Podcast: Gold Stars and Black Holes – analysing the discount: from resource to sanction

May 3, 2019

The Dig Deep mining podcast is produced by Rob Tyson, an experienced mining recruiter/head-hunter with over 10 years in the mining industry. Rob’s mission for his podcast is to discuss, educate and talk about mining industry news and hot topics.

‘Metals are getting more expensive and getting harder to find. We are in very interesting times at the moment’

In this latest edition, Rob is in conversation with Charles Gibson from Edison Investment Research and Phil Newall of Armstrong Waddell International. They discuss the conclusions from the latest annual global mining sector report from Edison, ‘Gold Stars and Black Holes’ written by Charles along with a range of topics including new markets, the exploration budget worldwide, the battery metals bubble and the development of the exploration space over the next ten years.

This is a must for anyone connected to mining and provides an amazing opportunity to hear the opinions and views of professionals with both considerable global experience and knowledge of the market.

Key highlights:

  • The first part of the report looks at the in-situ values which are important for stock market valuations.
  • We disaggregate different values for the measured indicator or inferred, you are not just looking at a blended ounce you are looking at 3 distinct types of ounces.
  • This enables us to differentiate between companies who have a higher proportion of measured ounces and lower proportion of inferred ounces
  • It allows us to draw conclusions when companies upgrade their resources from inferred to indicated, to measured,  as to how much value it adds to their stock market listing.
  • After companies have drilled up the resources the important questions asked are whether they are economic, how economic are they and what returns can you get on developing the project?
  • The second part of the report looks at the stock market valuation compared to the NPV (net present value) of the cash flows of the project and this enables you to look at how cheap a company is compared to the project valuation and the range of those valuations.
  • We looked at 19 metals and minerals for both halves of the report and of those 19 half of them had a value for measured resources that was less than the value of indicated resources and in some cases the valuation was negative.
  • It shows that for an average company with an average deposit upgrading your resource when you move from indicated to measured, although it would seem to be a value-adding process in the eyes of the stock market it appears not to be. Companies need to be aware of this when making decisions.
  • For all but one of the 19, there is evidence the market will give you credit for resources you haven’t yet discovered, resources you can suggest are there but are yet to be drilled up.
  • On average the valuation of companies who had done pre-feasibility studies on their projects get a lower market valuation than companies that have done a preliminary economic assessment or a scoping survey.
  • The list of where people won’t go is growing smaller. Generally, metals are running out and big deposits are no longer being found. What is being found are smaller deposits that tend to be in the smaller countries that people have previously been more reluctant to visit.
  • It’s encouraging that exploration is increasing but mine based exploration with people drilling where they know is low-risk exploration.
  • The market is currently starved of the exploration of new possibilities, people going out and finding those new deposits.
  • There are many companies who don’t have the money to do the grassroots exploration.
  • Historically it has been the junior market undertaking the exploration and making the discoveries that have allowed the majors to then come in and really take projects onboard.
  • At some point, the market needs to become more receptive to junior companies.
  • It should be an integrated market between the juniors, mids and majors. Currently, it isn’t, there are the juniors and the supermajors with almost nothing between.


Phil Newall, Managing Director,  Wardell Armstrong International

Historically the company has provided a full range of services from scoping surveys through to definitive feasibility studies.

We are here to help clients at whatever stage they are in their exploration projects

Our USP is our large mineral processing testing work facility in Cornwall.

We test samples from around the world and as metrology becomes more complex knowing what can be extracted from the ore is vital in determining the best ways to move forward.


Wardell Armstrong website

[email protected]


Charles Gibson, Edison Investment Research

Edison writes research for investors and corporate clients. Companies at various points need to interact with the market and need to keep their story in front of investors and we help them to achieve that. Once you are on the market we are able to undertake ongoing research that keeps the story alive and investors interested.


Edison Investment Research


Rob Tyson

Rob Tyson is an established recruiter in the mining and quarrying sector and decided to produce the “Dig Deep” The Mining Podcast to provide valuable and informative content around the mining industry. He has a passion and desire to promote the industry and the podcast aims to offer the mining community insight to people’s experiences and careers covering any mining discipline, giving the listeners helpful advice and guidance on industry topics.

Rob is the Founder and Director of Mining International Ltd, a leading global recruitment and headhunting consultancy based in the UK specialising in all areas of mining across the globe from the first world to third world countries from Africa, Europe, Middle East, Asia and Australia. We source, headhunt and discover new and top talent through a targeted approach and search methodology and have a proven track record in sourcing and positioning exceptional candidates into our clients’ organisation in any mining discipline or level. Mining International provides a transparent, informative and trusted consultancy service to our candidates and clients to help them develop their careers and business goals and objectives in this ever-changing marketplace.


Email Rob at [email protected]

Rob’s LinkedIn  

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