What does it mean mineral exploration ?
In the mining industry, exploration means : spending money ! But this is the cost, when attempting to discover a mineral deposit and then an economic ore body. Moreover, it is a long way of geological investigations and evaluations before to get a mineral deposit delineated.
So where stands the value of an exploration company ?
The value depends on the level of mineral projects advancement, on the amount and the quality of the mineral resource defined, and on the management ability to avoid shares dilution to fund the exploration program.
A mineral exploration project is not gambling; but it is more a process of increasing the probability of finding a mineral deposit by using the best work practice and knowledge available. It is generally the result of an exploration model, which has successfully evolved along scientific investigations.
We can described the following stages to conduct a mineral exploration:
Mapping, Sampling, trenching, Exploration drilling (auger, AC, RC)
• Uncertainty level 90% - 75%
After having acquired a prospecting and/or an exploration license in the most prospecting areas,the field reconnaissance work can start. Sometimes historical data from past explorers are available to orientate the geological mapping and mineralized indices might suggest the most adapted sampling programs. All samples are analysed and interpreted in order to define the first drilling targets.
• Uncertainty level 75% - 50%
The exploration model, which evolves with the project advancement, participate to the target generation exercise. Targets definition is based on a multidisciplinary approach to interpret the soil response.
When anomalies are defined, they are prioritized in order to generate drill targets for further investigations or to start a drilling program.
Tools for such investigation includes the use of ground and airborne geophysical methods (Magnetism, Electromagnetism, gravity, radiometric, Resistivity, etc..); Geochemical methods (soil geochemistry, hydro-geochemistry, regolith etc...); remote sensing methods (aerial photography, satellite and spectral imagery, Radar imagery).
The choice and the combination of methods have to be optimized in terms of costs and quality of results.
When a mineralization is intersected by drillings, the strike length follow-up exercise is engaged. Complementary sampling and geophysics may be required to optimize the drillholes location.
• Uncertainty level 50% - 40%
When drilling results appear successful in defining continuity in mineralization, a preliminary resource estimate is proposed.
The drillholes spacing (density) and the structural and geological interpretation enable to propose a first estimate of inferred resource, which still carry uncertainties (grade distribution, structural control, mineralogical variations, etc...).
These uncertainties are mitigated with infill drilling and complementary analysis. The resources are then upgraded into the measured and indicated category, which enable to prepare a scoping study and a Pre-feasibility Study.
• Uncertainty level 40% - 20%
Metallurgical test results and engineering study enable to design and to optimize the ore processing method and the mining operation.
However, it is only when the 'fourth dimension', the time, is integrated to the resource, that the viability of a deposit can be appreciated. Time impacts on the project economics and thus the reserve calculation (cutoff grade, ore recovery...), the mining and processing designs are subject to change.
The mine design use the economic figures present in the resource model, but it will also include geotechnical data in order to plan an extraction method. When all engineering studies are completed and the feasibility study is completed, a bankable feasibility will then propose a financing plan (business plan).
It is only when the funding is secured, that the kick off decision can be taken. At that point, the mine development can start with pre-stripping, Tailing dam preparation, ore stockpiling, plant construction.
Then the ore processing can start (pre-production) and the plant is tuned to reach its designed capacity (full production).
An exploration and mining project life cycle includes stages as described upper, which can significantly increase a company valuation. The following graph is a qualitative representation of a mining project value curve.
The probability to find a mineral deposit is low and the investment risks are high. The only way to mitigate such risks for a Junior explorer is to own the right knowledge and expertise; but also to be able to manage these skills in the most appropriate manner to achieve the objectives and to deliver results.
The highest potential returns stands in the discovery of promising early stage exploration projects. The associated risks are HIGH and they require being identified in order to anticipate the most probable return of an investment in a Junior explorer.