How to approach a mining company

[Mr.PinkMine]

Hi guys - new member here !

I am not sure if this is the "right" place but I just decided to give it a try.
I would like to get some hints/advices how can an individual or a company interested to buy or resell some ore approach a (junior) mining company. Let us suppose, for the sake of the argument, that I want to deal directly with the mining company and exclude all intermediaries and agents from this supply chain. I assume the first step is to find a mining company sales department and send them a simple RFQ (Request for Quotation) but here comes the first obstacle, is it appropriate to ask them what is the minimum order quantity/or what are their monthly delivery capacities? Do mining companies expect from (new) potential buyers well defined quantities requests, special payment terms & flexibility ? Useful comments are highly appreciated. :Y:

 

[grubstake]

You're seeking a junior mining company sales department? Unicorn hunting might be simpler! What type of ore are you talking about and in what quantities?

 

[davsgold]

I think they might first want to know your ability to pay and not scam them.

 

[HarryHoudini]

If you show them the money they will talk.
Scammers are everywhere trying to take advantage of small mining companies.

Cheers HH

 

[SWright]

I am not sure I understand. You want to buy ore from the company? For one thing a company would not be mining ore if it did not have a treatment option. Also most companies now mine at grades that would not be at all profitable for you to process. If you have a small to medium sized processing plant and you are seeking ore to process you should approach companies with deposits within trucking distance to your plant. Note it will cost you at least 1 gram per 50 Km to truck and 1-2 grams per tonne to process so you will need to find at least a supplier with 4-5 grams or better per tonne ore at grass. More if you also have to mine it yourself. You would probably need a modern plant with a capacity of at least a couple of hundred thousand tonnes per year. So there would be little or no chance. If you want to mine ore from their deposit that was not yet in production you would have to enter into a tribute arrangement to mine, transport and treat the material and pay a percentage to the owner. If you have ore to sell again you would have to have relevant grade and trucking distances enough to pay for toll treatment and make a profit. You would be better off selling the entire deposit to the company and taking a percentage free carried interest. I know of only a few such successful operations and they are all in major mining area such as Kalgoorlie or near a major producing mine with a capacity of 1 million tonne per year or better. The ore would also have to be compatible with their mill chemistry.

where are are thinking of do this?

 

[Mr.PinkMine]

Thanks for all the replies guys! I am surprised and very happy I was able to find such an active community here.

You're seeking a junior mining company sales department? Unicorn hunting might be simpler! What type of ore are you talking about and in what quantities?

Yes, I know it is difficult and that is why I opened this thread. I found many information on mining, prospecting and so forth but no one is discussing topics such as "how to make a business with a mining companies", "how to source a new ore suppliers", and more specific ..."should I contact sales dept., head office, etc..." besides that, I have also asked if it is appropriate to ask "what is the minimum order quantity/or what are their monthly delivery capacities?" Again is it appropriate to ask such questions in the RFQ document or is this something "what is not expected to ask".
This is something what bother me the most "how to get some insights on delivery capacities" such as min/max amount they are willing to sale and under what terms they are willing to cooperate. I know the answer will depend on the size of the mine, ore deposits, type & quality of the ore etc... but I want to know what is the appropriate way to ask min. amount I can get directly from a mine vis-a-vis a broker/dealer or a trading company which indeed can provide you with quite specific quantities. I hope I am clear enough - if not I can try again.

I think they might first want to know your ability to pay and not scam them.

If you show them the money they will talk.

Sure, it should be a standard procedure but on the other hand, I also need to know if they can deliver, right?

You want to buy ore from the company?

Yes, that is correct - no intermediaries, trade agents involved. What is (on average) the minimum amount a small mining companies expect from you to buy ? Are there some number available among you professionals so I can get some ideas if this is actually a viable solution to buy directly from a mine?

If you have a small to medium sized processing plant and you are seeking ore to process you should approach companies with deposits within trucking distance to your plant. Note it will cost you at least 1 gram per 50 Km to truck and 1-2 grams per tonne to process so you will need to find at least a supplier with 4-5 grams or better per tonne ore at grass.

Very useful insight!

in major mining area such as Kalgoorlie or near a major producing mine with a capacity of 1 million tonne per year or better

Ok, I am getting clearer picture. Do mining companies expect from a company to buy i.e. 1%, 10% of their yearly mining capacities or how can get some info on delivery terms, min. amount they are willing to sell?

 

[Simmo]

Sorry, I'm still lost here...

Are you trying to sell ore to a mining company??

Are you trying to buy ore from a mining company??

What commodity are you talking about??

I think I gather (with respect) that English is not your first language, where are you based?

 

[grubstake]

Sorry, I'm still lost here...
Are you trying to sell ore to a mining company??
Are you trying to buy ore from a mining company??

What commodity are you talking about??

I think I gather (with respect) that English is not your first language, where are you based?

That's the key question!

 

[Matt80]

If your selling high grade ore you may have options depending on location and mineral.
If you want to buy high grade ore to process then l can't see why they would sell to you unless you can process material cheaper than they can.

The only reason l can think of to buy ore from a small mining company would be if your trying to develop a processing technique and need ore to work with, but if so you would need to be quite clear about the type of ore.

 

[Mr.PinkMine]

That's correct English is not my mother tongue - my apology if my sentences are not well formed.

Sorry, I'm still lost here...
Are you trying to sell ore to a mining company??
Are you trying to buy ore from a mining company??
What commodity are you talking about??

Here comes a little bit longer post...I am just exploring an option to buy some nickel ore from a mining company (mineral deposits c. 13Mt.).
Because I am in the late stage of selling my business and it looks like I will have a plenty of time and some money on the side I just start playing around with different ideas what to do next. One of them is to buy an re-sell the nickel ore or any raw materials; Kind a "back-to-back" deals because it is crystal clear to me that nowadays even a big renowned companies with several credit lines, backed by banks and hedge funds are facing tough times when trying to finance their complex trading operations. I am just looking for some additional information on how to approach a potential seller in a professional way.

Let me give you an example, if you are buying excavators then the process is quite simple, you can send a RFQ for i.e. 2 excavators to you local heavy machinery dealer and you will get the offer, negotiate the payment terms, appropriate delivery procedure and close the deal. It is obvious that you will not contact Doosan or CAT directly because a.) size of the deal b.) licensed dealers network c.) other factors.

In my case, I would like to know what is the appropriate procedure to contact a mining company.
What are the average quantities the mining companies expected from a serious buyers to buy on monthly/yearly basis? (I know that some people here will say it depends on the ore and many other factors, but if you can give me some numbers you are familiar with, I will be more than happy to get some ideas)

-Should you as a buyer offer to them to buy at least 10% of their monthly/yearly capacities?
-How can I as an individual get information on min. amount of ore they are willing to sell?
-Should my new venture just send out a simple RFQ and ask them what is the min. amount they are willing to sell - for me it sounds like a little bit unprofessional.

I also assume that all the big mining companies have already well developed sales channels, in addition to that, they are also not willing to deal with the "No Name Corp" and the majority of their ore is already purchased in advance by Glencore and other Big Corps. OTOH approaching a junior mining companies which are looking to expand their sales channels is easier.

The only reason l can think of to buy ore from a small mining company would be if your trying to develop a processing technique and need ore to work with, but if so you would need to be quite clear about the type of ore.

Yes, that could be a reason or you can re-sell the ore and act as an intermediary and offer them a new sales channels.

FYI: Some people advised me to contact a consulting company; I think that kind of questions/problems are not the best match for them.

 

[SWright]

With nickel you will have no chance whatsoever. Nickel mining and metallurgy is very complex and expensive. Any company with a viable nickel mine will never sell any ore. They will sell concentrate but that is all contracted these days. What type of nickel ore are you looking for - sulphide, oxide, laterite, primary nickel or byproduct nickel?

You best bet is to look for small deposits within tucking distance to an existing and compatible plant, mine it and then sell to the plant. No one to my knowledge in Australia does or can do that. Nickel margins are small.

Araluen

 

[Hunting the yellow]

I approached a mining company in 2014 for exploration work in an area they had an interest in I at the time showed them a number of historic mines in the area of their EL licence so they could take rock chip samples the work lasted about 6 months but I learned a hell of a lot of stuff as the people I was with wore geologists. and in return they didn't have to spend days or research and footwork finding possible prospects I simply asked them what mines they wished to visit and what areas on a map they would want to look at it was as easy as that and because I knew the area really well I led them directly to the mines.

how I went about it was really simple I went to their website and emailed them directly stated that I knew a bit about the mining history and locations of possible prospects and it basically went from there I got a reply with in 2 or 3 days asking where to meet and head out. normally someone in the company would do all the research on 1 or 2 particular areas of the EL licence and only focus on those areas not really anywhere else. well in the end I gave them about 6 different areas to focus on ohh and im in there report smiling. I continue to message the geo's who I worked with and im still good mates.

 

[user 4386]

With nickel you will have no chance whatsoever. Nickel mining and metallurgy is very complex and expensive. Any company with a viable nickel mine will never sell any ore. They will sell concentrate but that is all contracted these days. What type of nickel ore are you looking for - sulphide, oxide, laterite, primary nickel or byproduct nickel?

You best bet is to look for small deposits within tucking distance to an existing and compatible plant, mine it and then sell to the plant. No one to my knowledge in Australia does or can do that. Nickel margins are small.

Araluen

I agree, and there are few types of mineral commodity that can stand the economics of trucking any long distance as ore - most things are concentrated to a much higher grade at the mine site (a "concentrate" is produced by methods such as water-gravity separation or flotation or hydrometallurgy, and this concentrate is then sold on). I appreciate that it is difficult when writing in another language (although you manage well). I wonder if you mean that you want to buy and re-sell mineral concentrate, not ore? That would be much easier to understand, If so, do you have smelters who will buy from you? Nickel is not a good example, because lateritic nickel ore is treated fully at site, and although sulphide nickel ore is shipped in some parts of the world, in Australia we have nearby smelters to produce nickel metal. The types of concentrate exported are certain types of iron ore, base metal (eg copper-lead-zinc) and other metal (tin, tungsten, antimony and complex gold concentrates. There are many others as well....

Mining companies that sell concentrate will usually contract much of their annual production with one or a limited number of buyers. There can be good reasons for this (eg many smelters cannot take arsenic in gold ores, or trace bismuth in copper ores, or lead in antimony ores etc.). So to sell to a smelter you need concentrate of the correct composition.

 

[user 4386]

I approached a mining company in 2014 for exploration work in an area they had an interest in I at the time showed them a number of historic mines in the area of their EL licence so they could take rock chip samples the work lasted about 6 months but I learned a hell of a lot of stuff as the people I was with wore geologists. and in return they didn't have to spend days or research and footwork finding possible prospects I simply asked them what mines they wished to visit and what areas on a map they would want to look at it was as easy as that and because I knew the area really well I led them directly to the mines.

how I went about it was really simple I went to their website and emailed them directly stated that I knew a bit about the mining history and locations of possible prospects and it basically went from there I got a reply with in 2 or 3 days asking where to meet and head out. normally someone in the company would do all the research on 1 or 2 particular areas of the EL licence and only focus on those areas not really anywhere else. well in the end I gave them about 6 different areas to focus on ohh and im in there report smiling. I continue to message the geo's who I worked with and im still good mates.

We would often get such communications or visits from people such as you. Most of the time we would at least visit what they wanted to show us, and sometimes it was interesting, other times we only had a good day or three in the bush and we paid their expenses. We would often then employ them if they could contribute a bit or wanted to work on the exploration crew, sometimes we would grubstake them for fuel, food and accommodation and they would find new unpegged areas for us to peg, and they would keep a small free-carried interest. Many take out an EL first and then come to a company, and then there can be substantial rewards (ultimately tens to hundreds of thousands of dollars, rarely millions and sometimes you win like a Creasey - just make sure you tie up a good agreement from day one - the "good guys" you first meet might be working for a different company when a find is made, or they might undergo personality change, and nobody ethical on either side wants to do things without a clear written agreement that suits both sides - it can take some horse-trading negotiation on both sides before starting.

 

[Simmo]

I seriously believe that the OP is asking in the wrong forum/country.

Anyway, I deleted my response...

 

[Mr.PinkMine]

I seriously believe that the OP is asking in the wrong forum/country.

To be honest it is very difficult to find an active forum about mining industry & commodities (it looks like crypto-miners hijacked the stage). I don't mind if your answers are specific to gold or Australia. I've just asked for a general info useful for me or anyone checking this topic, and that is "how to approach a mining company if you want to buy something from them".

That would be much easier to understand, If so, do you have smelters who will buy from you?

Well, as I've mentioned earlier only option (in my opinion) is to make kind a "back-to-back" deals where buyers are secured. Buying and storing ore for speculative operations require proper risk management, etc..

Mining companies that sell concentrate will usually contract much of their annual production with one or a limited number of buyers. There can be good reasons for this (eg many smelters cannot take arsenic in gold ores, or trace bismuth in copper ores, or lead in antimony ores etc.). So to sell to a smelter you need concentrate of the correct composition.

This is something I found useful. As I can see from your latest reply it is a standard thing that the big mining companies usually sell majority of their annual production to a limited number of buyers (Probably via organized tenders). I think I was right assuming it is almost impossible to approach them as a "no-name" company; Hence targeting junior miners or miners restarting their operations could be a chance to find a supplier. It looks like we are coming closer to the answer I am looking for.

So do you or anyone else have some ideas about what do mining "sales team" expect from a serious buyer (besides :moneyis this a purchase 30% of their annual production capacities or is "enough" to buy i.e. x amount of trains/trucks per month, or should I as a buyer ask them first about their monthly capacities and the minimum amount they are wiling to sell, or maybe should I ask them what are their monthly allocations to their exiting clients (I have doubts they will tell me this)... Cheers !

 

[user 4386]

Possibly 30% would be of interest to some if that were significant. However it is very dependant on what the commodity is. You might find they think it easier to simply contract their supply with a major producer. Personally, if I were buying I would be concerned about whether a small producer would definitely supply in any consistent manner (if at all), and I would be looking into the trace impurity issue with many metals (eg that might stop you collecting a reasonable tonnage from multiple producers and selling it, i.e. you might have trouble building up a shipment for sale). And I'm not sure what you would be offering them that would be advantageous. This is the wrong place to ask though, if I was doing it I would be looking at average monthly production from mines in an area to get some idea of potential supplies, and asking around as to whether they have sales issues.

 

[grubstake]

Australia, Canada and other countries, have regular mining expos/seminars/forums at which representatives from all phases of the industry - exploration, mining, processing, equipment, etc - attend and make contact with one another. If you are able to be present at one of these events, you may find it easier to get answers to your questions directly:

Australia
http://diggersndealers.com.au/

Canada
https://northamericaminingexpo.com/
https://americas.minesandmoney.com/

Global
http://canadianminingmagazine.com/upcoming-events/

 

[Mr.PinkMine]

Thank you all for useful info. If there is anything you want to share or do you think it might be interesting to add to this thread please go ahead.

I was doing it I would be looking at average monthly production from mines

Makes sense

Australia, Canada and other countries, have regular mining expos/seminars/forums

Interesting links.