Issue link: http://resourceworld.uberflip.com/i/638235
28 www.resourceworld.com f e b r u a r y / m a r c h 2 0 1 6 FOCUSED ON HIGHGR ADE SILVER IN MEXICO • 44% Interest in Juanicipio Joint Venture • 10,000m+ drill program at Juanicipio • Cinco de Mayo (100%) Upper Manto Zone/Pegaso Zone • Strong Financial Position www.magsilver.com | Tel: 604-630-1399 | Free: 1 866-630-1399 explorationists become mine-builders. This can be a humbling experience. By investing in a project using the phased-approach model, the investor has an opportunity to test management's perfor- mance before further investment is made. legal & PermiTTing issues The best thing management can do for a successful "legal" project is to have a legal representative that understands the project jurisdiction, in-country corporate structure and requirements, strong surface rights knowledge and agreements, coun- try mining law experience, tax laws, who pays attention to detail for filings, and has knowledge of political and social aspects in the project area. A competent lawyer will keep everyone focused on the issues and will prevent costly delays while issues are being resolved. Of all the risks to a project, permitting is the greatest; the timing of permitting can bring a good project to a halt. This discour- ages investors, frustrates stakeholders and makes everyone including management disinterested in investing time and money. Management should intimately under- stand the legal permitting process in the project's jurisdiction and allow reasonable time to achieve permits based on local case histories. By following a phased-approach model, most legal conflicts will come forward during Phase I of production and can be addressed in preparation for Phase II investment. Permitting an initial, smaller phased project is usually considered more favorable and responsible by environmen- tal and permitting decision-makers. social risks Get it right or get it wrong, there is no middle ground when it comes to impact- ing communities. Obtaining a social license to explore, construct and produce should be on everyone's priority list in order to assure success. In my experience, most errors are made when a company represen- tative makes verbal statements and makes promises to local communities in order to expedite work programs and then reneges on them. Worse yet is when there is mis- interpretation of the promises made. The only promise that needs to be made for obtaining and maintaining a social license is: "With the success of this project, we can ensure the local community benefits in a variety of ways." The local commu- nities along with local champions must see management as being trustworthy, compassionate to the needs of the com- munities, and present and available with boots on the ground in communities and having a genuine interest in responsible distribution of wealth with success. By using the phased-approach model, trust can be built as staged success is achieved without the over commitment of jobs, wealth, local impacts and promises to keep. Along with risks, there are always opportunities in a project. Using a phased- approach model can assist or even accelerate these opportunities in today's market. Many of the mega deposits with pro- posed mega capital costs are not financeable in current market environments. These projects present such unmitigated risks that their failure means certain destruc- tion of shareholders value. Often within these types of deposits there is a higher grade portion that is amenable to a phased- approach with lower capital costs that provide a de-risked entry to the ultimate mega project. Development time for a phased- approach project can be significantly less than an all upfront project. The phased- approach project is much more flexible and resilient to rapid changes in market condi- tions, availability of financing, and metal prices. In summary, the phased-approach business model is a wise choice allow- ing mitigation of risk in terms of time and investment dollars. With decreased risk, more investors are will- ing to participate. In this industry and market, we can use all the help we can get! n