Executive General Manager – Exploration
WMC Exploration Inc.
8008 East Arapahoe
Court
Suite 110
The comment has been made that exploration is a very complex business. In fact, some would argue that it is so complex that it should be treated more as an “art” than as an activity to which the scientific principles of business management can be applied.
In contrast to the above, I would like to share a somewhat different perspective: that exploration is fundamentally simple! Note that I say simple, not easy. I believe that it is possible to make some simple observations about our business that have significant implications for how we need to run a successful exploration organisation. However, the challenge is to maintain the discipline necessary to achieve this success. I will return to this point in my conclusion.
What then are these simple observations? Most of them will probably seem self-evident to the experienced explorationist, but this does not alter their significance.
The first and perhaps most critical observation is that most of the mineral industry’s wealth is captured by a handful of giant deposits. For example, in a comprehensive study of all base-metal deposits discovered in Canada and Australia until 1988, MacKenzie (1995) found that two-thirds of the wealth (expressed in NPV) derived from just 10% of all deposits (Figure 1). There are fundamental geological reasons for this that I will not discuss here, but the practical messages from this for both major and junior mining companies are very clear.
A major mining company must focus, to the exclusion of all else, on the discovery of these high-value, giant deposits. Only they will provide a sufficiently large return to justify the costs of an ongoing exploration program of the type typically mounted by major corporations. Perhaps even more fundamental, only deposits of this size will make a significant impact on the business of a large organisation. Even if it were possible for a major to run a profitable exploration program not focussed exclusively on giants (which is doubtful), such an exploration organisation would be doomed to irrelevancy within the broader corporate context and, ultimately, would most likely be discontinued.
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