It is increasingly vital for shareholders and financiers to get expert and independent corroboration on mining resources, plans, valuations and other aspects of each venture as mining projects are increasingly being presented with a wide and growing range of risks, reports mining consultancy SRK Consulting.
These efforts can be best performed through a detailed due diligence study – a critical phase that underpins the future success of the mining industry.
A common purpose of conducting due diligence is to support mergers and acquisitions, says SRK principal mining engineer and partner Joseph Mainama, adding that the process involves assessing the risks associated with an operational asset or project to ensure that the transaction is informed and well-considered.
“Stakeholders really need to understand, in some detail, what the risks are in the operational asset or project that they are targeting.
“Anyone conducting a quality due diligence study must therefore have insight into the many key facets of mining projects, so that the feedback can usefully inform decisions about the transaction,” he elaborates.
Therefore, a due diligence study examines the findings of the technical studies that have already been carried out and interrogates them for any potential shortcomings.
He notes that there are many aspects to consider, from reserve estimations and mining plans to geotechnical and groundwater issues.
“If the risks in areas like these are not fully identified or are miscalculated in some way, they have the potential to derail a project or to undermine its viability,” Mainama says.
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