestation.
  • Social: Promoting gender equality through supporting women in management positions and local business development.
  • Economic: Creating job opportunities in local communities.
  • Educational: Providing educational awareness of carbon mitigation within local areas, such as primary and secondary schools.

Often, companies are looking to buy carbon credits that make the greatest sustainable impact. Co-benefits can offer additional value that simultaneously address broader climate challenges.

Why Market Values Are Increasing

In 2021, market values in voluntary carbon markets are set to exceed $1 billion.

YearTraded Volume of Carbon Offsets (MtCO₂e)Voluntary Market Transaction Value
201746$146M
201898$296M
2019104$320M
2020188$473M
2021*239$748M

*As of Aug. 31, 2021
Source: Ecosystem Marketplace (Sep 2021)

Today, oil majors, banks, and airlines are active players in the market. As corporate climate targets multiply, future demand for carbon credits is projected to jump 15-fold by 2030 according to the Task Force on Scaling Voluntary Carbon Markets.

What Qualifies as a High-Quality Carbon Offset?

Here are five key criteria for examining the quality of a carbon offset:

  • Additionality: Projects are unable to exist without revenue derived from carbon credits.
  • Verification: Monitored, reported, and verified by a credible third-party.
  • Permanence: Carbon reduction or removal will not be reversed.
  • Measurability: Calculated according to scientific data through a recognized methodology.
  • Avoid Leakage: An increase in emissions should not occur elsewhere, or account for any that do occur.

In fact, the road to net-zero requires a 23 gigatonne (GT) annual reduction in CO₂ emissions relative to current levels. High quality offsets can help meet this goal.

Fighting Climate Change

As the urgency to tackle global emissions accelerates, demand for carbon credits is poised to increase substantially—bringing much needed capital to innovative projects.

Not only do carbon credits fund nature-based projects, they also finance technological advancements and new innovations in carbon removal and reduction. For companies looking to reach their climate ambitions, carbon markets will continue to play a more concrete role.

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