Summary

This review describes due diligence in the mining and mineral exploration industry. It lists a series of activities involved in due diligence from well known consulting firms. It also gives an overview of publications, consultants, and lawyers with expertise in due diligence.

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A TRUE STORY

"Tell me all the environmental issues at these mines." This request from a friend with a mining company about to make an offer to buy another mining company. These are two low key companies. Thus was I thrust into the world of due diligence. "Well give me all the reports you have on the target mines." A perfectly reasonable reply, I thought. "We have none," was the reply, "see what you can get off InfoMine."

But first to Wikipedia:

"Due diligence may refer to the process of research and analysis that takes place in advance of an investment, takeover, or business partnership. The potential investor generally uses in-house resources or hires a consulting firm that specializes in due diligence and corporate investigations to investigate the background and principals of the target company. A due diligence assignment generally includes reviewing press and SEC filings, checking for regulatory and licensing problems, identifying liens and judgments, and uncovering civil and criminal litigation matters. Sophisticated investigators will also search for conflicts of interest, insider trading and press and public records that identify problems that may have occurred under the principal's watch."

"Press releases, that's easy," says I, clicking to the news tab on InfoMine. For one property alone over three hundred news items spilled at me. "And there are ten mines," I shudder.

Then to the InfoMine Properties Database: a random collection of cut & pastes from the press releases (albeit three hundred of them) and the fancy formatted Annual Reports, which are a wonder to behold, with color and graphics, and pages and pages of obfustication.

Yet somehow this process rapidly illuminated issues: the dam failure, the acid rock drainage, the environmental liability law suite, years of cost-cutting and neglect of environmental concern. A funny thing also soon appeared-in the last two years there have been no press releases, nothing in the Annual Reports-just grave silence. Almost as though a great nothing has taken over. Maybe they got control of an unruly press release-bleed after that last publicity disaster?

To the InfoMine Library, where the right keywords rapidly brought up papers on the acid rock drainage issue-those pesky researchers at the local university have documented the complete mess-infinite control and expensive water treatment. The EIS written when they bought the mine from the corrupt government tells all about the problems still to be dealt with. Funny how easy this due diligence thing is, thought I.

Now my friend is on a plane to the sites and the mines, armed with a list of questions, deep, insightful ones, based on a cheap review (discounting my time in the properties database) of generally public documents.