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Visualizing the Life Cycle of a Mineral Discovery

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Visualizing the Life Cycle of a Mineral Discovery

Visualizing the Life Cycle of a Mineral Discovery

Mining legend Pierre Lassonde knows a little bit about mineral exploration, discovery, and development. Drawing from decades of his experience, he created the chart above that has become a staple in the mining industry—the Lassonde Curve.

Today’s chart of the Lassonde Curve outlines the life of mining companies from exploration to production, and highlights the work and market value associated with each stage. This helps speculative investors understand the mining process, and time their investments properly.

Making Cents of Miners: The Stages of a Mineral Discovery

In the life cycle of a mineral deposit, there are seven stages that each offer specific risks and rewards. As a company proves there is a mineable deposit in the ground, more value is created for shareholders along the way.

  1. Concept

    This stage carries the most risk which accounts for its low value. In the beginning, there is little knowledge of what actually lies beneath the Earth’s surface.

    At this stage, geologists are putting to the test a theory about where metal deposits are. They will survey the land using geochemical and sampling techniques to improve the confidence of this theory. Once this is complete, they can move onto more extensive exploration.

  2. Pre-Discovery

    There is still plenty of risk, but this is where speculation hype begins. As the drill bit meets the ground, mineral exploration geologists develop their knowledge of what lies beneath the Earth’s crust to assess mineral potential.

    Mineral exploration involves retrieving a cross-section (drill core) of the crust, and then analyzing it for mineral content. A drill core containing sufficient amounts of metals can encourage further exploration, which may lead to the discovery of a mineable deposit.

  3. Discovery

    Discovery is the reward stage for early speculators. Exploration has revealed that there is a significant amount of material to be mined, and it warrants further study to prove that mining would be feasible. Most speculators exit here, as the next stage creates a new set of risks, such as profitability, construction, and financing.

  4. Feasibility

    This is an important milestone for a mineral discovery. Studies conducted during this stage may demonstrate the deposit’s potential to become a profitable mine.

    Institutional and strategic investors can then use these studies to evaluate whether they want to advance this project. Speculators often invest during this time, known as the “Orphan Period”, while uncertainty about the project lingers.

  5. Development

    Development is a rare moment, and most mineral deposits never make it to this stage. At this point, the company puts together a production plan for the mine.

    First, they must secure funding and build an operational team. If a company can secure funding for development, investors can see the potential of revenue from mining. However, risks still persist in the form of construction, budget, and timelines.

  6. Startup/Production

    Investors who have held their investment until this point can pat themselves on the back—this is a rare moment for a mineral discovery. The company is now processing ore and generating revenue.

    Investment analysts will re-rate this deposit, to help it attract more attention from institutional investors and the general public. Meanwhile, existing investors can choose to exit here or wait for potential increases in revenues and dividends.

  7. Depletion

    Nothing lasts forever, especially scarce mineral resources. Unless, there are more deposits nearby, most mines are eventually depleted. With it, so does the value of the company. Investors should be looking for an exit as operations wind down.

Case Study: The Oyu Tolgoi Copper-Gold Discovery, Mongolia

So now that you know the theoretical value cycle of a mineral discovery, how does it pan out in reality? The Oyu Tolgoi copper deposit is one recent discovery that has gone through this value cycle. It exemplifies some of these events and their effects on the share price of a company.

  1. Concept: 15+ Years

    Prospectors conducted early exploration work in the 1980s near where Oyu Tolgoi would be discovered. It was not until 1996 that Australian miner BHP conducted further exploration.

    But after 21 drill holes, the company lost interest and optioned the property to mining entrepreneur Robert Friedland and his company Ivanhoe Mines. At this point in 1999, shares in Ivanhoe were a gamble.

  2. Pre-Discovery/Discovery: ~3 years

    Ivanhoe Mines and BHP entered into an earn-in agreement, in which Ivanhoe gained ownership by completing work to explore Oyu Tolgoi. A year later, the first drill results came out of drill hole 150 with a headline result of 508 meters of 1.1 g/t Au and 0.8%. To get a sense of how large this is, imagine the height a 45-story building, of which a third of story is copper. This was just one intersection of an area that could stretch for miles.

    Wild speculation began at this stage, as steadily improving drill results proved a massive copper-gold deposit in Mongolia and drove up the share price of Ivanhoe.

  3. Feasibility/Orphan Period: ~2 years

    In 2004, the drilling results contributed to the development of the first scoping study. This study offered a preliminary understanding of the project’s economics.

    Using this study, the company needed to secure enough money to build a mine to extract the valuable ore. It was not until two years later, when Ivanhoe Mines entered into an agreement with major mining company Rio Tinto, that a production decision was finalized.

  4. Development: 7 years

    By 2006, the Oyu Tolgoi mineral deposit was in the development phase with the first shaft headframe, hoisting frame, and associated infrastructure completed. It took another two years for the shaft to reach a depth of 1,385 feet.

    Further development work delineated a resource of 1.2 billion pounds of copper, 650,000 ounces of gold, and 3 million ounces of silver. This first stage of development for Oyu Tolgoi made Mongolia the world’s fastest growing economy from 2009 to 2011.

  5. Startup/Production: Ongoing

    On January 31, 2013, the company announced it had produced the first copper-gold concentrate from Oyu Tolgoi. Six months later, the company stated that it was processing up to 70,000 tonnes of ore daily.

  6. Depletion: Into the Future

    The Oyu Tolgoi deposit will last generations, so we have yet to see how this will affect the value of the mine from an investment perspective.

    It’s also worth noting there are still other risks ahead. These risks can include labor disruptions, mining method problems, or commodity price movement. Investors will have to consider these additional conditions as they pan out.

  7. The More You Know

    Mining is one of the riskiest investments with many risks to consider at every stage.

    While most mineral discoveries do not match it perfectly, the Lassonde Curve guides an investor through what to expect at each stage, and empowers them to time their investments right.

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Chart of the Week

Can a Shorter Workweek Make People Happier?

The idea of a shorter workweek sounds enticing to most, but would it actually lead to a happier population? We look at the data so far.

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Can A Shorter Workweek Make People Happier?

For many people, the concept of a shorter workweek is enticing. After all, it can be difficult to find enough time for the things we love.

Is it reasonable then, in our quest for happiness, to begin working less? Advocates of a shorter workweek would agree, but these policies have yet to be widely-adopted.

Today’s chart plots data from the World Happiness Report 2019 and the OECD to determine if there’s any correlation between a country’s happiness and average hours worked per person.

What Happens When We Work Too Much?

The unhealthy side effects of working long hours are well established. In extreme cases, however, symptoms can extend beyond the usual stress and fatigue.

For example, the American Heart Association found that people under the age of 50 had a higher risk of stroke when working over 10 hours a day for a decade or more. Another study, conducted across 14 countries, concluded that people who worked long hours were 12% more likely to become excessive drinkers.

If working longer days is so harmful to our well-being, what happens if we work fewer hours instead?

Comparing the Numbers

The tables below list the happiest countries as well as the unhappiest countries in the OECD; happiness scores range from 0 to 10, with a 10 representing the best life possible.

Based on the data, there appears to be some degree of correlation between a person’s happiness and the amount of hours they work.

Here’s how the five happiest countries stack up:

CountryHappiness Score (0-10)5-Yr Average Annual
Hours Worked
Difference in Hours Worked
from OECD Average (1,682 hrs) 
🇫🇮 Finland7.7691,559 hrs-123 hrs
🇩🇰 Denmark7.6001,406 hrs-276 hrs
🇳🇴 Norway7.5541,422 hrs-260 hrs
🇮🇸 Iceland7.4941,491 hrs-191 hrs
🇳🇱 Netherlands7.4881,432 hrs-250 hrs

The five happiest countries each work over 100 hours less than the OECD average. Compare this to the five least happiest countries:

CountryHappiness Score (0-10)5-Yr Average Annual
Hours Worked
Difference in Hours Worked
from OECD Average (1,682 hrs) 
🇬🇷 Greece5.2871,946 hrs+264 hrs
🇹🇷 Turkey5.3731,832 hrs+150 hrs
🇵🇹 Portugal5.6931,722 hrs+40 hrs
🇭🇺 Hungary5.7581,749 hrs+67 hrs
🇯🇵 Japan5.8861,710 hrs*+28 hrs

*OECD data includes full- and part-time workers. While this affects the entire data set, Japan’s high share of part-time workers (37% as of 2017) suggests it is particularly vulnerable to underestimation.

Coincidentally, all five of the least happiest countries work more hours than the OECD average, up to over 264 hours in the case of Greece.

Happiness is multifaceted, though, and we should avoid drawing conclusions from a single variable. For instance, the World Happiness Report 2019 calculates happiness scores based on eight distinct metrics:

 MetricDescription
#1Positive AffectThe average of 3 measures: happiness, laughter, and enjoyment
#2Negative AffectThe average of 3 measures: worry, sadness, and anger
#3Social SupportHaving someone to count on in times of trouble
#4FreedomThe ability to make life choices
#5CorruptionThe perception of corruption throughout business and government
#6GenerosityBased on survey results about charity donations
#7GDP per Capita (Log Scale)Economic output per person
#8Healthy Life ExpectancyYears spent in good health

With these in mind, we can make a few additional observations.

Four of the five happiest OECD countries are located in the Nordics, a region known for low corruption rates and robust social safety nets. On the other end of the scale, economic hardship is a recurring theme among the OECD’s least happiest countries. The falling Turkish lira and Greece’s debt crisis are two significant examples.

To properly measure the happiness-boosting potential of a shortened workweek, it seems we need to isolate its effects.

Challenging the Status Quo

Employers are now experimenting with shorter work schedules to see if happier employees are in fact better employees.

Case 1: Successful Trial

Perpetual Guardian, a New Zealand-based estate planning firm, trialed a four-day workweek for two months with no changes to compensation.

The trial was hailed as a success. Employee stress levels fell by 7 percentage points while overall life satisfaction rose by 5 percentage points. Perhaps most impressive is the fact that productivity remained the same.

Employees designed a number of innovations and initiatives to work in a more productive and efficient manner.

– Helen Delaney, University of Auckland

Following the trial, the firm’s founder expressed interest in implementing the four-day workweek on a permanent basis.

Case 2: Successful Trial with Trade-offs

Filimundus, a Sweden-based software studio, trialed a six-hour workday in 2014. Staff reception was positive, and the company has since adopted it permanently.

There were trade-offs, however. While staff enjoyed more time for their private lives, productivity across different departments saw mixed results.

We did see some decrease in production for some staff, mostly our artists, but an increase in production for our programmers. So money-wise, in costs, it evened out.

– Linus Feldt, CEO

Interestingly, the studio also trialed a seven-hour workday, and saw no positive effects.

Case 3: An Unsustainable Solution

Public healthcare workers in Gothenburg, Sweden, trialed a six-hour workday for two years. Similar to the first case, compensation was unchanged.

While the trial achieved good results—staff experienced lower stress levels and patients received a higher level of care—the policy was unsustainable.

It’s far too expensive to carry out a general shortening of working hours within a reasonable time frame.

– Daniel Bernmar

17 additional staff were hired to compensate for the shorter workdays, increasing the local government’s payroll by $738,000. The city council did note, however, that lower unemployment costs offset this increase by approximately 10%.

Picking Up Momentum

These experiments are garnering attention from around the world.

Even Japan, a country known for its “overtime culture”, is getting in on the action. Microsoft offices in the East Asian country tested a four-day workweek in August 2019, and reported happier staff, as well as an impressive 40% boost in productivity.

While the results of these early experiments are indeed promising, they’ve exposed the nuances that exist between industries and job types, and the need for further trials. One thing is certain though—shorter workweek policies should not be interpreted as a “one size fits all” solution for happier lives.

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Ranked: The Social Mobility of 82 Countries

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Ranked: The Social Mobility of 82 Countries

It’s an unfortunate truth that a person’s opportunities can be partially tethered to their socioeconomic status at birth.

Although winning or losing the “birth lottery” will continue to shape the lives of generations to come, climbing the socioeconomic ladder is possible. However, it boils down to what opportunities people are afforded in the country they live in.

Today’s chart pulls data from the inaugural Global Social Mobility report produced by the World Economic Forum. The report ranks 82 countries according to their performance across five key pillars: healthcare, education, technology access, working conditions, and social protection.

While most countries aim to create a level playing field, which places best live up to this lofty and challenging mission?

The Spectrum of Social Mobility

Social mobility refers to the movement of individuals either up or down the socioeconomic ladder relative to their current standing, such as a low-income family moving up to become a part of the middle class.

Countries with high levels of social mobility exhibit lower levels of income inequality and provide more equally shared opportunities for its citizens across each of the five pillars.

Here is how all 82 countries rank, according to the report:

RankingCountriesIndex Score
#1Denmark85.2
#2Norway83.6
#3Finland83.6
#4Sweden83.5
#5Iceland82.7
#6Netherlands82.4
#7Switzerland82.1
#8Belgium80.1
#9Austria80.1
#10Luxembourg79.8
#11Germany78.8
#12France76.7
#13Slovenia76.4
#14Canada76.1
#15Japan76.1
#16Australia75.1
#17Malta75.0
#18Ireland75.0
#19Czech Republic74.7
#20Singapore74.6
#21United Kingdom74.4
#22New Zealand74.3
#23Estonia73.5
#24Portugal72.0
#25Korean Republic71.4
#26Lithuania70.5
#27United States70.4
#28Spain70.0
#29Cyprus69.4
#30Poland69.1
#31Latvia69.0
#32Slovak Republic68.5
#33Israel68.1
#34Italy67.4
#35Uruguay67.1
#36Croatia66.7
#37Hungary65.8
#38Kazakhstan64.8
#39Russian Federation64.7
#40Bulgaria63.8
#41Serbia63.8
#42Romania63.1
#43Malaysia62.0
#44Costa Rica61.6
#45China61.5
#46Ukraine61.2
#47Chile60.3
#48Greece59.8
#49Moldova59.6
#50Vietnam57.8
#51Argentina57.3
#52Saudi Arabia57.1
#53Georgia55.6
#54Albania55.6
#55Thailand55.4
#56Armenia53.9
#57Ecuador53.9
#58Mexico52.6
#59Sri Lanka52.3
#60Brazil52.1
#61Philippines51.7
#62Tunisia51.7
#63Panama51.4
#64Turkey51.3
#65Colombia50.3
#66Peru49.9
#67Indonesia49.3
#68El Salvador47.4
#69Paraguay46.8
#70Ghana45.5
#71Egypt44.8
#72Laos43.8
#73Morocco43.7
#74Honduras43.5
#75Guatemala43.5
#76India42.7
#77South Africa41.4
#78Bangladesh40.2
#79Pakistan36.7
#80Cameroon36
#81Senegal36.0
#82Côte d’Ivoire34.5

There are a number of countries that set an example for social mobility that others can follow.

The Mobility Medal Winners

All of the countries in the top 10 are European, but it is the Nordic countries that sit comfortably at the top of the ranks.

Denmark holds the title for the most socially mobile country in the world, boasting an index score of 85.2. If a person is born into a low-income family in Denmark, the WEF estimates it would take two generations to reach a median income. In contrast, someone in Brazil or South Africa would take nine generations at the current pace of growth.

As one of the few non-European countries in the top 20, Canada also performs well across the majority of pillars, but similarly to Denmark, it could improve in the area of lifelong learning which includes providing support for the unemployed and teaching digital skills.

The Least Socially Mobile Countries

Developing country Côte d’Ivoire sits at the bottom of the ranks, with an index score of just 34.5. As a nation once ravaged by internal conflict and turbulent economic shifts, the resulting poverty rate remains high at 46.3%.

While the government has made improvements to its basic social services, the country falls behind on categories like access to education and fair wages, and retains the highest gender inequality rate in the world.

Despite a significant decrease in the percentage of people living in absolute poverty, India ranks low on the index in 76th place. Structural reform is required across all pillars if India is to increase its score, especially in relation to fair wages and education.

Why Invest in Social Mobility?

According to the report, most economies are far from providing fair conditions for their citizens to thrive, with the greatest challenges ranging from lack of social protection and low wages to poor lifelong learning systems.

Countries that fail to invest in the key pillars of social mobility could experience damaging consequences for governments and citizens alike:

  • Precarity (the unpredictability of living without secure and well-paid employment)
  • Perceived loss of identity and dignity
  • Weakening social fabric
  • Eroding trust in institutions
  • Disenchantment with political processes

Aside from the social returns, the economic impact of investing in the right blend of social mobility pillars could be substantial.

Calculating the True Cost

The report dives into the opportunity cost of low social mobility and finds that if each country increased its score by just 10 index points, it could result in an extra 4.41% of cumulative GDP growth for the global economy by 2030—equal to $5.1 trillion.

China alone could add $1 trillion of GDP growth by 2030 if a 10 point increase is achieved:

social mobility true cost

Although social mobility can act as an economic lever, many countries are struggling to provide the optimal conditions for their citizens to thrive. For those countries, globalization and technology may continue to exacerbate income inequality.

If countries are unable to create new social mobility pathways towards more inclusive economies, they risk being stuck in a cycle where inequality remains entrenched—and history continues to repeats itself.

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