The Finance Monthly sat down with AMC’s Mark Chesher for an interview as part of its Expert Insight Series on Mining. Mark is a Principal Mining Engineer who has worked 17 years on feasibility studies for AMC’s clients. This comes after working in operational roles for 18 years. For the past three years, Mark has worked in Russia where, along with other FSU countries, he has identified significant mining opportunities. He is backing this confidence by moving to Moscow later this year to pursue an expanding AMC client base.
Finance Monthly: Australia is well known for its mining industry – what are currently the hottest topics being discussed on mining in the country?
Mark Chesher: The end of the mining boom has dominated the Australian media commentary for the last 4 years. Reduced commodity prices, leading to reductions in jobs and royalties received by State governments, iron ore in particular, has brought the impact of the mining industry on the general community sharply into focus.
Behind the scenes though, mining operations have been pushing hard to overturn attitudes of the mining boom, where advice to companies was to expand production at any cost. This of course led to overcapitalization of operations and higher unit costs. They subsequently found it very difficult to adjust once the downturn inevitably arrived.
Mining operations have been concentrating on productivity improvement over the last 4 years – basically a return to good mining practice. More proactive companies are well advanced and we have been helping to achieve some of their goals.
With the emergence of “Big Data” in recent years, the mining industry started to think differently about its business models, and concepts like disruption, autonomy and centralised control entering common language. A mining operation generates an enormous amount of data, which can support many productivity improvements leading to improved unit cost performance. AMC holds a competitive advantage in this space, offering clients “Online Mining Intelligence” and “Performance Benchmarking” services from experienced professionals.
FM: What attracted you to the field of mining engineering?
MC: Growing up in Brisbane, Queensland exposed me to the impact of mining through coal and base metals operations – particularly at Mt Isa. My older brother also moved into Metallurgy, so I became aware of opportunities afforded by the mining industry.
I found that mining engineering suited my desire for overviewing mining operations and integrating separate disciplines to provide better overall outcomes for projects. Managing feasibility studies, in particular, requires overall understanding of geology, mining, processing, infrastructure, transport, environmental, social, economic, project implementation, and government factors.
FM: Can you tell us a bit about your career path prior to joining AMC Consultants?
MC: My early career involved moving to a variety of operations around Australia. I spent 12 years in three gold mines and a bauxite mine gaining a basic grounding in the design and operation of these mines. Experience that has been particularly important in later years of managing and planning operations.
I then moved into management of a mid-sized gold mine, rising to the role of operations manager, and then on to the Mining Manager’s role at the large Murrin Murrin Lateritic Nickel operation.
In all these roles, I generally had overall responsibility as Competent Person for the reporting of Ore Reserves. This gave me a growing insight into factors such as equipment selection and specification, dilution and ore loss estimation, pit design, scheduling and budgeting and operations management.
In 2000 I joined AMC and really enjoy the ability to work on a variety of projects without having to move companies. I have seen several industry cycles and have a great respect for the Australian mining industry’s ability to change and adapt each time there is a downturn.
FM: Tell us a bit about your role as a Principal Mining Engineer for AMC Consultants? What are the most common projects/operations that you work on?
MC: The most common projects are gold feasibility studies at varying levels of confidence (Concept, Pre-feasibility or Feasibility). There is always the challenge in this environment of falling grades and increasing difficulty of deposit exploitation.
Being a Principal Engineer in the AMC Open Pit group provides an opportunity to work on a diverse range of projects with 14 engineers (six of them Principals with more than 30 years of experience). I find this a very collegiate environment with a wide variety of opinions and approaches available to apply to our projects. There are often well-trodden paths for metallurgy, mining and development, or there can be difficult projects that are at times very challenging, requiring novel approaches and use of all our skills to ensure the best possible assessment for our clients.
FM: What motivates you about your role?
MC: I enjoy the reward of seeing projects come to life after starting as several sets of data collected at different times and with a variety of techniques. Turning that data into usable information and then developing viable plans takes planning and forethought to provide the development plans at the right times. Even if the study shows a negative result, I find great satisfaction in understanding the problem and providing objective advice to our client on the way ahead.
Having been in the industry for many years, I now enjoy helping others at AMC achieve the same sort of satisfaction that I receive. Mentoring takes a long time to show results, but seeing my colleagues grow and develop their experience is very gratifying.
FM: What are the challenges associated with managing feasibility studies for precious metals projects?
MC: Many study teams lack a clear idea of the study objectives and lack direction on the important features of the study and the outcomes required. For example, a pre-feasibility study is the opportunity to assess trade-offs relevant to the project and determine a project Basis of Design before conducting a costly feasibility study (where the focus is on detailed design of all project components). It is also the time to optimize the project to achieve the goals (perhaps maximum value, minimum capital cost, maximum reserve etc).
Precious metals projects have their own set of challenges. I think they are most prone to public expectation and the temptation for being “fast-tracked” to achieve a certain window of development opportunity. Early conceptual plans are prepared on limited data and for low cost, but often form the basis for early release to the public, sometimes with much fanfare, only to find that more rigorous study does not support the expectations already made public. This can force the project team to confirmation bias and a “making it feasible” approach rather than satisfying the key question “Is it feasible” and then developing an optimum solution.
FM: What are the most common types of issues that arise during a feasibility study for precious metals projects and how do you help resolve these swiftly?
MC: The Feasibility Study stage is usually the most expensive, where the focus is often on the infrastructure and plant equipment design, cost estimation and financial analysis. However, analysis by AMC over the last 20 years showed that around two thirds of project failures are due to: poor resource estimation; poor mine design and scheduling; or poor metallurgical testing and scale-up. So it seems to me that we should be focussing our efforts on collecting reliable data in these areas and then developing a robust Basis of Design at Pre-feasibility stage before moving to Feasibility study.
An Independent Audit of a Feasibility study, and the underlying data, is an essential check on the study logic and provides a useful “circuit-breaker” enabling problems to be highlighted and discussed before a final commitment to the next stage.
FM: Over the years, which would you say has been your most successful and rewarding project, and why?
MC: Probably the Pre-feasibility study for Cannington Silver and Lead Mine extension. Two AMC teams studied, in parallel, open pit and underground mining methods for the same orebody. My responsibility for the Open Pit area encompassed surface hydrology, ground water hydrology, geotechnical, and environmental factors, as well as mining. The company chose the underground option to take forward for further study and ultimate development. While it wasn’t the open pit option, I felt satisfied that the options were well researched and the grounds for development were sound.
FM: What is your message to our readers about the mining industry?
MC: The mining industry is certainly becoming more global and I think we will see increasing mobility of people and companies. This provides a great opportunity for us all to take advantage of improvements right across the global mining industry. So we all need to be alert for these opportunities as they arise.
This interview first appeared on The Finance Monthly here: https://www.finance-monthly.com/2017/06/mark-chesher-on-the-mining-industry-in-australia/