Module 1: The Lassonde Curve & The 10 Stages of a Mining Company

Why this is the most important framework

The Lassonde Curve — named after Pierre Lassonde, founder of Franco-Nevada — plots a typical mining company's market cap over its lifecycle, from grassroots exploration to production decline. It looks like two peaks separated by a deep valley.

Most retail investors buy the first peak (discovery hype), get smashed in the valley, and capitulate at the bottom. Sophisticated capital buys the valley and rides the second peak. The framework's value is letting you recognise which peak/valley you are standing in right now.

Every other module in this course feeds back into this curve.

The 10 stages

Stage 1 — Concept / Grassroots

Stage 2 — Drilling Begins

Stage 3 — Discovery

Stage 4 — Resource Definition

Stage 5 — Scoping Study

Stage 6 — PFS (Pre-Feasibility Study)

Stage 7 — DFS (Definitive / Bankable Feasibility Study)

Stage 8 — Financing & Construction

Stage 9 — Commissioning & Ramp-Up

Stage 10 — Production & Depletion

A reference map of typical Lassonde positions

This is a snapshot — stocks move along the curve over time, sometimes forward, sometimes backward, occasionally sideways for years. Use it as a way of orienting any new ticker quickly:

Stage Typical MC Risk profile Position sizing default ASX examples (April 2026)
1 — Concept <$5m Lottery 0.5–2% Most $2–3m shells
2 — Drilling $5–20m Lottery 0.5–2% BSR, TOR (early drilling)
3 — Discovery $20–100m+ High volatility, asymmetric 2–4% PC2
4 — Resource def $50–200m High volatility 2–4% MI6, PC2 (transitioning)
5 — Scoping flat / softening Orphan period 2–5% varies
6 — PFS -30 to -60% from peak Deep valley 2–5% varies
7 — DFS recovering Smart money zone 2–5% SLS (parts of portfolio)
8 — Construction re-rating Execution risk 3–6% GLN (entering Stage 9)
9 — Commissioning significant re-rate Ramp risk 3–6% GLN (Q2 2026 onwards)
10 — Production commodity × tonnes Macro-driven 5–10% ELV

(Position sizes are defaults — Module 10 covers sizing in detail. They depend on conviction, total mining allocation, and your risk tolerance.)

Why the valley exists (and why it's the opportunity)

  1. No catalysts. Discovery dopamine has worn off. Months of nothing while consultants run studies.
  2. Capital raises. PFS/DFS work costs millions. Issued at deep discounts because SP is weak. Existing holders get diluted.
  3. Capex sticker shock. $200m–$2bn+ capex numbers scare retail.
  4. Time. 3–7 years from discovery to first production is typical. Retail attention does not last that long.
  5. Permitting. Indigenous Land Use Agreements, environmental approvals, water licences, native title — glacial pace, especially in WA and NT.

The valley is where 10m → 100m+ MC stories actually get built. Not at the discovery pop (gambling), but at the bottom of the valley when a real project with real economics is being de-risked and the market hasn't woken up yet.

The GLN case study is worth internalising here. In mid-2025, lithium was deeply out of favour, GLN's SP had collapsed from $1.70+ in 2022 to ~$0.09. Most retail had capitulated. That August, a specialist lithium fund (Clean Elements) did 77 days of due diligence and put $20m in at $0.11 — a 21% premium to market. Five months later, after Phase 1 construction had visibly progressed, the same fund paid $0.41 in another placement at premium-to-VWAP pricing. The valley was where the asymmetric trade existed; by the time mainstream coverage and broker upgrades arrived, the easy money had been made.

Where 10m → 100m MCs come from (honestly)

Three legitimate paths:

  1. Discovery (Stages 2 → 3). Highest-conviction trade if you're early. Lowest probability per attempt. Lottery economics — most go nowhere; the rare ones go 20-50x.
  2. Re-rating from valley (Stages 7 → 9). Lower upside per stage but much higher probability if you've done the work. The "boring" path that compounds.
  3. Commodity cycle. A producer (Stage 10) can 5–10x just because the underlying commodity moved. Macro overlay — covered in Module 9.

A fourth path that exists but is harder to time: takeover. Mid-tier or major acquires the developer at a 20–80% premium. Often happens at Stage 6–8. (GLN rejected a US$150m takeover bid from Huayou + Renault in late 2024 — sometimes management sees more value standalone, sometimes they're wrong.)

Using AI tools to research mining stocks — a 2-stage workflow

A practical note that's worth flagging early because most retail are now using AI tools (ChatGPT, Claude, Gemini, Grok, etc.) to research stocks and getting burned by it.

What AI is good at

What AI is bad at and routinely gets wrong

The 2-stage workflow

Stage 1 — Frame the question with AI. Use the AI to:

Stage 2 — Verify every specific fact against primary sources. That means:

The AI-research failure mode is doing Stage 1 and skipping Stage 2 — letting the AI confidently tell you that a company has X tonnes at Y g/t when it has neither. The number sounds plausible. It isn't. Every specific number, name, or date that matters to your decision must be verified from the company's own ASX disclosures. No exceptions.

A simple rule: if you're about to put real money behind a fact, that fact has to be linked back to a specific ASX document you've actually read. If the AI gave it to you and you can't find it on the ASX announcements page, treat it as not real until proven otherwise.

Practical exercise

For every ASX mining stock you're tracking, write down:

  1. What stage is it at?
  2. What was its peak MC and when?
  3. Where on the curve is it sitting now relative to its peak?
  4. What's the next genuine catalyst that could move it?
  5. What ASX document did you verify each of those answers from?

If you can't answer all five, you don't actually know the company well enough to size a position.

What I'm uncertain about

Revision #2
Created 22 April 2026 01:44:45 by Conor
Updated 25 April 2026 02:08:58 by Conor