Fresh Thinking: The 3-Minute Read. Episode 108

Here’s your 3-minute quick read of Fresh Thinking by Snowden Optiro’s podcast Episode 108.
We’ve pulled out the key insights and takeaways—perfect for when you want the value, minus the headphones.

Processing the Risk: Metallurgy in Mining Due Diligence

When assessing mining investments, due diligence is essential—and metallurgy is a key part of that process. In this episode of Fresh Thinking, Dr Tarrant Elkington chats with Dr Leon Lorenzen, who brings over 40 years of experience across mining operations, research, and consulting, to explore what investors need to consider when it comes to metallurgical and processing risk.

The Process Plant: Not Just a Black Box

Leon compares a process plant to a Formula 1 car—it’s designed with precision for specific conditions. If you feed it something different to what it was designed for, performance may suffer. The first step in due diligence is to establish a baseline: what was the original design, and how has the plant performed over time? Has the ore type or feed consistency changed? How did the plant adapt?

These insights help assess whether forecasted recoveries and throughput are realistic. It’s not just about the recovery rate; it’s also about the grades, the throughput, and the cost to achieve those outcomes. High recovery might come at the cost of inflated operating expenses or by overloading the plant—red flags that indicate deeper issues, sometimes beyond processing, such as geological or mining constraints.

Looking Forward: The Risk of What’s to Come

For operating assets, historical data offers clues. But what about what’s coming next? Mines often transition into different ore zones or face variable material properties like hardness or clay content. Leon notes that while some operations take a “the plant can handle it” attitude, test work is critical. Understanding how representative that test work is—and whether it’s based on a few or many samples—matters hugely when forecasting future performance.

It’s also vital to align the processing outlook with the broader mining and geological plan. For instance, a shift from open pit to underground mining might reduce the material available to the plant, affecting throughput—something often overlooked during acquisition.

New Projects: More Uncertainty, Higher Stakes

With greenfield projects, risks are amplified. There’s no operating history, and assumptions are often built from limited test work. Leon emphasises the importance of understanding the flow sheet, why it was selected, and whether costs—both capital and operating—are realistically estimated.

Ramp-up time is another major uncertainty. Getting to full throughput doesn’t happen overnight, and a longer ramp-up period can disrupt cash flow and delay payback. Due diligence at this stage often involves a “fatal flaw” review, looking for critical risks that could derail the project. Fortunately, these can sometimes still be addressed through additional test work or design tweaks before major investment is committed.

Expert Eyes Make the Difference

Ultimately, the success of a due diligence process—especially for metallurgy—hinges on the experience and judgement of those conducting it. Leon stresses the value of involving seasoned professionals and independent engineers who understand both technical nuance and commercial implications.

At Snowden Optiro, supporting clients through due diligence is a routine and vital part of the work. Whether for operating or new assets, having the right team reviewing the details can mean the difference between a wise investment and a costly mistake.

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If you would like to contact either Tarrant or Leon: contact@snowdenoptiro.com

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