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Response To Memo From K. Abbott-Gill, The Cfo Of Antipodes Mineral Resources Company
Finance & Accounting
Pages 9 (2259 words)
The core business in a mineral company is mining and therefore most investments in such entities revolve around this central activity. The paper under consideration will touch upon the types of investment projects one expects to find in a minerals company…
The core business in a mineral company is; mining and therefore most investments in such entities revolve around this central activity. The following are the areas I would expect AMR to make their investments:
• Prospecting and exploration of minerals: The process of pinpointing deposits is costly and time consuming. A mineral company must therefore, invest in the process of geological mapping to stay in business by securing the supply end of its operations. The amount of drilling and excavation involved in mining is determined at the exploration stage and therefore, this preliminary phase of the mining process determines the financial allocation required to purchase the right tools for the jobs that include among others, drilling and transportation equipment.
• Equipment: After locating the mineral deposits in the exploration stage, a mining company like AMR in this case, must invest in the acquisition of the correct equipment. The success of a mining process is entirely dependent on the available excavation, drilling and transportation machinery. AMR must therefore commit to continuously acquiring proper tools, something that is always a work in progress project for companies in this industry since new, more efficient equipment are manufactured everyday.
• Acquisition of mines: After the completion of exploration process, mining companies must make ownership of such mining locations their projects. This can be done through partnerships with both governments and local communities in the mineral rich locations. It is my expectation that a mining company should make significant investments in acquiring mines to ensure sustainability of their respective material supply chains. ...
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