Best Practice demanded from Mineral Exploration Companies in 2000
By Mike Raetz

SECTOR: MINERAL EXPLORATION

What Has Changed
The main change demanded by fund managers and company boards in 2000 will be that Mineral Exploration operates more like a business, which understands its risks, something the oil industry learned decades ago. Clearly the purging of many major exploration groups (like RTZ, BHP, WMC, PLACER to mention a few only) is a fair indication that the margins were not good enough. The market risk money has also gone elsewhere and 1999 was a 'watershed' in the way Mineral Exploration groups do business worldwide.

Common themes now are 'Brown Fields Exploration', 'Growth Through Acquisition', and of course 'Outsourcing' anything that is not 'Core Business'. More fundamentally some companies may not even wish to remain owners of mines, rather they may wish to simply become investors. The entire environment seems to be driven by control over investments and creating choice (options) for more investment.

The strongest companies will compete to acquire the few good advanced projects in the world and dominate in the prime mineral belts like the Atacama in Chile. However, new discoveries will be needed to sustain the world's mineral trade. Conventional risk assessment based on 'orebody cloning' will appeal to more conservative investors, but will not help to find the true 'wildcats'. These methods mainly provide economic thresholds but few technical solutions. More flexible and intelligent systems to assess geological risk in mineral discovery are needed, alongside more innovative business solutions to manage risk that may not be measured well.

What Has Not Changed
Best practice will demand a clear understanding by explorers and investors of the risk and rewards that relate to each of the four principal stages of the 'Exploration Cycle'. These are:
1. Concept development and area selection;
2. Proof of concept;
3. Target definition, and;
4. Target testing.

Best practice is also about maintaining the balance between these four activities and an energetic turnover of properties because of the low odds that any given project will succeed. Best practice recognises that a diversity of skilled people will be needed to fuel the fight. Of upmost importance will be people that think and communicate at vastly different scales. In the writers experience most exploration project geoscientist are trained to think at the prospect scale, whilst it is apparent that processes which control the location of giant ore deposits (and consequently the critical decisions of area selection) relate to a much larger scale. Many of the best academic (University or Government) regional geologists are much more used to this scale of work, but these people rarely 'fit' into exploration teams.

The Role of Research

One of the great ironies of the past decade is that despite a large investment by companies and universities in ore deposit studies this has had little direct impact on the bottom line of most mining companies. The biggest impact has come from technique-based research like the indicator mineral studies that led to the discovery of diamonds in Canada, or comparable improvements in geophysics. It is simply not good enough to understand how and why orebodies may form without the ability to translate that knowledge into where to look in standard data. The blame rests squarely with the companies (both as clients and investors) for not ensuring the transfer of this R&D, and it has been to their loss.

The strategic analysis of integrated continental scale data is the key to future discovery and therefore crucial to exploring for minerals in green field areas. The increased availability of regional aeromagnetic and gravity data sets is perhaps the major advance of the previous decade.

The analysis of this data in partnership with geoscientists and mine-finders remains a great opportunity of the next decade.

Summary of Future Challenges

Discovery challenges in future will likely be met by partnerships between science, explorers for minerals and investors: that is universities and R&D companies; exploration companies & governments; fund managers and their advisers.

A premium is likely to attach to leaders in the following service areas:
- Information about prospects
- New directions
- Global data access
- Interpretation services
- Quality assurance services
- Risk analysis services
- Enabling technologies
- Skilled people and labour hire
- Business solutions

Acknowledgment
Appreciation is expressed for stimulating discussion to many colleagues and consultants with whom the writer has worked on committees of the AGCRC, CSIRO, the Chamber of Mines, in BHP and more recently at Monash.

Michael Raetz is currently a Senior Research Fellow at the Australian Crustal Research Centre, Monash University in Melbourne Australia, studying better ways to manage geological risk in mineral exploration. He is also Director of Global Discovery Pty Ltd and formerly held the position of Principal Geologist Australian Reconnaissance with BHP World Minerals Discovery from 1994 to 1999. He may be contacted by Email: mike@skilledgeosience.com This article may be biased by the writers understanding of the Australian scene, therefore others are invited to comment on the relevance of the views expressed, particularly about other regions of the world. Please use the Discussion Forum on www.skilledgeoscience.com or submit a new article for publication to the Editor@skilledgeoscience.com in the Skilled Journal.