Surveying the exploration phase of the mining lifecycle
Mining is a dynamic and unique industry. While all businesses change over time, few other industries have actual separate, distinct phases in their lifecycle. There are five generally recognized phases in the mining lifecycle: Exploration, Assessment, Development, Operations and Closure. Each phase becomes increasingly more complex, presents its own set of challenges and requires different business management functionality to address the challenges.
Here we kick off a five-part series where we’ll dig deeper into each of the phases in the mining lifecycle. We’ll start by surveying the Exploration phase, highlight the unique challenges mining companies face during this stage and suggesting seven ways technology—specifically a mining ERP solution—can solve those challenges.
The state of exploration
During a mining operation’s exploration phase, companies enlist geologists and others to prospect specific (and usually remote) areas in search of mineral deposits. They may employ methods such as geological surface mapping and till sampling, geophysical measurements and geochemical analysis to help pinpoint potential deposits. With odds of only one in 3,000 exploration targets leading to mine development, the exploration phase can be labor-intensive, time consuming and expensive.
Despite the odds, Canadian miners increased exploration spending by 31% in 2018 as they gear up for predicted long-term growth. And globally, exploration allocations are up as well, indicating the overall mining sector is on solid ground.
Technology is a valuable commodity
There is much talk about the enormous transformations technology will bring to the mining industry. Technology such as driverless trucks, automated drillers and internet-connected sensors is predicted to decrease mining companies’ per ton digging costs by more than 30% by 2020.
Canadian miners in the world’s Top 40 are leaders in digital transformation, focusing on increasing efficiency, enhancing safety and mitigating cybersecurity risks. BDO predicts that most mining companies will spend 10% of revenue on IT in 2020—compared to just 1% in 2015. And mining companies will allocate part of that IT spending to an accounting application or ERP solution.
The right technology for the exploration phase
Every business needs reliable financial and operations software, and mining companies in the exploration phase are no exception. While it may be tempting to start small, using an entry-level accounting software, we counsel our mining clients to consider the long-term big picture and invest in a mining ERP solution right from the start.
A mining industry ERP solution can address the specific financial and functionality considerations that are important during the Exploration phase (and beyond) including:
- Core accounting functionality
Mining companies in the exploration phase need essential accounting functionality, including accounts payable, accounts receivable, bank reconciliation, and general ledger. Cost control and visibility must start early and continue throughout the phases in order for a mining operation to be profitable.
- Multiple regulations, languages and currencies
Thinking of going global? Select an ERP solution with the flexibility to support international operations, allowing all users to access a single, centralized database while working in their own language, with their local currencies and in compliance with local regulations.
- Multi-company, multi-site with intercompany processes
Even if your mining operation starts small, with a single site, it’s vital to plan for future expansion by selecting an ERP solution that supports multiple companies and multiple projects and streamlines intercompany transfers and allocations.
- Consolidated reporting
As your mining operation adds additional sites or separate corporate entities, it will be vital to produce consolidated reports in a variety of formats.
- Tax management and compliance
Failure to comply with tax and other regulatory demands can have severe consequences, leading to fines, cessation of activities, seizure of assets—or worse. Visibility and auditability are fundamental to both tax management and compliance. Ensure the mining ERP solution you select is collecting the data you need and making it securely accessible to those stakeholders who may need it.
- Asset accounting
In the early exploration phase, a small number of capital assets may be tracked in spreadsheets, but as assets grow, this becomes burdensome. In addition, a system for tracking asset maintenance, repair and usage becomes invaluable as more assets are deployed.
- Investor relationship management
Investor relationship management is a critical piece of any investment organization. By combining a robust customer/investor relationship management (CRM) application with your mining ERP you can create a seamless investor experience right from the start.
While mining may be one of the oldest industries, it is positioned to benefit significantly by available new technology. In upcoming posts, we’ll visit the Assessment, Development, Operations and Closure phases to highlight the unique challenges mining operations in those phases face, and the technology solutions designed to solve those challenges.
Caron Mining Solutions is a comprehensive, powerful and easy-to-use mining industry ERP solution, built on Sage ERP software, that addresses the challenges modern mining operations face. Learn more about Caron Mining Solutions here, or by contacting us here.