Startup Series: MineSense
Today's guest is Jeff More, President and CEO of MineSense.
MineSense provides real-time, sensor-based ore sorting and data analytics for mines. The company recently announced a $42 million Series E round led by JP Morgan's sustainable Growth Equity Group. MineSense technology platform includes a set of sensors that go into a shovel bucket, and at the moment of extraction, help identify the makeup of ore and rock with each new scoop. This helps mines reduce the amount of low-quality rock sent to milling and processing, which also helps mining operations use less power and water.
Jeff and Cody dive into the state of mining today, MineSense's technology and how it's increasing efficiency. They also cover the company’s business model, and the adoption curves of software in the mining industry generally. And lastly, they talk about how mining is changing and how sustainability and climate factor into purchasing decisions around innovation. We've had a number of conversations on the pod recently about the state of metal supply chains, metal recycling, and related topics. But this is an excellent primer for how mining works generally and how MineSense is helping to drive optimizations into processes that have been in place for decades.
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Episode recorded on March 20, 2023.
In this episode, we cover:
The state of mining today and its challenges
Site selection and permitting process
The logistics behind setting up a new mine and long-term plan
What happens to waste
Environmental impact of the mining process
An overview of MineSense
The company's hardware and software
MineSense's focus on copper and other base metals
The company's value proposition of increased profits and sustainability
MineSense's business model
Jeff's predictions for the future of the mining industry
Advice for founders/CEOs as they navigate their go to market
MineSense's funding to date and how the business plans to capitalize moving forward
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Cody Simms:
Today's guest on the My Climate Journey Startup series is Jeff More, President and CEO of MineSense. MineSense provides real-time, sensor-based ore sorting and data analytics for mines. The company recently announced a $42 million series E round of financing, led by JP Morgan's sustainable Growth Equity Group. MineSense technology platform includes a set of sensors that go into a shovel bucket, and at the moment of extraction, help identify the makeup of ore and rock with each new scoop. This helps mines reduce the amount of low quality rock that is sent to milling and processing, helping mining operations use less power and water. Jeff and I dive into the state of mining today, including how a site is identified, what needs to happen before a dig begins, how a dig is managed and how rock and ore is processed. We then go into MineSense's technology and how it's increasing efficiency, in the mining space,
We talk about MineSense's business model, and the adoption curves of software in the mining industry generally. And lastly, we talk about how mining is changing and how sustainability and climate factor into purchasing decisions around innovation. We've had a number of conversations on the pod recently about the state of metal supply chains, metal recycling, and related topics. But this was a great primer for me on how mining works generally and how MineSense is helping to drive optimizations into processes that have been in place for decades. But before we dive in, I'm Cody Simms.
Yin Lu:
I'm Yin Lu.
Jason Jacobs:
And I'm Jason Jacobs. And welcome to My Climate Journey.
Yin Lu:
This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms:
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help. And with that, Jeff, welcome to the show.
Jeff More:
Well, thanks for having me. It's great to be here.
Cody Simms:
So Jeff, I am interested, let's start by diving into your background and ultimately how you came to work in the mining space.
Jeff More:
Well spent early career working for large companies. Towards the end of that part of my career was mostly running business units for large companies. Then migrated to running companies for private equity, their portfolio companies. And then really had no background in mining whatsoever, but had worked in a number of different industries and then was approached by a group of VC investors about running this company called MineSense. And the proposition that the business could have [inaudible 00:02:51] potential was very compelling and decided to come to MineSense, and from there, got into mining.
Cody Simms:
And it looks like for the last maybe few roles you had were in related fields, whether it was e-waste recycling or an environmental services role at a large company. So it seems like you've been in a natural resources space for a while, even if it wasn't specifically mining. Is that accurate?
Jeff More:
Yeah, that's accurate, especially the last few roles. And then I was also early career in spaces like agriculture, for example, as well, so for in terms of the food system. But the last few roles, exactly, running an electronics recycling business, then the environmental services business. So more on the environmental sustainability side in the last few roles.
Cody Simms:
Let's talk about the state of mining today. Mining, we all know, I think as we transition to a clean energy economy, becomes even more and more critical to access various types of metals that we need to support the electrification of the world. What does mining actually work today? I think of these giant big trucks that are getting rocks dropped on top of them, but other than that, I don't really know exactly what the process looks like.
Jeff More:
So your description is actually quite accurate. I had never been to a mine myself before joining MineSense, so I had this reaction. And everybody we take, for example, investors that come from the sustainability clean tech space that have not been to a mine, everybody has the same impression. They get to a mine, they're blown away by the scope of a mine, how huge it is, and just the complexity of what the people that mine have to do. So it isn't a very complex operation and part of what's facing the mining industry today is that what they call ore, so the metal that's in the ground. As humans, of course, we went to where the good stuff was first, and so by definition, was left today, and there's still a lot left, but what's left is a much lower quality of what they call grade, the percent of metal in the ground. And so they're faced with that constant challenge that their ore grades are decreasing, but of course the world needs more of these critical metals going forward. So that's where their challenge really starts.
Cody Simms:
And how is a site identified today? If we take it from the top, if I ran a mining business, how would I decide where the next operation should be placed?
Jeff More:
There's a number of things that start with these geological surveys and this is not where MineSense plays, but there's some very cool technologies used to try and identify, some using technology where there's planes flying over a large area space and looking for things. At some point they'll start taking some samples, so they refer as core samples, and those samples start to give them ideas to whether there's the types of metals they're trying to find that are in that place or not. But part of the challenge of mining is that there's, talk later about MineSense specifically, but at every stage, starting with the exploration stage, there's a real lack of information. It's very hard to be precise. So they're basing big bets on relatively anemic information because that's the only thing that's available to them. But that's essentially what they'll do, they'll do some surveys, then they get down on the ground, geologists are taking rock samples, and then from there they try to defer, okay, it looks like there's an ore body here.
Cody Simms:
I assume there's permitting involved and figuring out if you have the mineral rights to this plot of land. Partly there has to be some degree of speculation, of needing to acquire the mineral rights before you know for sure. How much is there, because if you knew for sure how much was there, or if the landowner knew for sure how much was there, they might not want to sell you the mineral rights on that land in the first place. How does that dance tend to work? And I know this isn't the space you play in, I'm just trying to get smarter on the mining space in general.
Jeff More:
Yeah, generally you have it correctly. So if they determined there's something there, then they would try to acquire the mineral rights for a part of land, and that's well before there's any permitting. So they then will start to do a more significant, there's basically a drill program that's put together and they start to take a lot more samples on that parcel of land and try to build a little bit more of a data set in terms of what's actually there. They then go through a series of studies. So in the mining world, you'll hear something called a pre-feasibility study. And that's really your first study, where based on the sampling, you're putting together an estimate of what could be there and trying to track your first financing. And then there's a second stage, what they call the feasibility study. And so all of this happens before they're able to even start doing anything that even is close to building an actual producing mine.
Cody Simms:
Fantastic. And so then through those studies, you presumably have acquired the mineral rights, you go get some permitting, which I'm sure varies widely depending on city, state, local, nation, state level controls, and then you somehow secure project financing as well for the project, I'm guessing. Most of these mining companies presumably aren't funding the actual mining operation directly off their balance sheet. Is that also accurate?
Jeff More:
Yes. And what you tend to see, so there's the very large mining companies that are big producers, they would have some of their own exploration as well, but there's another whole segment on the market. They're usually referred to as the juniors, which are smaller companies. And generally the juniors are focused on that very early stage. So generally the juniors will be the ones looking for the next mining site, and then when they find some that looks promising, then often they'll sell to somebody else. It's a bit of a spectrum, but typically the juniors are the exploration companies and not necessarily the producers. And so the larger companies will typically, at a certain point, they'll buy these properties off the junior mining companies.
Cody Simms:
I mean, thinking with my childhood comic book hat on, these are the people you would think of as the old prospector, the juniors are the people out looking for the next big mine, but they're probably not the ones who are going to be doing the digging because that involves a ton of heavy CapEx at that point.
Jeff More:
That's exactly correct. And then the CapEx goes up dramatically. And so you need people that have big balance sheets and people that have access to much larger funding. But that's exactly correct, there was a big mining show in Toronto a few weeks ago, it's referred to as PDAC and the P stands for prospectors. The term is still used, there are literally people flying to remote corners of the planet looking for these metals.
Cody Simms:
And so then you now have this site, you're permitted, you're funded, you're bringing heavy machinery in there. I don't even know how in the world these large multi mega ton dump trucks actually get there. They're certainly not driving there over terrain. So there's probably a whole business around the logistics of moving the machinery to a mine, I'm guessing. And then you are starting to dig, and you've got this general plot. How do you know where to dig and what to do with the rock that starts coming out of the ground?
Jeff More:
So the first point, you're exactly correct. So for most mines, because they tend not to be anywhere near a civilized part of the planet, you have to build an entire infrastructure. So the mining company would've to build the roads, and in some cases railroads, but access to get all the equipment in and to get eventually the product out. And then what they do is they'll develop a long-term mine plan. So they drill what's called core samples, and they'll drill core samples around the plot where they believe they should build the mine. And from that, they develop a plan. I mean, a mine life is decades typically. And so they'll design an overall mine plan that will dictate how they approach this ore body. And one thing that is always very consistent in the ore body, there's two kinds of mines typically, there's what's called an open pit, which is you're digging a hole or there's an underground mine where you have to actually go under the surface and build a whole infrastructure underground.
In both cases, the open pit may be a little bit more straightforward, you have this area, you know that there's stuff you have to move that has absolutely no value. They refer to it as stripping, but you're moving material that is just barren rock, but you basically have to move what's in front of you. So you do start to dig the hole in what you think will be the most productive way, but you're going to have to dig through a number of material just to get the mine started. And then even when the mine's operating, you'll still have that operation. If you go to a mine, it depends on the mine, and they refer to it as a stripping ratio. There's these huge shovels, which is what MineSense goes on, these huge shovels that dig rock and load these big trucks. A lot of those shovels, they're simply digging barren rock to get it out of the way so that you can actually get to the good stuff.
Cody Simms:
And then-
PART 1 OF 4 ENDS [00:11:04]
Jeff More:
To get it out of the way so that you can actually get to the good stuff.
Cody Simms:
And then you're looking for, I think in my head, like, "We've hit a seam." You're looking for this pocket of highly dense ore that you're ultimately seeking. Is it obvious when you've hit this stuff or is it less obvious than an outsider might think, meaning that it's embedded in the rock, but still a shovel full of ore might look like a shovel full of rock?
Jeff More:
Yeah. No, it's much more of the latter. A shovel full of ore could look like a shovel full of rock. And you also don't want people trying to visualize anything, even if you could see the difference. So it really comes down to once they're mining a certain area, the way they do it, traditionally they have these big drill rigs and the drill... So the first step in an operating mine is you have to blast the rock. You have to blow it up so you can actually dig it. To put the explosives in, they dig a hole down into the rock. This big drill spits out a pile of chips basically, and they sample those chips and they send it off to an assay lab. That then gives them an idea of this vertical hole that they've drilled. What is that greater of that material?
So they'll drill a hole here, they'll drill a hole here, maybe 10, 20 meters apart, and they sample each of those. Unless it's a copper mine, that's 0.3, that's 0.4, this is 0.2. They then do an average of that whole area and say, "Okay, this is what we're going to dig." And they designate that as ore, meaning it has value and they're going to process it or as waste, depending on what that sampling exercise determines.
It's not visible without our shovel sense product. You're basing it on those samples and a lab has sampled and then said, "All right, this is what you have in that sample you pulled out of the ground when you were drilling."
Cody Simms:
So depending on how accurate your sampling is and how accurate you are at extrapolating the sample info back to the plot of land, you could be throwing away perfectly good ore as waste, or you could be pulling just plain old limestone or rock out of the ground and sending it off to a processing plant only to find out that there wasn't anything in there.
Jeff More:
That's exactly correct. And the big problem is, as you said, it's the interpolation. So we've dug this relative size of mine, this very small, narrow vertical hole in one spot. You've got this other spot, you've got a few spots. But geology is never linear. So they extrapolate what's in between, but they really don't know. It's impossible to actually know what's actually in between these samples.
So that is a huge challenge to the mining industry. They work on these averages. They've taken these bunch of samples and then they take an area... And a copper mine, it's typically about 5,000 tons. They designate that as an average of what their samples were. So they treat it as if it's one homogenous thing of 5,000 tons. They know it's not. They absolutely know that. They know that there's going to be veins and structures and all these cool geological formations going on, but without our technology, they have no way to see where those are.
Cody Simms:
I think of it, the pattern might look more like looking up at a galaxy where it's this crazy spiraled pattern or something like that as opposed to just being one big giant chunk of the ore that you're going after. Would that be a good way to think about it?
Jeff More:
Best way to think about it. And the ore by themselves are very different. And geologists, I love our geologists, but whenever you ask a question to a geologist, A, they'll start talking about what happened 4 billion years ago. That's always how they start their answer. And then they always end the answer with, "But it depends." But in between, they'll use all these words that none of us will really know what they are, but there's all these different types of ore body. Some are more disseminated, they're more spread, others are very vein like. And so you have to know exactly where the vein is. It depends on the ore body itself.
Cody Simms:
Let's take the two today, if it's fairly binary. It's either I'm digging here, we have classified this section as waste, and so we're just shoveling it away, or I'm digging here and we've classified it as ore so I am extracting it. What happens in either of those cases? So let's start with the "waste rock." It's dug out of the mine today. Where does it go?
Jeff More:
These big shovels that are digging, they have to dig what's in front of it. And so the shovel digs and it loads a truck. Basically the mine plant tells the truck where to go. So every mine works on what they call a cutoff. It's an economic cutoff. Anything below the cutoff, the truck will drive to a waste dump on the side of the mine, and that rock gets dumped into the mine site's a waste dump. Any truck that's above cutoff according to the mine plant, that gets sent for downstream processing.
Cody Simms:
Above cutoff means basically it's been classified as having enough presumed ore richness that we want to take this somewhere to go process it.
Jeff More:
That's correct. So it's basically a breakeven. So the mine has their costs to be able to process the ore and that cutoff is a breakeven point. If it's below the cutoff, they would lose money if they processed it. If it's above the cutoff, they will make money. Then they also then measure the actual percent, or grade is just a percent of, let's say it's copper, it's a percent of copper. They measure that because they need to know that to optimize the downstream. But that first point of extraction, that's the key binary function. Do we truck it to be processed or do we truck it to be thrown away?
Cody Simms:
So does each mining project then have some sort of score that's being measured on how accurate it is at where it drew the cutoff line from a profitability perspective?
Jeff More:
Yeah, absolutely. You'll see that cutoff variable measured. You'll also see what they refer to as head grade, which is of the stuff that gets processed, what's the average of that stuff that gets processed. You'll see that. And then mines always have a big, what they refer to as a reconciliation process. So we believe we took this out of the ground. At the end of the mine process, what did we actually get? And they try to reconcile those two numbers.
Cody Simms:
Great. And then the last question I guess I have on setting the stage and just helping me understand the broader context here is, you mentioned at the start that humans went after the good stuff first. And so mining has gotten increasingly harder because it's harder to find deep pockets of ore now. And at the same time, the world has become more environmentally conscious over the last couple decades recognizing the impact that the insatiable human growth has had on our planet. How are mining companies balancing the need to go after harder and harder places to mine while also having to presumably be more beholden to regulation and more beholden to shareholder demands, stakeholder demands, et cetera, for environmentally friendly processes?
Jeff More:
So there's a number of things that the mining companies are doing in the ESG area. Areas like for example, they're being much more conscious of the communities that they are next to. On the pure carbon side or clean tech side, mines themselves actually don't take up much of the world's surface. So on a macro scale, it's not the physical mine itself, so to speak. The main factors a mine consumes, there's a lot of electricity required to run a mine. And then on a mine, there's actually two main processes. There's the mine itself, but then there's referred to as usually in North America it's called the mill. It's a crushing grinding circuit, and then the rock ends up being a powder and it's put into a flotation circuit.
So the crushing, grinding consumes a lot of electricity and the flotation circuit consumes a lot of water. So those are really the two large environmental inputs that mine uses. And so there's a huge effort to find out innovative ways to reduce the electricity and the water on a per metal produced. The world needs the metal. The best way to measure that is on how much environmental factors did I incur to get so much metal out, and that's really what they're very focused on.
Yin Lu:
Hey everyone. I'm Yin a partner at MCJ Collective, here to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast.
We started in 2019 and have grown to thousands of members globally. Each week, we're inspired by people who join with different backgrounds and points of view. What we all share is a deep curiosity to learn and a bias to action around ways to accelerate solutions to climate change. Some awesome initiatives have come out of the community. A number of founding teams have met, several nonprofits have been established, and a bunch of hiring has been done. Many early stage investments have been made as well as ongoing events and programming, like monthly women in climate meetups, idea jam sessions for early stage founders, climate book club, art workshops and more.
Whether you've been in the climate space for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mcjcollective.com and click on the members tab at the top. Thanks and enjoy the rest of the show.
Cody Simms:
Got it. So obviously there's the visual impact of the mine itself, but the vast majority of environmental impact is in the processing of the ore at the mill where you're either probably and/or using a lot of electricity to crush and grind, as well as creating a lot of water use and presumably water pollution as you're processing this ore. Am I correct in hearing that?
Jeff More:
Yeah. The water pollution, and I'm talking about, there's mines that do what's referred to as leaching, and there's mines that are used as flotation as I was describing. One of the waste materials out of the flotation circuit is what they refer to as tailings. So that is contained. The mines will have a tailings pond where they contain the waste water. So it is not really a water pollution per se, it's mostly contained.
Another factor that mines are also looking at is there's some rock which is acid generating, and there's some rock which is not acid generating. That's another environmental factor they do measure and handle the rocks differently so that the acid generation rock is obviously more contained than the other rock that is more can be used for different things.
Cody Simms:
Great. Well, Jeff, thanks for all that context. Super helpful to set the stage and just get me more up to speed on the state of mining. I have never visited a major mining operation in my life, though I imagine I would be have my eyes opened in doing so. So thanks for putting us in your shoes for a minute and explaining how that works.
So MineSense then came up with a methodology for helping mining companies do some of this more efficiently. Maybe explain a bit, just give us the high level overview of what MineSense is and then we're going to spend a little time on the origin of how it came to be in the first place.
Jeff More:
Yeah, absolutely. Going back to that front part of an operating mine where what they're basing their measurement on is the sampling exercise, when they drill the holes and sample what comes off the drill holes. What MineSense is essentially all about is making that extraction exercise much, much more precise. So rather than dealing with 5,000 tons that are all designated as one thing, knowing that you're going to be wrong for some large portion of that 5,000 tons, what MineSense does is we give them a very accurate reading, that big shovel that-
PART 2 OF 4 ENDS [00:22:04]
Jeff More:
... this does, is we give them a very accurate reading, that big shovel that digs every single dig that they have. And depending on the shovel, that's between 50 and 90 tons. So you're going from 5,000 tons to 50 to 90. We're telling them in exact real time, with a lot of precision, what's in that 50 to 90 tons. Our system also has high-precision GPS, GNSS it's called. So we also are telling them exactly where in the mine it comes from.
So for the first time, the mining industry isn't operating blind, as they have for the existence of mining. They actually now have a precise reading and know exactly what every single dig, what it actually is, what that grade of material is. And so, the first thing that does is when they're loading the trucks, the trucks now are routed correctly, whereas the air bars on an operating mine can be as high, well, between 10 and 20% without ShovelSense, our product is called ShovelSense, they're not going to the right place. With us, we reduce that variability dramatically, and that's the essence of what we do.
Our technology is a combination of hardware, software, and where our secret sauce really is in our AI. We have machine learning algorithms that translate the data specific to every ore body and translate the readings we're getting from our sensors into that very accurate grade and other ore characteristics, and that's really where our technology is. A lot of focus goes on the hardware because we put very delicate equipment into a very, very nasty environment and that's been a part of our journey as well, but it really is our AI that makes everything work.
Cody Simms:
We'll definitely want to get into the AI that makes it work, but maybe start with just a little bit more explanation on the hardware itself. So this is some kind of attachment on the shovel bucket that is trying to read in real time the makeup of the rock and mineral material in that bucket. Is that correct?
Jeff More:
Yeah. So our hardware comes with a series. We looked at it as metal boxes. Two of them are computing devices that sit elsewhere on the shovel, the boxes that really start it all and take the beating, we sometimes call them as our heads, but they sit right inside the actual bucket and they're up in the upper side inside the bucket. We use a technology called X-ray fluorescence or XRF, low-level X-rays, and technically, what's happening is we hit the rocks with this X-ray and we're actually measuring at a tectonic level the energy, the electrons change shells and when they do that, they give off photons of energy.
We have an emitter that sends out the X-ray, we have a detector that reads the photons, and every element gives out photons at a specific energy level. So we know that copper is 120 and iron is 150, and we see that very accurately. And so, the raw data looks like a spectrum, basically. Our system is very, very fast. We read dynamically. We have a laser as well that triggers the X-rays to go on and off, and we only read when the bucket is filling, but we read as it's filling so we see the rocks as they're tumbling into the bucket, which gives us a very accurate reading.
Cody Simms:
Got it. And then does the AI somehow then help make a prediction of where that vein may be based on what it's seeing in the bucket and what it saw in the prior bucket, et cetera?
Jeff More:
It reads bucket by bucket, so it tells you exactly what's in that bucket. And then the trucks, it's three to five buckets, typically, the load of these big trucks. So we give a reading by bucket, and then the routing is done at the truck level, and so we get the average for that truck. And so, let's say a shovel, the mine plan said that where the shovel is digging is waste, let's say, and we're confirming, "Yeah, that's below cutoff. Yep, that's below cutoff," giving the specific grade.
But then when they do hit a vein they don't know, or a pocket of ore that they didn't know it was exactly where it was. Then we're saying, "No, that truck has actually got good ore, process that truck." We do the reverse in an ore block. They're digging ore. They're sending the trucks to be processed, when they hit an area that's just waste, there's no value to process it. We tell them, "No, send those trucks to the waste dump." And this is all done automatically. There's existing software referred to as fleet management systems that mines use. Our software talks directly to that software, so it's all automated.
Cody Simms:
So the digger is then going to make a binary decision to dump into the ore truck or dump into the waste truck on a per-bucket basis, and then you'll route those trucks accordingly.
Jeff More:
Yeah, it can be done that way or the digger just loads a truck as the digger always does, and our software tells that truck where to go. That's the usual way.
Cody Simms:
Okay, got it. Makes sense. And then from there, the benefit to the mine, obviously, is you're trying to decrease the amount of waste you're sending to process and you're trying to increase the amount of ore that is going to process, which allows these mines to operate more productively. And I think based on what you were saying around the energy usage of milling, the climate benefit would be that you're using less energy and using less water to produce. You're not trying to produce lower-grade ore as frequently, basically.
Jeff More:
Yeah, that's exactly correct. So it is very much a mass balance-driven exercise. So exactly, rather than consume the electricity to crush rock that has no value, we're taking that rock out and we're replacing with rock that without us, they were throwing away, but that rock has a lot of value. Let's say it's a copper mine, on the amount of copper produced, we're dramatically decreasing or materially decreasing the amount of electricity that's used.
So we're seeing reductions between five and 20%, which is pretty significant. The mining industry consumes 3% of the world's electricity for that crushing, grinding exercise. And so, if we can reduce that by between five and 20%, the average we're running at is about 12% currently, that's a material decrease in electricity consumption.
Cody Simms:
You let me know when we were getting ready to have a conversation that you're in Chile today, I assume Chile being a very large copper-producing company, is that the focus area right now from MineSense, is copper as a metal, or do you work across multiple different ore types?
Jeff More:
Copper is definitely our largest target market for a number of reasons, including just the criticality of copper to electrify the world, we'll need more and more copper to do that. But we're also focused on the rest of what's referred to as the base metals. So we're focused on nickel, zinc, iron ore, other more specialty metals like cobalt, lithium, we're focused on a range of metals, but copper is our largest target market, and as you said, Chile is the largest producer, it produces a third of the world's copper. And then we're also very active in Peru as well, commercially in Peru, which is the second-largest producer in the world,
Cody Simms:
Is the value prop to the mines, how are they balancing the value prop of, "Hey, lower energy use, lower energy footprint, lower water footprint," relative to higher throughputs of high-quality ore? One of the things we talk about in the climate space is what is the value that your technology has to climate change, et cetera, but also, why is your customer actually buying this thing? What's the driver of value? And I'm curious to hear how the mining industry is receiving this technology today.
Jeff More:
Well, I mean, what we try to create with MineSense is that one-two punch combination. So we've created a technology that we can go to a mining company and say, "We will make you more money and we'll make you more sustainable." And the dual value proposition resonates very strongly with mines. Definitely, in the last several years their focus on sustainability has become greater and greater and greater, and so we offer them both. And also, we can quantify both quite well, so we have a model that quantifies the profit improvement side, we have a model that quantifies the carbon reduction side. And that's always our starting point when we're talking to a mining company or a specific mining site, that's always where we start.
Cody Simms:
And so it is the, "We're going to reduce your carbon footprint," more so than, "We're going to reduce your cost of operations from an energy perspective. We're going to make you more profitable because you're going to be finding ore that is higher value, so there's greater profitability and greater yield on the top line, greater revenue." But also on the cost side, it's mostly around, "Hey, we're going to reduce your carbon exposure here."
Jeff More:
Yeah. And they both resonate in different ways because one is measured by them on the bottom line, the others are making more and more efforts to measure their carbon footprint, whereas the profit improvement, they've been measuring that forever. But yes, they both resonate. The other thing that's very related but resonates as a third factor, there's a lot of predictions now.
I was at a clean tech farm in Palm Springs, I guess about a month ago, and one of the things that's very interesting now when you look at MineSense, we're digital, we're clean tech and we sell into mining, so those are sort of the worlds we hang out in, which are typically very different worlds. But what you're seeing now, one of these intersections between a clean tech conference and a mining conference is the need to get critical metals like copper for the electrification of the world. And in both cases, one thing that you'll always see is the supply/demand forecasts and the fact that with things like EVs and other sustainable technologies coming on, we're going to need more copper than we actually have today, and so, we have to produce more of it.
And so, the third element that we have is that we increase from existing operations pretty materially the amount of copper or other metals that they can produce on those existing operations. It's very important for a number of reasons, but one is timing. So with MineSense, you can do that today, so to speak, as soon as you install our systems, you're getting that benefit, as opposed to you're asking at the beginning about finding new mines. That total process is 15 to 20 years. That's a long time, so our technology is one of the rare technologies that has an immediate impact and a fairly material impact on that metal supply.
Cody Simms:
And the business model today is, are they buying this as a hardware and software package? I'm not even going to infer. Explain to us how the company makes money right now.
Jeff More:
So the vast majority of our revenue is we monetize the data we provide to the mine. We use something called value-based model. We don't have a list price per se, we have pricing that is based on the value we create to the mine, the improvement that we bring to their profitability, and then the way we monetize that is through the data. So, majority of our revenue comes from, it's a data fee paid for the dataset they're buying from us, and that's paid monthly or quarterly as, to us, a recurring revenue.
And then we have two versions of that. One, it's a pure SaaS model, we retain ownership of the hardware and it's just one fee, they pay us and all the services come with that, plus we supply the hardware. Other mines are a little bit more conservative, they want to buy the hardware, but in that case, the majority of our revenue is still from the same data fee, but they've bought the hardware as a one-time CapEx to them, one-time fee to us.
Cody Simms:
How does the data sales business line up with the relative realtime decision-making you're enabling on the minefield? Are they then buying the data to check the accuracy of the decisions they were making on this truck being above the cutoff line, for example?
Jeff More:
The realtime data that they're buying, that's the benefit for them. For the operations, I imagine that's all real time. We also live stream all the data, so if you came to visit us in Vancouver or here in Santiago where I currently am, we'd take you to our data room. We'd show you...
PART 3 OF 4 ENDS [00:33:04]
Jeff More:
... Or here in Santiago where I currently am, we take you to our data room, we show you live data from every system we have operating around the world, but they're paying for that live data. Over time, we're going to be adding other data services to that, and there's a number of ways we're extending off of that. One area will be more of that analysis of data over time. So we're collecting now all this data. We've got a lot of very, very smart geoscientists and data scientists and they're looking at the data on a regular basis. So you could argue we're getting to know your bodies almost better than some of the mines do because we're constantly gathering and looking at this data. We also accumulate the data, but the main thing is this real-time data. That's really what they're buying.
Cody Simms:
On a scale of one to 10, whatever, you don't have to be accurate on this, how technologically oriented do you think the mining industry has been historically? Where do you see that moving over the next five or 10 years?
Jeff More:
Well, that's a dangerous question. I mean, the mining industry, for good reasons, primarily the complexity of the challenges that they have, and you compare it to say a manufacturing industry where you have your own building and you build inside your building, it's a relatively conservative industry because there's so many things that can go wrong in a mining operation from an operational perspective. So I would sort of put them at a 4.5, how's that, out of a 10.
Cody Simms:
Sure.
Jeff More:
Trend-wise though, a huge focus to move up that scale with the biggest focus being on digitization. Everybody is wanting to become much more digital than they are today, and that's part of why we're very excited to be a key technology in that move forward to be much more digital.
Cody Simms:
Historically, how are those sales cycles selling digital product into the mining industry?
Jeff More:
They're relatively long. Now that we have the technology proven, if I can make a certain reference, the mining industry is from Missouri. If you know that expression, "The show me state."
Cody Simms:
I know the expression, I didn't realize the industry emerged out of Missouri.
Jeff More:
It didn't come from Missouri. I'm just using that expression, if you remember Missouri-
Cody Simms:
Oh, got it. Okay.
Jeff More:
Or let me use a different phrase. In the mining industry, the first time that I heard this, being new to mining, I kind of thought the person was joking and was a very negative person. Neither of those were correct. But in mining, there's an expression, "Everybody is in a race to be second because nobody wants to try something new," is a stereotype. But once it's proven, they then move relatively fast. And so we're now seeing that difference. So our earlier sales cycles were quite long because we had to find those first people. Now also to be fair, our product was... Took us a while to get the product to work without breaking. So to be fair, the early product took that term minimal viable product, the MVP took it to the extreme in the early days. But now that we have reference sites, now that we have the technology proven, it's moving much faster. We're still though seeing initial, "That sounds interesting, let's work together," to actual commercial revenue is somewhere on average about a year. On the short side, maybe six to eight months.
Cody Simms:
But you're now a company, and we'll get into a little bit of your financing history, but you're a Series E stage, growth stage company in an industry that you said is seeking to digitize much more aggressively than it has historically. You're the old hand in the room here. For any startups that are much earlier stage today, that are now coming into this space as it is starting to digitize more aggressively, what advice do you have for founders, CEOs as they're trying to navigate their early go-to-market?
Jeff More:
So one piece of advice would be, it's going to sound trite, but one piece of advice is that don't accept the norm. Well, I mentioned our value-based pricing. We were told by many people, "We hate that. It's crazy, it's never going to work." But we believed that that was the right way to approach it for our customers and definitely for us to make the kind of margin we wanted to make. If you really have figured something out that you believe is going to add value, then stick your guns. Second thing would be, I mentioned the phrase, "In mining, everyone's racing to be second," even the most conservative industries, there are those companies that are different, that will move faster, that understand concepts like optionality.
One of our first customers, they told me later, but they actually started working with us and they thought it was only about a 30% chance it was actually going to work. But they understood option theory, "Why not take that chance? If you don't have to spend a whole much money, why not see how it works?" Even in the slowest industries, there are those customers that will be more able to take risk and more innovative, more creative. They'll kind of get it and try and find those ones first and then they'll be your reference sites.
Cody Simms:
Super helpful advice, Jeff. And then, yeah, I think to kind of close up here a little bit, you recently announced a $42 million Series E led by JP Morgan's Sustainable Growth Equity team. It's Osei Van Horne's new firm, if I'm not mistaken. And previously had investors like Prelude involved in the business. How do you see continuing to capitalize the business going forward? And early on, when you were having to build this hardware stack to a point where a mine could install it in a giant shovel and trust you to do the work, did you fund all that off the balance sheet? Have you used any form of project-based financing, et cetera, in the past? Just again, trying to help entrepreneurs understand how money flows in this space and how they should be thinking about capitalizing their own businesses.
Jeff More:
So we followed, I think, a fairly classic investment pattern in our most recent run. As you mentioned, we're very, very pleased. JP Morgan's Sustainability Private Equity Fund to lead it and Osei Van Horne and Tanya Barnes are the co-managing heads. Tanya's out of New York, Osei's of San Francisco. And prior to that, most of our investors were venture capital and clean-tech type investors. I think we followed it fairly classic. One thing that we did was in parts, it's a little bit different perhaps in Canada than US, but we tended to raise more smaller rounds rather than large rounds. And that allowed us to really fund each stage, but also get a nice valuation pick up. Our capital was less expensive, so to speak, rather than getting money early on. But that was really what we primarily did. In our very early stages, we also did attract grant money from some federal groups here in Canada, the SDTC being one of the primary ones.
Cody Simms:
Jeff, what's next for you?
Jeff More:
As a company?
Cody Simms:
Yeah.
Jeff More:
So we follow what I refer to as a layering in strategy approach to grow our business. And we have four dimensions. And so for us, it's continuing that layering in. So geography is one of the dimensions and maybe the most obvious. We will end up in all of the mining regions of the world. And so that's one of our key next steps is after having installations, we're fully commercial in Canada, Chile, and Peru, we have a commercial mine now in the US, but we're also installing systems in Africa and Europe. Actually, I was interviewing a candidate for a new account manager for Zambia this morning. We'll be adding the Europe, Africa region. And then from there, we're also now installing in Indonesia as well. So next thing is really to take this globally. And then we're also looking at other technologies we can add on to our AI platform as well, so other sensing technologies that expand our reach, both within our existing markets but also to new markets as there are other middle types, for example.
Cody Simms:
And when you are bringing new members of the team on board, are you looking for people who have mining industry experience, are you looking for people with technology backgrounds? What tends to be the profile of the team and the culture of the company?
Jeff More:
So we have very aggressively recruited both. It's largely focused on the function. So hiring data scientists, data engineers, software engineers, for example, we're not looking at all for people with mining experience. When we're dealing with functions that are more customer-facing or have a specialty skillset set like geologists, then we're hiring people with mining experience. It all comes together very seamlessly. And of course, people that come with no mining experience like myself, they learn a lot of mining in a short period of time. But it really depends on the function. We try to go where the best talent is, whether that's mining or non-mining.
Cody Simms:
Well, I'm super appreciative of you coming on today, helping someone like me and helping our listeners understand more about the mining space in general, understanding how technology is helping to shape the future of mining and make it more sustainable, make it more efficient, help it use less electricity and less water, and overall help us get smarter as humans on how we can take potentially smaller footprint of the earth and gain more value out of it in terms of powering the rest of our lives. And so Jeff, thanks for your time.
Jeff More:
Sure.
Jason Jacobs:
Thanks again for joining us on My Climate Journey podcast.
Cody Simms:
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity.
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Cody Simms:
Thanks and see you next episode.
