It is often said that everything begins with mining, but modern mining begins with exploration!
So just what is exploration?
- It’s the collection of processes that gather information about the presence or absence of mineral deposits
- The over-riding goal of exploration is to find deposits that can be worked as profitable mining operations.
- It is a time-consuming, multi-stage investment in information different gathering processes.
- It’s also an expensive, high-risk investment, unlike ordinary businesses investments.
- Depending on the literature source, the success rate for finding profitable mining operations (when weighed against the total number of mineral properties examined by a company) have ranges from a high of 4 in 100 (that’s a 4% success rate!), to less than 1 in 100 and as low as 1 in 1000 (that’s a .1% success rate!).
Who gathers the information?
- Exploration gathers up geological, geophysical, geochemical and physical information about an area as cheaply but as comprehensively as budgets will allow.
- Exploration starts at the broad scale and narrows down the work area to settle on a target or a set of targets.
- Exploration may be a multistage process, with the results of one season’s work being evaluated and the results rolled into the next season’s phase of work.
- Exploration is carried out by teams comprised of geologists and geophysicists who specialize in hunting for mineral deposits.
- The team of geologists and geophysicists may be a partnership or even a company or just a part of a larger company.
- The team seldom does it all and most often it gets support from contractors and service companies.
- Trade journals report that more than half of the money spent on metals exploration was spent by about 1500 “Junior” companies registered mostly on stock exchanges in Canada, Australia and London.
Why is exploration so different from the ordinary sort of investment?
- It is an investment in knowledge, not bricks and mortar.
- There is a high risk of failure associated with each specific exploration project.
- Failure is defined as the inability to recover even the limited capital funds committed to the project.
- Many projects will not yield more than a trifling discovery.
- A trifling discovery may point the way to future work and future exploration, but it won’t pay the bills.
- A successful discovery has to rich enough to pay for past investments in all of the company’s exploration projects, including its own costs.
- It must also pay for any future exploration and all of the other costs of running a company, including mining costs.
- Exploration is an economic activity that has been described as very similar to high-tech research and development or pharmaceutical research.
- Those doing exploration must have a large financial resource, available over long periods of time.
- Failing to have large, long lived financial resources they must distribute the risks of discovery and development by forming alliances or joint ventures with others.
How much gets spent on exploration?
- Exploration is dynamic and expensive process.
- It responds to mineral commodity markets, the depletion of existing mineral deposits, advances in the technology and government policies.
- Exploration in the United States and elsewhere is increasingly focused on deposits with little or no surface expression.
- The search for largely hidden deposits requires the use of technology that raises exploration costs.
- There are too many variables to place a rational ‘per deposit’ cost on all exploration activities.
- Academics and government experts attempted to estimate world-wide exploration expenditures in the 1970’s and 1980’s.
- Some countries such as Australia and Canada have collected exploration spending data for long periods of time, but they are the exception.
- It can be said that estimated worldwide exploration expenditures increased from about $200 Million dollars in the late 1940’s to nearly $1.0 Billion dollars in 1980.
- World wide exploration costs for metals have only been recently tracked by private companies.
- The most robust of these cost analyses began in 1989.
- The data has been used to support a USGS analysis of exploration expenditures covering period from 1995 to 2004.
- World non-ferrous expenditures for all exploration in 2007 are estimated to be about $10.4 Billion dollars.
- The United States has received less than 10 percent of all world-wide expenditures since 1995.
- This level of expenditures dedicated to the United States has remained constant even though budgets have increased from $1.9 Billion in 2002 to an initial estimate of more than $14 Billion dollars in 2008.
What do they do to get that information?
- Information and data gathering starts with what has been done before; which means a trip to a library.
- Data from company goals, commodity markets, previous exploration efforts, local and regional geologic mapping, mine and prospect site reports, known mineral deposit types, old studies of working mines and prior knowledge of the principal geologists will get rolled into a syncretic and hopefully coherent exploration target, or more likely a set of exploration targets that are often called an exploration model.
- The model will incorporate the geologic origin of the target deposits, broad scale geologic, geophysical and geochemical signatures of its presence.
- The exploration model will lay out the range of grades and tonnages of ore along with the infrastructure requirements that must be present to meet the company’s financial goals.
- The usual practice is to find large areas of the type rocks that are thought to be contain the deposits in the exploration model; if you are looking for a coal deposit, you probably won’t waste money looking at a geologic terrane composed exclusively of rocks that don’t have a chance of containing coal.
- A point to keep in mind is this: any model is just that – an approximation of the real world that must be tested and when a model that fails the test of reality it gets discarded or at minimum redesigned.
- At this point in the process, broad scale analysis of geology, geochemical sampling and geophysical data (most often airborne data) will be undertaken.
What gets done in a regional analysis?
- The first task is to assess the regional geology; are the correct rock-types present, are they legally available and most importantly, can you get to them without endangering life and limb?
- Are they likely to contain our exploration model?
- If a trip to the field is possible, then on the ground investigations begin with broad scale rock-type and geochemical sampling.
- Broad scale geophysical data will get collected by contractors, if it is not already ‘in the can’ and publicly available through government sources or available for purchase from contractors who may have done the work ‘on spec.’
- Much of the broad scale geological data will be the result of widely spaced airborne surveys.
- If the results of the regional exploration are a wash, the exploration efforts get shifted to a new area and the data may get put in a file cabinet only to emerge when another cycle of regional analysis starts to examine the area.
- The data gathered and more importantly the analysis prepared by the company is intellectual property and often has significant value in the marketplace.
- If the results are promising, then getting tenure to the minerals in question is the next step.
- Depending on the part of the world the area happens to be in, tenure is achieved either by negotiating a mineral lease, claim location, paying for a concession, or winning a lease or concession by auction.
- This sort of work is generally the job of the ‘landman’ assisted by the ever-present mining attorneys.
Exploration and Mineral Property Analysis
- Once some sort of land tenure is obtained, the investigation will likely switch to a ground-based campaign of property examination, often reported in surveys as ‘on-property work.’
- Basic field safety (pdf) is a major consideration in all field work and particularly so in remote areas where access is by aircraft or helicopter.
- At this point the field work will examine any anomalies identified by the regional surveys using a variety of methods including geological, geophysical and geochemical methods – preliminary geologic mapping and geochemical sampling, ground geophysical surveys tied to the mapping, and possibly even preliminary drilling.
- These results will be closely examined to see if the anomalies have ‘what it takes’ to become a target.
- If the anomaly fails the test of being a target, activities move on to the next good anomaly on the property block.
- If the anomaly has what it takes, that is good geology, good geochemistry and geophysics, it gets the full work over - it may include over burden stripping, trenching, more geologic and topographic mapping, more detailed sampling, more drilling, and down-hole geophysical studies.
- At this point the task is to find and lay out the initial limits of what may yet be a mineral property of potential economic interest.
- At this point there may even be larger-scale or bulk sampling to run some initial mineral processing tests.
- Initial environmental inventories and site surveys likely will commence.
- At the end of the work over the explorers will give management with their estimation of the mineral resources at the target and their interpretation of potential grade, quality and tonnage of a potential new mineral deposit.
- Management will have to decide it the target is of sufficient “economic interest” to justify more intensive and detailed work.
- If management agrees that more intensive and detailed work is warranted then the explorers go back to hunting and a whole new crew more focused on figuring out if the target can be mined will arrive on the property as it now become a potential mine.
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