To thrive in the global marketplace, mining companies need to do two things: understand what makes their business possible and then do everything to protect it. While many excel at the former, the latter presents unique obstacles. Even mining companies that fully grasp their true value – their commodity resources – may struggle to manage workflow. More importantly, they may struggle to keep up with tracking and reporting requirements, which can quickly land them into serious trouble.
Let’s go deeper into the questions surrounding these topics, examining why resource inventory is such a critical aspect of any successful mining operation, how reconciliation should work, and what all of this means to you and your company.
According to a study out of IBISWorld, the mining industry continues to grow at a rapid rate. 2021 alone will account for a 12.3% increase in total market size. This trend follows five consecutive years of industry expansion.
As exciting as this trend is for the industry as a whole, it entails more than higher revenues and new competition. Mining companies that try to keep up with this growth find themselves, again and again, running into challenges in tracking and reporting. Their primary assets, mineral resources and reserves, are so paramount to their long-term financial health that they need to stay aware of changes, with as much precision as possible.
Listed mining companies’ concern for tracking and reporting, however, extends beyond internal analysis. Because all publicly owned mining companies must report their mineral resources and reserves to regulatory organizations, keeping in-depth and accurate records of their assets is business critical. The dangers associated with improper or inefficient reporting are substantial, threatening all mining companies’ ability to continue to operate. Stakeholder expectations continue to rise, the companies that outperform the competition in governance of their business will attract more investment.
The more positive side of these requirements is that by focusing on resource inventory and reconciliation, mining companies can maintain their reputations among investors and shareholders as well. They can make clearer and more specific statements about their financial health – because they can take a more data-centered approach to all of their strategies and plans.
Before we go any deeper into why that is, let’s take a closer look at the regulations that impact mining companies.
Mining companies listed on the New York Stock Exchange must abide by the SEC SK-1300, a code that explains what they must disclose in their reports, what they must record, and how they must present all of their information. A relatively new addition to the mining industry, SK-1300 has brought US-listed mining companies more in line with their international counterparts.
Mining companies in South Africa, for example, must abide by an entirely different regulatory code (SAMREC) and the same goes for Australia (JORC). Each of these countries has set their own rules around mining resource inventory and reconciliation, enforcing their rules via fines and other penalties.
To make matters even more complicated, many publicly listed mining companies have made offerings on multiple exchanges. The result is that they have to abide by multiple sets of mining codes. Their minimum reporting standards change depending on where they are doing their reporting.
These regulations, encompassing as they do such a complex and high-stakes industry, are daunting to those who have never encountered them, due to both their intricacies and their potential consequences.
For the largest mining companies, assets and human resources are so extensive that basic management presents challenges. Achieving efficiency is another matter entirely, requiring both concerted effort and creative thinking. Add in national or international minimum reporting standards, and the obstacles tend to compound each other.
What is most common is for mining companies to attempt to record, process, and manage their data through an e-mail system, through a web server, or through some combination of the two. Their data then becomes unwieldy or convoluted, either causing massive slowdowns in their reporting or making any analysis a perplexing undertaking.
These mining companies, if they adhere to the systems they have set up for themselves, will get through the reporting process, meeting their minimum reporting standards, but in doing so, they are wasting time and resources. They create unnecessary difficulties for themselves by approaching the inherent challenges of resource inventory and reconciliation through outdated, outmoded technologies.
Making the problem worse, these systems make it easy for mining companies to overlook details. They may run into errors while they are recording, processing, or preparing their data for reporting. In effect, they are putting all of their effort and capital into systems that are only going to fail them in the long term anyway.
The list of challenges inherent to these “on the fly” systems is extensive. When mining companies are able to record, process, and prepare their data through e-mail or a web server, they may then find that long before they have started to do any of that, they have failed to ask the correct questions of those who are on the ground. They have not taken the steps to ensure they are looking for the information they need, because of a misunderstanding about their minimum reporting standards, because of a missed detail, or because of something else altogether.
Errors, then, damage mining companies’ reputations. They cause irreparable harm to brands built over a period of years, sowing mistrust among shareholders and making it more difficult to find investors.
On the rare occasions that mining companies are able to bootstrap a solution of their own, they lag far behind anything that looks like a reasonable lead time, instead taking somewhere between four and six months to complete a reporting cycle.
The largest mining companies have sometimes invested capital in building their own reporting systems. They have developed high-quality, user-friendly, cutting-edge platforms – only to see those platforms become obsolete within a couple of years. After that, they either have to rebuild their platform, to compensate for changes in the mining industry and changes in minimum reporting standards, or buy something off-the-shelf, which will inevitably prove to be lower-quality than the platform they built on their own.
Again, we can look at the more positive aspect of mining resource inventory and reconciliation: the benefits available to companies that meet these challenges.
There are four key benefits to overseeing minimum reporting standards in a more intelligent and more forward-looking way: improved governance, efficiency, speed, and cost-effectiveness. Let’s go through each of them.
1. Improved Governance
Stakeholder expectations for good governance are increasing in response to recent social and environmental disasters suffered by the mining industry. Staying ahead of those expectations will create value for any mining company, employing world class systems to bolster governance is a logical step in a digital world.
2. Efficiency
When a mining company takes charge of resource inventory and reconciliation, often by leaving the specifics to specialists and trusting in advanced technology, the result is greater efficiency. All of the time and capital the company would have spent on bootstrapping a system becomes free. The mining company is able to divert that time and capital toward discovery, research, analysis, and more expansion-oriented efforts.
3. Speed
While reporting lead times of four to six months are common among mining companies that attempt to bootstrap their own solutions, the right team – one that focusses on minimum reporting standards – can make deliveries much more quickly. This means that the mining company can then plan ahead, coming up with data-centered strategies several more weeks in advance.
4. Cost-Effectiveness
The large mining companies that have invested their capital in building proprietary systems can stop worrying about if (or really, when) their systems are going to become dysfunctional. They can instead budget a set amount of their capital to their minimum reporting standards, avoiding the unpleasant surprise that a two-year-old system has become insufficient.
At K2fly, these benefits are our primary motivation. We have committed ourselves to delivering them to our clients, empowering them with modern reporting that takes the pressure off their teams.
Through our solution, mining companies can establish synergy within and between their teams so that whatever their minimum reporting standards require, they can feel confident that they are missing out on nothing. Instead of forgetting to ask questions, or failing to know the right questions to ask, mining companies that work with K2fly are always aware of the data they need. All that the company then needs to do is capture that data, get sign-offs at the mine, and get sign-offs from executives.
The effect is improved governance, greater efficiency, higher speed, and more cost-effectiveness. We at K2fly pride ourselves on our ability to cut down on reporting lead times. To accomplish this, we automate as much as possible, removing the potential for human error wherever we can. We make reporting as simple and straightforward as it can be, funneling down the complexities of US, South African, Australian, and other requirements – so that you can follow a few steps to stay in compliance.
Our solution follows a sensible workflow: the administrator sets up roles and responsibilities with the company so that there is never any question about who owns each asset and what each team is supposed to be doing. In this way too, K2fly is taking the guesswork out of reporting, providing mining companies with strict, exact guidelines to follow.
Optimizing the processes of recording, processing, and preparing, we direct the flow of information so that it moves from one point to another, not taking any winding pathways through e-mail or web servers, where something could wind up lost or forgotten. We know the value of a straight line for this purpose, guaranteeing order throughout the reporting processes.
In a nutshell, we at K2fly offer the best of both worlds in resource inventory and reconciliation. We have engineered a system that is as convenient as an off-the-shelf product but that is also as powerful as a custom, in-house tool. Our solution manages all the steps in reporting. For multi-listed companies, it prepares reports in accordance with all the relevant minimum reporting standards, parsing and printing data as necessary.
What all of this amounts to is a new way of thinking about mining resource inventory and reconciliation. For reporting, for planning, and for self-analysis, K2fly is without a match in the marketplace. We have cultivated an ecosystem around these daunting challenges, specializing in the area in which so many mining companies, both large and small, tend to flounder or stumble.
The flexibility of our solution is notable as well. We are able to serve operations that manage both single and multiple commodities. As regulations change, our solution does as well, accommodating all new requirements and shifting standards. We remain linked into all stock exchanges around the world, in order to tweak our systems.
Cloud-based, our proprietary software includes features for governance, compliance, and reporting. In addition, it offers stakeholder checklists for relationship tracking, integrated data dashboards, controlled reports, and raw data. It functions as a tool for complete organizations: from the mines themselves to the C-suite offices, there is never any break in our platform. Data flows, fostering unprecedented efficiency.
If your mining company is publicly listed, or if you are trying to figure out new edges in the mining industry, the power of data is unquestionable.
As Peter Sondergaard of Gartner Research said,
“Information is the oil of the 21st century, and analytics is the combustion engine.”
To power your company through all of the years ahead, you need to question all of the assumptions that you have made about your data. You need to rethink all of your approaches to analytics, reporting, and compliance. Unless you have taken steps to improve your company in this area, it is likely that you are missing opportunities for growth or even falling behind your competitors.
At K2fly, we have made it our business to help mining companies like yours. We understand why resource inventory and reconciliation can get so overwhelming complicated. At the same time, we know what to do about it. We have created world-class solutions, setting other mining companies up for the future, and we can do the same for you.
To learn more about K2fly and how we are leading the way for mining resource inventory and reconciliation, speak to our expert team today for a free tour of our solution.
