Connect with us

Chart of the Week

Visualizing the Life Cycle of a Mineral Discovery

Published

on

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.

    Subscribe to Visual Capitalist

    Thank you!
    Given email address is already subscribed, thank you!
    Please provide a valid email address.
    Please complete the CAPTCHA.
    Oops. Something went wrong. Please try again later.

Comments

Chart of the Week

Global Shutdown: Visualizing Commuter Activity in the World’s Cities

Amid the COVID-19 crisis, cities are dramatically slowing down. Today’s chart demonstrates the impact of lockdowns on commuter activity worldwide.

Published

on

Staying Put: The COVID-19 Commuter Decline

Every day, millions of people worldwide rely on public transport networks to get around. But in times of crisis, bustling cities with high volumes of commuter traffic can come to a dramatic halt.

Today’s chart breaks down daily data from Citymapper’s Mobility Index, according to trips planned on the transport app across 41 select cities.

The results paint a unique picture of how social distancing and lockdown measures are impacting commuter and economic activity in major urban hubs.

Cities With the Biggest Drops in Activity

As the government response to the COVID-19 pandemic intensifies and people are urged to stay home, transit activity is dropping everywhere.

However, some areas are seeing more of a reduction in activity than others. Where has activity declined the most over the month?

RankCityCountry04-Mar11-Mar18-Mar25-MarTotal Change (%)
#1Vienna🇦🇹 Austria128%92%9%6%-122%
#2Lisbon🇵🇹 Portugal128%108%24%12%-116%
#3Istanbul🇹🇷 Turkey117%103%20%10%-107%
#4Barcelona🇪🇸 Spain105%86%6%4%-101%
#5Brussels🇧🇪 Belgium107%96%15%7%-100%
#6São Paolo🇧🇷 Brazil112%113%33%12%-100%
#7New York City🇺🇸 USA104%85%17%7%-97%
#8Madrid🇪🇸 Spain100%65%5%4%-96%
#9Los Angeles🇺🇸 USA108%81%23%13%-95%
#10Melbourne🇦🇺 Australia113%110%53%20%-93%

*Note: Data measures the % of city moving compared to 100% baseline.

Overall, Vienna and Lisbon are the cities with the biggest average drop in commuter activity over the past few weeks. This decline in mobility is correlated with a spike in the proportion of COVID-19 cases in the population:

  • Austria
    March 4: 2.6 per million
    March 25: 586 per million
  • Portugal
    March 4: 0.4 per million
    March 25: 232 per million

That said, not every city is seeing a precipitous decline in activity — let’s look at those next.

Standing Still, or On Guard

Cities that saw lower decreases in commuter activity over recent weeks can generally be slotted into three categories:

  1. Cities that were already on or near shutdown (Seoul, Milan)
  2. Cities that have so far avoided major impacts from the virus (St. Petersburg)
  3. Cities that successfully mitigated spread (Singapore)

Here are the 10 cities on the list that saw the lowest changes in activity:

RankCityCountry04-Mar11-Mar18-Mar25-MarTotal Change (%)
#1Seoul 🇰🇷 South Korea48%43%41%37%-11%
#2Hong Kong🇭🇰 China (SAR)50%52%48%37%-13%
#3Singapore🇸🇬 Singapore90%88%79%62%-28%
#4Milan🇮🇹 Italy43%10%5%3%-40%
#5Tokyo🇯🇵 Japan63%54%42%21%-42%
#6St Petersburg🇷🇺 Russia114%114%85%69%-45%
#7Moscow🇷🇺 Russia112%113%75%54%-58%
#8Rhine-Ruhr🇩🇪 Germany75%72%28%15%-60%
#9Stockholm🇸🇪 Sweden97%83%34%32%-65%
#10Lyon🇫🇷 France75%97%6%4%-71%

*Note: Data measures the % of city moving compared to 100% baseline.

St. Petersburg is still seeing commuter activity at 69% of normal levels as of March 25th, as the proportion of confirmed COVID-19 cases in Russia remains low, at roughly 3.4 per million.

Milan has the lowest activity of any city at 3%, and has been in shutdown for most of the month.

Although Singapore’s total COVID-19 cases grew from 18.8 to 95.4 per million, it still has 62% commuter activity. Interestingly, Singapore is one of the few countries that has been able to properly control and manage its COVID-19 outbreak.

Biggest Weekly Declines

As the month progressed, various cities showed stark one-week declines in commuter activity based on official healthcare recommendations and growing case numbers.

After a government lockdown announced on March 9, Rome experienced the sharpest decline of -75% commuter activity in the week from March 4 to March 11. Currently, there is only 5% activity compared to usual, similar to Milan.

In the second week of March, COVID-19 cases in France jumped fourfold, from 27.3 per million to 118.4 per million people. As a result, Lyon saw a whopping -91% drop in commuter activity—going from 97% on March 11 to 6% on March 18.

Over the past week, as cases in Australia reached 95 per million, Sydney and Melbourne exhibited the highest average declines at -36% and -33% in commuter activity respectively.

Full List of 41 Cities

Here’s the full list of cities, courtesy of Citymapper.

City, CountryMarch 4March 11March 18March 25Total Change (%)
Vienna, Austria128%92%9%6%-122%
Lisbon, Portugal128%108%24%12%-116%
Istanbul, Turkey117%103%20%10%-107%
Barcelona, Spain105%86%6%4%-101%
Brussels, Belgium107%96%15%7%-100%
São Paulo, Brazil112%113%33%12%-100%
New York City, U.S.104%85%17%7%-97%
Madrid, Spain100%65%5%4%-96%
Los Angeles, U.S.108%81%23%13%-95%
Melbourne, Australia113%110%53%20%-93%
Amsterdam, Netherlands98%86%13%6%-92%
Washington DC, U.S.97%82%15%6%-91%
San Francisco, U.S.96%65%9%6%-90%
Boston, U.S.97%77%16%7%-90%
Chicago, U.S.97%92%16%7%-90%
Montréal, Canada103%104%31%14%-89%
Paris, France95%89%8%6%-89%
London, UK100%91%36%12%-88%
Manchester, UK100%91%42%13%-87%
Sydney, Australia106%99%56%20%-86%
Mexico City, Mexico109%110%53%23%-86%
Rome, Italy91%16%6%5%-86%
Copenhagen, Denmark97%80%11%11%-86%
Berlin, Germany93%86%26%12%-81%
Birmingham, UK99%91%45%18%-81%
Toronto, Canada97%91%32%19%-78%
Vancouver, Canada94%89%38%16%-78%
Philadelphia, U.S.89%85%22%13%-76%
Monaco, Monaco81%50%12%7%-74%
Hamburg, Germany85%72%20%12%-73%
Seattle, U.S.80%51%19%8%-72%
Lyon, France75%97%6%4%-71%
Stockholm, Sweden97%83%34%32%-65%
Rhine-Ruhr, Germany75%72%28%15%-60%
Moscow, Russia112%113%75%54%-58%
St Petersburg, Russia114%114%85%69%-45%
Tokyo, Japan63%54%42%21%-42%
Milan, Italy43%10%5%3%-40%
Singapore, Singapore90%88%79%62%-28%
Hong Kong, Hong Kong50%52%48%37%-13%
Seoul, South Korea48%43%41%37%-11%

*Note: Data measures the % of city moving compared to 100% baseline.

The COVID-19 pandemic is affecting everything from the stock market to the environment. With cities actively working to keep populations in isolation and healthy during this time, it may take a while before commuter activity returns to normal.

Subscribe to Visual Capitalist

Continue Reading

Chart of the Week

Ranked: Global Pandemic Preparedness by Country

This interesting pre-COVID19 report ranked countries by their level of preparedness for the outbreak of infectious diseases and pandemics

Published

on

Global Health Security Index

Ranked: Global Pandemic Preparedness by Country

The world has experienced many pandemics throughout its history, but not every era has had the benefit of modern medicine and hindsight.

However, even with the readily available medical expertise and equipment that exists today, it is still unevenly distributed throughout the globe. Combine this with a highly interconnected global economy, and large populations are still at risk from infection.

Today’s chart pulls data from the 2019 Global Health Security Index, which ranks 195 countries on health security. It reveals that while there were top performers, healthcare systems around the world on average are fundamentally weak—and not prepared for new disease outbreaks.

Pathways for Commerce and Disease

Modern transportation and trade have linked the farthest stretches of the world to fuel a global economy. Physical distance plays less a limiting role and more an enabling one to form a flat world as Thomas Friedman put it, creating opportunities for commerce anywhere in the world.

A person can sell dishware from his home in Cusco, Peru, online to a customer in Muncie, Indiana, with products manufactured in China, from materials sourced in Africa.

While these connections sound sterile, there are people interacting with one another to procure, manufacture, package, and distribute the goods. The connections are not just through products, but also people and animals across many borders.

Now, add up the interactions within the global food supply chain with plants and livestock and tourism industries and place them under the pressures of climate change, urbanization, international mass displacement, and migration—and the volume and variety of opportunities for disease transmission and mutation becomes infinite.

The same pathways of global commerce become the transmission vectors for disease. A cough in Dubai can become a fever in London with one flight and one day.

You Cannot Manage What You Do Not Measure

Despite this, we still live with national healthcare systems that look inward towards national populations, with less of a focus on integrating what is happening with the outside world.

The Global Health Security (GHS) Index is the first comprehensive effort to assess and benchmark health security and related capabilities by nation, and it tracks six key factors to come up with an overall score for each of the 195 countries in the ranking:

  1. Prevention
    Prevention of the emergence or release of pathogens
  2. Detection and Reporting
    Early detection and reporting for epidemics of potential international concern
  3. Rapid Response
    Capability of rapidly responding to and mitigating the spread of an epidemic
  4. Health System
    Sufficient and robust and health system to treat the sick and protect health workers
  5. Compliance with Global Norms
    Compliance with international norms by improving national capacity, financing plans to address gaps
  6. Risk Environment
    Risk environment and country vulnerability to biological threats

Note: The GHS Index is a project of the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security (JHU), and was developed with The Economist Intelligence Unit (EIU).

Country Overall Rankings

Overall, the rankings uncover a distressing insight. Global preparedness for both epidemics and pandemics is weak, with the average score in the index sitting at 40.2 out of 100.

The countries with the highest scores have effective governance and politics systems in place, while those with the lowest scores fall down for their inadequate healthcare systems—even among high-income countries.

Here are the 50 highest-ranking countries in the index:

RankCountryGHS Index Score
#1🇺🇸 United States83.5
#2🇬🇧 United Kingdom77.9
#3🇳🇱 Netherlands75.6
#4🇦🇺 Australia75.5
#5🇨🇦 Canada75.3
#6🇹🇭 Thailand73.2
#7🇸🇪 Sweden72.1
#8🇩🇰 Denmark70.4
#9🇰🇷 South Korea70.2
#10🇫🇮 Finland68.7
#11France68.2
#12Slovenia67.2
#13Switzerland67
#14Germany66
#15Spain65.9
#16Norway64.6
#17Latvia62.9
#18Malaysia62.2
#19Belgium61
#20Portugal60.3
#21Japan59.8
#22Brazil59.7
#23Ireland59
#24Singapore58.7
#25Argentina58.6
#26Austria58.5
#27Chile58.3
#28Mexico57.6
#29Estonia57
#30Indonesia56.6
#31Italy56.2
#32Poland55.4
#33Lithuania55
#34South Africa54.8
#35Hungary54
#35New Zealand54
#37Greece53.8
#38Croatia53.3
#39Albania52.9
#40Turkey52.4
#41Serbia52.3
#42Czech Republic52
#42Georgia52
#44Armenia50.2
#45Ecuador50.1
#46Mongolia49.5
#47Kyrgyz Republic49.3
#47Saudi Arabia49.3
#49Peru49.2
#50Vietnam49.1

You can view the complete rankings of all 195 countries on the GHS Index website.

Interestingly, 81% of countries score in the bottom tier for indicators related to biosecurity—and worse, 85% of countries show no evidence of having completed a biological threat-focused simulation exercise in conjunction with the World Health Organization (WHO) in the past year.

Confirmed COVID-19 Cases vs. Global Health Security Score

Many healthcare systems have had their security tested with the outbreak of COVID-19.

global health secutiry score vs covid19 cases

Although it is still extremely early, there appears to be a relationship between a nation’s health security and its ability to cope with pandemics.

Takeaways: A World Unprepared

While there may be top performers relative to other countries, the overall picture paints a grim picture that foreshadowed the current crisis we are living through.

“It is likely that the world will continue to face outbreaks that most countries are ill positioned to combat. In addition to climate change and urbanization, international mass displacement and migration—now happening in nearly every corner of the world—create ideal conditions for the emergence and spread of pathogens.” – The Global Health Security Index, 2019

The report outlined eight critical insights about global health security in 2019 that reveal some of the problems countries are now facing.

  1. National health security is fundamentally weak globally. No country is fully prepared for epidemics or pandemics, and every country has important gaps to address.
  2. Countries are not prepared for a globally catastrophic biological event.
  3. There is little evidence that most countries have tested important health security capacities or shown that they would be functional in a crisis.
  4. Most countries have not allocated funding from national budgets to fill identified preparedness gaps.
  5. More than half of countries face major political and security risks that could undermine national capability to combat biological threats.
  6. Most countries lack basic health systems capacities critical for epidemic and pandemic response.
  7. Coordination and training are inadequate among veterinary, wildlife, and public health professionals and policymakers.
  8. Improving country compliance with international health and security norms is essential.

A Stark Reality

The intention of the Global Health Security Index is to encourage improvements in the planning and response to one of the world’s most omnipresent risks–infectious disease outbreaks. When this report was released in 2019, it revealed that even the highest ranking nations still had gaps to fill in preparing for a pandemic.

Of course, hindsight is 20/20. The COVID-19 outbreak has served as a wake-up call to health organizations and governments around the world. Once all of the curves have been flattened, the next version of this report will undoubtedly be viewed with renewed interest.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading
Get more Visual Capitalist with VC+

Subscribe

Join the 150,000+ subscribers who receive our daily email

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Popular