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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.

  • First peak: discovery / maiden resource excitement
  • Valley: the “orphan period” or “valley of death” during studies, permitting, and financing
  • Second peak: production ramp-up and cash flow realisation
  • Decline: as reserves deplete

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

  • Typical MC: under $5m, often $2–3m shells
  • What’s happening: tenement pegging, geophysics, soil/stream sediment sampling, mapping. No drilling yet.
  • Catalysts: essentially none. Tenement grants, MOUs, “JV signed” announcements.
  • SP behaviour: drifts; pumped briefly on cheap PR.
  • Reality: you are buying a story, a postcode, and management. 95%+ never advance past this stage.

Stage 2 — Drilling Begins

  • Typical MC: $5–20m
  • What’s happening: maiden drill program. Usually RC (reverse circulation) for cost reasons before diamond core.
  • Catalysts: “rig mobilised”, “drilling commenced”, “first hole completed”, “assays pending”.
  • SP behaviour: the drill speculation ramp — SP often runs before assays return as punters position for a hit.
  • Reality: ~90% of maiden programs return nothing economically meaningful. The pre-assay ramp is often the entire trade.

Stage 3 — Discovery

  • Typical MC: $20–100m+, sometimes much more in hot commodity cycles
  • What’s happening: high-grade hits in multiple holes, geological continuity emerging, step-out drilling extending the mineralised footprint.
  • Catalysts: every assay batch is market-moving. Comparisons to nearby tier-1 deposits.
  • SP behaviour: THE FIRST PEAK. 5x to 50x moves possible in weeks. This is the dopamine spike.
  • Trap: many discoveries don’t substantiate at scale. Step-out drilling reveals grade falls off, mineralisation pinches, or it’s a one-pod wonder.

Stage 4 — Resource Definition

  • Typical MC: $50–200m
  • What’s happening: closely-spaced drilling to define a JORC-compliant resource. Metallurgical testwork begins.
  • Catalysts: maiden JORC resource is a major re-rate event. Subsequent upgrades (Inferred → Indicated → Measured) are progressively less impactful.
  • SP behaviour: can hold or drift higher into maiden resource, then often sells the news.

Stage 5 — Scoping Study

  • Typical MC: flat or starting to soften
  • What’s happening: conceptual economic study, ±35–50% accuracy. Tests whether the project is worth progressing.
  • Catalysts: scoping study results.
  • SP behaviour: muted. Market starts thinking about capex, dilution, permitting timelines. The valley begins.

Stage 6 — PFS (Pre-Feasibility Study)

  • Typical MC: often down 30–60% from discovery peak
  • What’s happening: ±20–25% accuracy. Mining method selected, processing flowsheet designed, infrastructure costed.
  • Catalysts: PFS results. Capex sticker shock is real and frequent.
  • SP behaviour: deep valley. This is where capital raises hurt most because the SP is depressed.

Stage 7 — DFS (Definitive / Bankable Feasibility Study)

  • Typical MC: starting to recover if economics are robust
  • What’s happening: ±10–15% accuracy. Lender-ready engineering. Reserves declared from Indicated/Measured resources after applying Modifying Factors (Module 2).
  • Catalysts: DFS results, Final Investment Decision (FID), financing close, offtake agreements.
  • SP behaviour: bottom of the valley typically here or just before. This is where smart money accumulates — the project is de-risked but the market hasn’t re-rated yet.

Stage 8 — Financing & Construction

  • Typical MC: re-rating
  • What’s happening: debt + equity + offtake/streaming/royalty package finalised. Construction begins. EPC contractor mobilised.
  • Catalysts: financing close, ground-breaking, construction milestones, first ore on ROM pad.
  • SP behaviour: grinds higher with milestones. Setbacks are punished hard.
  • Watch out: 30–50% capex blowouts are common, not exceptional. Schedule slippage is the norm.

Stage 9 — Commissioning & Ramp-Up

  • Typical MC: significant re-rate
  • What’s happening: plant commissioning, first concentrate / doré / cathode, ramp toward nameplate capacity.
  • Catalysts: first product, first revenue, first cash flow, achievement of nameplate.
  • SP behaviour: THE SECOND PEAK builds here. But ramp problems are normal — recovery shortfalls, throughput issues, grade reconciliation problems — and can crater the SP temporarily.

Stage 10 — Production & Depletion

  • Typical MC: tied to commodity price × production × remaining reserves
  • What’s happening: steady-state production, reserve replacement battle, expansion studies, M&A.
  • Catalysts: quarterlies (production, AISC, cash position, hedge book), reserve updates, exploration around mine, M&A.
  • SP behaviour: tracks commodity price + operational delivery. Depletion without replacement = terminal decline.

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.

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.

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?

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

What I’m uncertain about

  • MC ranges by stage vary massively by commodity, jurisdiction, and macro cycle. The numbers above are typical Australian junior patterns over the last decade — treat as rough guide, not law.
  • The Lassonde Curve is a heuristic. Plenty of companies skip stages, fail at any stage, or backslide. A discovery can de-rate to below pre-discovery levels if step-out drilling disappoints.
  • Timeframes have been getting longer in WA due to permitting bottlenecks. 3–7 years discovery-to-production is increasingly optimistic for new projects.
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