Roller coaster or moonshot? Navigating market volatility in mining

The mining and exploration sector has always been a world of highs and lows. Commodity prices surge and collapse, investment sentiment shifts, and global events add unpredictable twists. But are companies preparing for this reality, or just hoping for the next big boom?

Sean Russo , joint managing director and principal at Noah's Rule , believes that the difference between success and failure in the sector isn’t just about timing the market—it’s about having a structured financial strategy that anticipates both peaks and troughs.

The illusion of the “moonshot”

Speaking at the RIU Explorers Conference, Russo challenged industry leaders to rethink their approach to risk and opportunity. While every miner dreams of a “moonshot” discovery or a bull market that sends valuations soaring, the reality is often far less predictable.

“Too many companies are focused on the upside without a plan for managing the inevitable downturns,” Russo explained. “If you’re only preparing for the next commodity supercycle, you’re ignoring half the equation.”

Rather than relying on optimism alone, he urged companies to build financial resilience so they can survive—and thrive—when market conditions turn against them.

Volatility is the only certainty

Market fluctuations in mining are nothing new. But in today’s world, the volatility is even more extreme. Russo pointed to several key drivers of instability, including geopolitical uncertainty, investment sentiment shifts, technological disruptions, and regulatory changes. Trade wars, resource nationalism, and global conflicts continue to create ongoing supply chain risks that can disrupt production and drive costs higher. Meanwhile, investment sentiment is shifting as environmental, social, and governance (ESG) expectations become more prominent, with green energy transitions and changing investor priorities influencing capital flow into the sector.

At the same time, technological advances are reshaping demand for different minerals, with innovations in battery metals, alternative energy, and automation driving investment into some commodities while diminishing interest in others. Regulatory frameworks are also becoming increasingly complex, as governments worldwide impose tighter restrictions on sustainability, royalties, and permitting. These converging factors mean that miners can no longer afford to rely on past trends to predict future stability. Instead, they must incorporate greater financial flexibility into their business models to withstand market turbulence.

The role of structured financial management

For Russo, the best way to navigate uncertainty is through disciplined risk management. One of the most effective ways to mitigate financial instability is through hedging, which allows companies to protect against price swings by locking in future sales at stable prices. By securing a guaranteed price for a portion of their production, miners can avoid the severe revenue fluctuations that often accompany commodity market volatility.

Capital structuring is another essential aspect of financial resilience. A well-balanced mix of equity and debt financing ensures that companies have the financial flexibility to weather downturns without becoming overly reliant on a single source of funding. Additionally, attracting long-term investors who understand cyclical risks is crucial. Too often, mining companies cater to short-term speculators chasing quick price spikes, but Russo emphasised the importance of building relationships with investors who are willing to support a company’s vision even during challenging market conditions.

Scenario planning is another critical tool in a company’s risk management strategy. By stress-testing business models against different market conditions, miners can ensure their operations remain viable even in the face of unexpected downturns. This proactive approach allows companies to anticipate potential obstacles and develop contingency plans rather than scrambling to react once a crisis emerges.

“Having a risk strategy in place doesn’t mean you won’t benefit from an upswing,” Russo explained. “It just means you won’t be wiped out when the downturn inevitably arrives.”

Resilience over reaction

Russo emphasised that mining companies need to move beyond reactive decision-making. Too often, businesses chase short-term market trends, adjusting their strategy only after prices move against them. This, he argued, is a recipe for financial instability.

Instead, he encouraged leaders to embrace long-term resilience, structuring their businesses to remain viable regardless of market cycles. Building financial stability requires foresight and strategic planning, rather than knee-jerk reactions to market fluctuations. Companies that adopt this mindset are better positioned to ride out market instability and emerge stronger when conditions improve.

“The miners that will be here in 10 or 20 years aren’t just the ones who made the biggest discoveries,” he said. “They’re the ones who managed their risks wisely and built financial stability into their DNA.”

Preparing for the future

While commodity markets will always be cyclical, a well-prepared company can turn volatility into an advantage. Rather than viewing market instability as a threat, mining leaders should see it as an opportunity to strengthen their financial strategies and future-proof their businesses.

Russo left the audience with a final challenge: is your company structured to endure the next downturn, or are you just hoping for the next big rally? Companies that fail to take proactive measures will find themselves vulnerable to market shifts, while those that embrace financial resilience will position themselves for sustained success.

The choice, he suggested, is simple: ride the roller coaster without a plan, or prepare for a sustainable journey—one that ensures long-term growth regardless of where the market swings next.