THE DIMENSION STONES SECTOR new perspectives in the international mining standards reporting Speaker MARCO COSI E-mail: [email protected] DIMENSION STONES INDUSTRY A new «entry» in the Stock Exchange Listing, to be correctly and professionally approached GOOD PROFESSIONAL QUARRY PROJECTS & LISTED PROJECTS THE BRIEF HISTORY OF LISTING (2012-2013) The first DS companies listed in the International Stock Exchanges are: KINGSTON-China (HKSE), FOX MARBLE-Kossovo (LSE) and ART GO - China (HKSE), The Dimension Stone Sector a very particular mining sub-sector, with its own rules, features and driving factors, that MUST be consequently approached and evaluated with different methodology and tools, different from any other mining sectors DIMENSION STONES A very brief overview DIMENSION STONES ‐ MAIN ROCK GROUPS «MARBLES», TRAVERTINES & ONIX Metam. Marble Limestone Onyx Serpentinite Travertine «GRANITES» Granite Gabbro, Norite etc. Gneiss & Migmatites Syenites Granodiorites «STONES» Commercial Classification Sandstone Volcanic stone Quartzite MAIN TYPES OF DS PRODUCTS ‐ Blocks QUARRY ‐ Slabs (« semifinished ») ‐ Tiles (« finished ») PROCESSING FACTORY ‐ Cut‐to‐Size DIFFERENT TYPES OF DS QUARRIES/DEPOSITS Hill-slope quarry Deep trench/open-pit quarry Top-hill quarry Boulder quarry Underground quarry Hill quarry QUARRYING THE RIGHT BLOCK FROM THE MINING DESIGN AND THE FOLLOWING BLOCK PRODUCTION DEPENDS THE ENTIRE VALUE CHAIN OF THE DS INDUSTRY !!! A CORRECT EVALUATION, DESIGN and MINING OPERATION MEANS: THE FINAL BEST COMMERCIAL RESULT PROJECT VALUATION AND RELATED RESERVE ESTIMATION MAINLY DEPENDS ON MINING DESIGN & METHOD QUARRYING - Drilling & splitting - Diamond wire - Chain saw QUARRYING DRILLING & SPLITTING DIAMOND WIRE CUTTING CHAIN SAWE CUTTING Underground quarrying QUARRYING BY DRILLING & SPLITTING WITH EXPANSIVE CEMENT PROCESSING DIFFERENT PRODUCTS = DIFFERENT PROCESSING LINES = DIFFERENT INVESTMENT Block Cutter Gang Saw TILES SLABS Bridge Saw CUT-TO-SIZE THE PRESENT DS INDUSTRY SCENARIO Very Old Industry Ancient activities DS are not considered as «Strategic Minerals» in the common sense by Mining & Financial Institutions. Anyway, actually they represent «KEY MATERIALS», as most of Construction Mat. And some IM, for the sustainable development of most of developing countries and their PS and Societies in general, IF a new realistic sustainable medium term policy for these «Low Value Minerals/Materials» will be put in place. This process can be also replicated in industralised countries, supported by Regulatory Inst. And Policy Makers. Small Companies. Pyramidal, often «one man» company structure Low technical Know How of modern exploration & evaluation techniques Low Know How about Resource/Reserve definition and utilisation Fully Market driven sector (often totally non regulated) Increasing Number of DS quarrying projects, mainly outside EU Relative low investment for exploration, evaluation and mining, too, in comparison with most of other Minining projects THE PRESENT DS INDUSTRY SCENARIO (continue) Common preception of easy investment with easy & fast return of investment, often without considering the market factor Regular increasing Market Demand of DS products in all markets. Large Competition due to the entry of several new players, often unskilled. Growth of middle class in some BRICS countries and others. No any large Mining Company/Group invest in DS. Lack of technical and market know how. DUE TO ALL THESE FACTORS LISTED ABOVE, the economic and environmental difficulties in investing in industrialised western countries and the huge economical growth in China and BRICS, there is a new trend in the Industry: Large Far East and Indian DS companies and also some Financial Investing Groups, wish to invest in DS Projects. Some of them also begin Stock Exchange Listing process. ANYWAY THIS PROCESS STILL HAPPENS WITHOUT ADEQUATE TECHNICAL KNOW HOW. THEN, TO BECOME MATURE, THE DS INDUSTRY ABSOLUTELLY NEEDS TO INCREASE ITS TECHNICAL AND MANAGEMENT CREDIBILITY IN THE INTERNATIONAL MARKETS. TECHNICAL INNOVATION , MAINLY IN EXPLORATION AND EVALUATION PHASES, STANDARDIZATION AND A PROFESSIONAL AWARENESS CAMPAIGNS TOWARD KEY DECISION MAKERS ARE THE MAIN GOALS FOR A LONG TERM SECTORAL IMPROVEMENT PERC IS CONTRIBUTING TO THIS PROCESS AS REGARD THE LAST TWO POINTS Why the dimension stones sector needs an its own section in the global reporting standards A. SPECIFIC SECTORAL FEATURES, DIFFERENT FROM ANY OTHER MINING SUB-SECTOR. DS sector has its own rules and particular methods of evaluation, due to its specific features and peculiarities , different from any other mining sub-sector. Modern exploration and evaluation methods poorly utilized by DS companies and investors Lack of technical know how on the DS industry, of Financial Institutions, Stock Exchange community and of some large investors Few CPs with specific sectoral experience. No Standardization in the sector B. RECENT FAST GROWTH OF THE INDUSTRY IN SOME NEW DEVELOPING AREAS IN THE WORLD. LARGE SIZE OF THE NEW DS GROUPS and THEIR INTEREST IN LISTING PROCESS Since around 5-6 years, following the economic boom of China and other southern Far East countries (e.g. Indonesia, Thailand, Singapore, Vietnam etc.), the Dimension Stone Industry, in some of these countries, begun a more “mature” development process. China and Indonesia in particular, from just large potential DS source countries, became key DS producers and end users with demand rapidly and tremendously increasing. New strong and large growth of DS companies and large groups in these countries, with increasing interest in investing in new DS mining projects in Asia and all over the world. Some of them begun to acquire DS quarries and factories in Turkey, Europe (mainly Spain and Portugal, at present) and USA, and/or to enter in majority partnership/shareholding. Since 2011 several DS Companies (mainly Chinese and Indonesian) started the Stock Exchange Listing process, mainly in the HKSE. Only few of them completed that process. In Europe only a UK DS company has been listed at London SE in 2011 (FOX Marble Holdings), although the first two years of activity The Group incurred an large operating loss in the first two years !!! WHY DO I MENTION THAT ?? DIMENSION STONES PROJECTS CANNOT BE EVALUATED & VALUATED LIKE ANY OTHER MINING PROJECTS : THEY ARE TOTALLY DIFFERENT !! Any stones in principle can be sold; anyway only the ones with competitive features will have chance of success (i. right texture, colour and their regular and homogeneous distribution; ii. no particular defects; iii. correct evaluation of reserves mainly according to market quality; iv. low transport costs to the factory and to the markets; v. correct professional market evaluation and preliminary tests; vi. perfect knowledge of the market; vii. right quarrying method and equipment, according to the different material and geo-structural situation; viii. production of large size blocks with regular shape (§) Projects must be managed and evaluated by persons with direct experience in the sector with good technical and market know-how. A CPR in principle cannot be drafted by any mining CP, without specific experience in DS mining and Market The geo-mining and market value of DS material in general cannot be defined by laboratory tests. (e.g.chemical tests for most of other minerals) and its objective market value easily presented by numeric results A gold or any other metal or most of Industrial minerals ore body, can be evaluated and relatively easily presented by a series of sampled drillings or trenches and the chemical analyses of samples representative of a certain thickness. This allows to have a clear picture of the volume and grade of the ore body, being the chemical analyses in position to give precise information on the quality and grade of the target mineral. From this type of document is generally possible to “say” if the material is of low, medium or high quality in relation to market demand (see IM) and/or to define the content of the mineral in an unit volume (see metals). Moreover, in most of these cases it is actually predictable that the target material can be sold in the International Market, mainly based on the mining location, transport costs and the marketing skill of the producer. In a target Dimension Stones Project the mineral ore body is not contained in the rock mass (country rock)….. IT’S THE ROCK MASS ITSELF!! Anyway It’s not enough to define its geometrical characteristics, but also, and mainly ITS MARKET QUALITY !! ----------------------------------------------------------------------------------------------------- (§) in principle, It’s better to produce small regular blocks with good colour & textural characteristics than large blocks with defects and/or lower colour&texture quality GOOD KNOWLEDGE OF THE MARKET and ITS TRENDS FOR THE FINAL EVALUATION OF THE TARGET STONE MARKET RULES & TRENDS INTERNATIONAL MARKET TREND OF BLACK & YELLOW GRANITES POSSIBLE DEFECTS IN GRANITES (No differences in colour grade, tonality and distribution are considered in the examples below) G C D L F I A E H B A ‐ Black Spots / Xenolites of different composition E ‐ Whitish lines; quartz or calcite veins darker in colour B ‐ Presence of lighter areas with same grain and texture F ‐ Black Lines; biotite, amphibole or mylonitic veins C ‐ Presence of areas of different grain (coarser or finer) D ‐ Presence of “whitish Spots”, single crystals or small G ‐ Whitish veins; usually tension quartz bearing veins agglomerates