Competent Person’s Report and Technical Due Diligence in the Mining Industry

The mining industry can be highly lucrative, no matter what stage of the mining lifecycle a project is at, but it is also highly complex and risky with many specialised technical aspects to consider. Competent Person’s Reports (“CPR”) and Technical Due Diligence (“TDD”) reports are critical tools used for evaluating projects, managing risks and guiding financial decisions.

CPRs and TDDs provide a comprehensive framework for informed decision-making to accurately evaluate the potential, risks, and overall viability of a mining project, ensuring that technical, financial, operational, environmental and social aspects are thoroughly assessed. Both types of reports contribute to ensuring transparency, offering assurance, and maintaining technical integrity throughout mining operations and related transactions.

What is a CPR?
A CPR is a technical document used to provide an independent report on a Company’s asset(s) for the market, offering an unbiased evaluation of its potential and risks. A CPR is often a requirement as an admission document for an Initial Public Offering (“IPO”) or public fundraising, as well as for mergers and acquisitions (“M&A”). Reporting codes such as JORC, NI 43-101 and SAMREC also mandate a CPR for disclosing Mineral Resources and Reserves.

Components of a CPR
Depending on the development stage of the project or projects under review, a CPR will include some or all of the following sections:

  • Executive Summary: A brief overview of the project, outlining the important points;
  • Project Background: Mineral licenses, ownership structure, project history and location details;
  • Geology: Description of the regional and local geology, mineralisation styles, exploration data and geological models;
  • Resource and Reserve Estimates: Statement of mineral resources and reserves (if any), with description of the estimation method, data used, expected recovery and dilution, production and processing tonnages;
  • Mining and Processing: Description of potential mining methods, processing techniques, and expected recovery rates, supported by metallurgical testwork and geotechnical considerations;
  • Environmental and Social Considerations: An assessment of the environmental impact and any social responsibilities or risks associated with the project; and
  • Financial Analysis: A valuation of the project, covering Capex and Opex, market conditions, and potential revenue.

Putting the CP in CPR
CPRs are authored and signed off by Competent Persons (“CP”). A number of CP may be involved in the production of a CPR, each taking responsibility for one or more aspects of the reporting process depending on their experience and expertise. A CP generally meets the following broadly agreed requirements:

  • The CP will be a mineral industry professional;
  • The CP will be a member of a Recognised Professional Organisation (“RPO”);
  • The CP will have at least five years’ experience in the estimation, assessment and evaluation relevant to the style of mineralisation or type of deposit under consideration.

Many stock exchanges, such as AIM, stipulate that the CP for a CPR is not a sole practitioner, thus a mining consultancy such as ourselves is required to sign off on the report.

Technical Due Diligence Reports
Technical Due Diligence reports differ from a CPR in that a TDD is likely commissioned as a decision making tool for consideration of investment into a mining project. A TDD is a comprehensive appraisal of the technical aspects of a mining project, covering everything from geological and environmental, to operational and regulatory. The goal of a TDD is to identify potential risks and opportunities that could affect the project’s feasibility and success.

Objectives of a TDD
There are multiple reasons why a TDD might be commissioned:

  • Project valuation and assessment: Due diligence assesses the technical and economic viability of a mining project. This process includes auditing geological models, resource estimates, mining methods, infrastructure capabilities, and production plans to verify that the mine plan and financial model are both realistic and attainable;
  • Identification of key risks: Auditing the project identifies potential risks and allows mitigation. Risks include inherent geological uncertainty, operational, logistical and infrastructure challenges, environmental and social concerns, legal and permitting requirements and country/geographical risk;
  • Identification of opportunities: Perhaps certain aspects have been overlooked in existing studies – alternative mining methods, additional resource upside, potential growth and scalability, along with additional income streams could all improve the project’s economics;
  • Compliance with environmental and regulatory frameworks: Verification that relevant licenses, permits etc. are in place for the project is crucial for the successful operation of the project. Environmental and social impacts of mining, along with sustainability are significant topics today, and their associated regulations are continually evolving. Therefore, it is essential to thoroughly assess whether the project meets these various obligations; and
  • Verification of costs and revenue: Assessment of mining, processing, power, transport, closure, selling, taxation and royalty costs, along with predicted revenue is crucial. Ideally, these figures will be verified not only by benchmarking but also by experience and commodity price forecasting to assess confidence in the financial model.

What contributes to a Successful TDD?
We believe that the biggest factor in a successful TDD is the collaboration of an experienced team of experts working together to explore the various facets of a project, integrating their findings to develop a comprehensive understanding of the project in its entirety. Specific aspects of the project cannot be viewed in isolation to understand their viability, but instead assessed holistically to define the correct approach.

Conclusions
CPR and TDD are essential tools in the mining industry, providing independent, unbiased verification of mining projects. A CPR ensures that a project’s resource estimates, technical studies and supporting data meet regulatory standards and provide transparency for investors. A well-executed TDD examines potential risks, opportunities and operational challenges. Together, they help stakeholders and investors make informed decisions, ensuring that investments in mining projects are backed by solid technical and financial foundations.

How can we help?
Our expertise encompasses all commodities including precious, base, battery and ferrous metals, coal, and industrial minerals. Our truly globally experienced team (Qualified Persons under the CIM Code (NI 43-101) and Competent Person’s under the JORC Code (2012) and under SAMREC), has worked on projects in over 90 countries in Africa, North, Central and South America, Central Asia, Southeast Asia, and Central and Eastern Europe.

With expertise across the full spectrum of related areas including geology, exploration services, mineral resource estimation, mining, mineral processing, ESG and economic assessments, we are unique in the level of service we offer; we pride ourselves on our strong client relationships.

We are well-equipped to guide companies through CPR and TDD. Recent projects include CPR and TDD for Au, Cu, Fe, Pb-Zn, Al, PGE, battery metals, coal and industrial minerals in Europe, Africa, the Middle East, and Central Asia on many of the World’s major stock exchanges including the London Main Market and AIM, TSX, ASX and Hong Kong.

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