Why redo a technical report?

Suppose that a junior and senior mining company have entered into a joint venture for a project.  Suppose that the junior has access to feasibility studies prepared for the senior miner.  NI 43-101 obligates the junior miner to file technical reports.  Management at the junior should be disclosing material information to shareholders anyways so they should be issuing technical reports even without 43-101.

The easiest and cheapest way for the junior to meet its obligations under 43-101 is to re-purpose the technical reports prepared for the senior miner.  However, many technical report authors hired by juniors choose to heavily modify the work given to them.  The technical report prepared for the junior will change the underlying assumptions.  In my opinion, the simplest and best explanation for this behaviour is that the junior is trying to inflate the technical report.  They are likely pressuring the technical report author into manufacturing higher numbers.

This is one of the reasons why I dislike the junior mining world.  Juniors are generally dishonest and extremely difficult to perform due diligence on.

2 thoughts on “Why redo a technical report?

  1. Pingback: Mine economics explained | Glenn Chan's Random Notes on Investing

  2. Pingback: Kobex Capital: A pile of cash, trading at a discount, with an impending catalyst | Glenn Chan's Random Notes on Investing

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.