Mining Economics Explained: A Guide for Boards, Executives, Managers and Investors

by Craig Hutton

Mark Bristow, CEO of Barrick Gold Corporation, is quoted as saying that “No one made any real money during the last super-cycle” because as Jamie Polanski put it “the single-minded pursuit of production was destructive to margins and valuations.” AMC Consultants Principle Peter McCarthy said that “by second guessing the economic optimisation of the ore deposit, owners are obliged to pay for something greater and more expensive.” What followed the great commodity super-cycle was a lesson in austerity that now threatens the industry as “a reserve crisis in the gold industry now exists” according to Mark Bristow.
By emphasizing the primacy of the ore deposit this book unpacks the economic optimization of a mine so that mining teams can maintain capital investment discipline against consistent criteria. The temptation to pursue acquisitions or projects at any price is tempered by a fundamental understanding of an ore deposits economic capacity to deliver value. As Alfred Rappaport “The ultimate test of corporate strategy, the only reliable measure, is whether it creates maximum excess economic value for its shareholders.”
Craig Hutton, the author of this book, unpacks Mining Economics in a practical manner that is anchored in economic theory. The optimal size of any mining pursuit is ultimately measured by McCarthy’s “Hill of Value” formulation. Hutton has developed a robust tool to generate McCarthy’s “Hill of Value” in a fast yet detailed manner to test multiple production combinations saving on time and money to direct feasibility studies to optimal outcomes.
Neal Brewster, executive director at Elemental Economics commented that “ I found myself nodding along.” He went on to say that this book has the knack of translating theory into practical approaches alongside real world experiences from inside the mining industry, making it one of the more useful books on mineral economics that he has read.

287 pages, Kindle Edition

Published April 11, 2022

Reviews

[Derek Visvanathan · Rating 3 out of 5]

I enjoyed this book as I have experienced the lack of rigour that accompanies grade cut-off decisions and have heard several times that scale is always beneficial. Lots of good in these pages.

However, this book has some serious quality issues. Mislabeled and ineligible graphs are not uncommon. It has the feeling of a book that did not pass over the desk of a dedicated editor.

[Michael L Hutchinson · Rating 4 out of 5]

Excellent book. Very detailed in the economic data and theories to "unpack the economic optimization of a mine...[for] capital investment discipline...[and to] deliver value. By reading it, I am now the mining Neo, and know Single Equation Linear Regression Analysis Kung-Fu!

[Jim Mackay · Rating 5 out of 5]

Stunning

[Victor Yan · Rating 3 out of 5]

Good concepts but could have been shorter - too much complicated textbook materials