READ TIME: 8 MINUTES
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This conversation with mining engineer Neil Ringdahl dissected what speculators should really look for when evaluating PEA- and PFS-stage mining projects—well beyond flashy NPVs and IRRs. From dilution, bench height, and pit slope geometry to social license, ramp design, and flawed financial modeling, Ringdahl laid bare the technical and operational red flags that often get glossed over in promotional studies. The core takeaway: most projects won’t make it, and the ones that do survive only if they’re grounded in solid engineering, honest assumptions, and practical design. Investors need to go deeper—because in mining, what you don’t know will hurt you.
TL;DR
- 1. Community and permitting risk can kill a mine before it ever begins, no matter how good the grade or economics look on paper.
- 2. Dilution, orebody geometry, and mining method must align, especially in narrow vein or structurally complex deposits, or your model won’t survive contact with reality.
- 3. Bench height and pit design are critical to economic performance, and mismatches between design and orebody can silently destroy profitability.
- 4. Most PEAs are promotional in nature, and 80% of them never become mines, so treat them with deep skepticism.
- 5. Streaming deals and high royalty stacks can render marginal projects permanently uneconomic, even if the underlying resource has potential.
What’s the most important question to ask at the PEA stage?
When assessing a PEA-level mining project, the single most important question investors should ask is deceptively simple: Is this even buildable?
Mining engineer Neil Ringdahl, who’s built mines and torn apart more than a few bad studies, doesn’t mince words: “If the people aren’t on board, if there are water issues, or if permitting is miles away, then nothing else matters.” While investors often obsess over grade or metallurgy, Ringdahl puts community buy-in and permitting status at the top of the checklist. Without those, a mine—no matter how economic on paper—won’t get financed or built.
“Grade is king,” he concedes, “but if you’ve got community opposition or permitting holes, you’re dead before you start.”
What are the five most critical technical factors to evaluate in a mining project?
Ringdahl offered a surgical critique of the five-point checklist presented in the interview, which included: 1) Continuity, 2) Metallurgy, 3) Dilution/Ore Loss, 4) Orebody Geometry, and 5) Geotechnical Stability. Here’s his verdict:
- – Continuity: Yes. Without it, you don’t have a mine—you have a science project.
- – Metallurgy: “Lower on my list.” Why? Because by the time you’re at PEA, some basic metallurgical work has usually been done. “Unless you’re introducing new processing tech—then it’s a red flag.”
- – Dilution and Ore Loss: Absolutely. “Dilution kills projects, especially in narrow vein gold systems.”
- – Geometry: Crucial. “Geometry determines your strip ratio and your mining method.”
- – Geotech: “Really important,” particularly pit wall angles and depth. “If someone’s showing 50° pit slopes without solid geotechnical justification, start asking questions.”
Ringdahl also emphasized a rarely-discussed sixth factor: QA/QC in sampling and drilling. Weak QA/QC is an early red flag, particularly in desktop due diligence.
How much does cyanide really matter? Is alternative tech worth it?
“People freak out when they hear the word ‘cyanide,’” Ringdahl says, “but it’s manageable.” Most plants have cyanide destruction circuits, and tailings facilities exposed to sunlight break it down naturally.
He’s skeptical of companies promoting “clever” (his word) alternatives like CLEVR—“twice the cost and not as efficient.” If cyanide is legal and effective, why complicate the flowsheet?
What’s the biggest disconnect between a study and what Ringdahl sees on site?
“General mining practice,” he says flatly. If a project looks good on paper but the field photos show uneven pit floors, poor haul road conditions, or truck-damaging rock piles, then something’s off. And logistics often get ignored: “40 concentrate trucks a day going through a tiny village? That’s a social license time bomb.”
Ringdahl added: “You can immediately tell on-site if the team knows what it’s doing.”
Do property boundaries kill open-pit projects?
Yes, and few investors ask the question. “If you can’t mine vertically because the orebody goes right up to someone else’s claim line, that’s a real constraint.” He points to Regulus Resources in Peru as a textbook case—open pit constrained by adjacent tenure, requiring cross-boundary negotiations.
“Disclosure says what they can legally mine, but every team has done the ‘what if’ modeling. The real story often sits off-balance-sheet.”
How many projects at the PEA stage actually get built?
“Probably 20%, maybe less,” Ringdahl says. He agrees with research by Lobo Tiggre, which suggests that 80% of PEA-stage projects die before production. Even at the PFS stage, he estimates 40% to 60% still don’t make it.
Why? In part, streaming and royalty deals. “We’ve walked away from so many projects because of royalty stacks. They kill marginal projects.”
He also adds a chilling truth: “Some projects will sit on the shelf for decades. Maybe centuries.”
How much smaller does a resource get between PEA and production?
Ringdahl estimates that 60-70% of a PEA resource typically survives into an economic reserve. “PEAs are promotional. Feasibility studies are cold, hard facts.” In practice, IRRs drop, costs rise, recoveries decline.
And yet, he adds, mine life is not static. “I work on a mine that’s been running for 78 years. It had 8-12 years of resource when I joined 8 years ago. Still has the same life today.”
What should retail investors focus on in a PFS?
- – Opex – “The most important number.”
- – Initial Capex-to-NPV – A quick filter on upfront cost efficiency.
- – Sustaining Capex – Often underdisclosed, but vital.
- – IRR and Payback – Useful, but not in isolation.
- – Strip Ratio (and its timing) – Life-of-mine numbers can hide brutal first-year costs.
Neil warns: “You might see a 2:1 strip ratio, but for the first five years it’s 5:1. That’s a major cash flow hit that can get overlooked.”
Are large-scale projects riskier than smaller ones?
“Absolutely,” Ringdahl says. “Big projects have big expectations—from governments, communities, investors. Everything has to be world-class. That adds risk.”
His preference? “I’ve always found it easier to build a small mine and grow it than to try building a large mine from day one.” Small mines can also be socially easier to permit, with lower surface rights exposure.
Do companies design pits using metal prices that are too optimistic?
In Ringdahl’s view, most engineering firms stay conservative. “But in 2010–2012, there were PEAs with very optimistic pricing assumptions.”
He points to pit optimization and revenue factor modeling. “Your starter pit should be economic at the lower end of your price assumption range.”
A case study in how not to do it? “Guyana Goldfields. Poor ramp design and terrible dilution control. They ran into a wall—literally.”
Do discounted cash flows make sense in mining?
He hesitates. “Yes, but with caution.”
“There are so many inputs in a feasibility study that you can tweak them all slightly, and each one will look ‘reasonable’—but the final result is complete fantasy.”
Instead, Ringdahl prefers stress-testing models with realistic dilution, recovery, and waste assumptions. “I’ll build a mock production year based on their numbers and push the weak points to see what breaks.”
What do financiers actually look at before funding a mine?
Most streaming firms and banks have in-house or contracted technical experts. “And those people matter,” Ringdahl says. “We have a shortage of good mining engineers and geos right now.”
He worries that consultants reviewing these projects often lack hands-on mine experience. “That’s the biggest systemic risk in the sector.”
If a CEO knows the PEA is flawed, how do they hide it?
“They just keep lying,” Ringdahl says bluntly. Whether intentional or due to naivety, the result is the same: projects that look great on paper but collapse under scrutiny.
He adds: “Watch for promotions around first production—without clarifying commercial production. And if there’s bad news in a press release, it’s probably really bad news.”
What subtle technical issues can ruin a mine?
Bench height, dilution control, ramp access, haul delays—these are the invisible killers.
“Bench height is huge,” he says. “Too tall, and you get dilution. Too short, and you lose productivity.” Ideally, bench heights are adapted to orebody geometry.
The Australians, he says, are best at selective mining. They often mix fleets—big gear for waste, small gear for ore. It’s a tactical compromise.
Grade control drilling, especially bench-to-bench, is also key. “Without infill drilling, your dig lines will be off, and you’ll mine waste as ore—or vice versa.”
Neil Rindahl Full Interview
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