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Major to Junior Explorer - PowerPoint PPT Presentation

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Major to Junior Explorer
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  1. Major to Junior Explorer Major to Junior Explorer

  2. Lots of cash Cash-poor Big team Small team with contractors & consultants Broad area / worldwide Focussed area (NSW ?) Require large deposits Small deposits acceptable and farm-out large mineralised systems DIFFERENCES BETWEEN MULTINATIONAL MAJORS and JUNIOR EXPLORERS Majors Juniors

  3. Cost effective exploration is the best means of adding value to your company in the long run for example, Newcrest’s cost per discovery ounce in NSW is A$5 per ounce vs current gold price of A$500 Good people are a company’s essential best asset a company cannot succeed in the long run without good people Drill more holes into selected targets a two-year Canadian study on how to be more successful in exploration indicated “drill more holes” Majors WHAT WORKSand WHY

  4. Design a long-term (>10 year) programme the main reason for WMC’s success in the 1970s (pers. Roy Woodall) eg Olympic Dam. Also Amoco identifying Selwyn Choose mine-finders by elimination Amoco hired many geologists and kept the mine-finders Explore in an ore-permissive area or as Roy Woodall says “the right jungle” for example the Mt Isa inlier has produced world class deposits as has the N&S American Cordillera Majors WHAT WORKSand WHY

  5. Devise meaningful incentive schemes for your mine-finders cash bonuses or shares based on achievements of inherent value of find Organise in-house workshops with presentations of own work, mine visits and recreation recognition of work, team bonding, exchange of ideas and viewing different deposits Majors WHAT WORKSand WHY

  6. Short-term programmes. Concept of "turning over ground” without getting to know it many foreign majors have come and gone several times Exploring from a foreign head office and comparing finds with local model e.g. Kennecott c.f. Bingham De Beers c.f. South African diamond pipes Anglo c.f. Witwatersrand Big teams controlled by head office tendency for regional geologists to be stifled by pre-set ideas and foreign Head Office conditions not appropriate to a particular region Majors WHAT DOESN’T WORKand WHY

  7. Companies limiting geologists to certain size deposits in early exploration e.g. Cadia was passed over at 200,000 oz gold and now has over 20 million oz potential Majors banking on one or two geophysical approaches to finding major deposits e.g. Canadian and US majors in 1970s flying huge areas with EM and covering large tracts with IP Majors WHAT DOESN’T WORKand WHY

  8. Cost effective exploration is the best means of adding value to your company e.g. Dalrymple’s Thunderbox deposit and Aztec’s Golden Grove deposit Acquire properties that have already had many millions spent on them Juniors will not have to spend precious funds drilling but can collate and manipulate all previous data using modern methods to develop targets that will attract majors Successful exploration can be a numbers game for most juniors. The more properties of merit a junior can afford the better the chance of success in the long term taken to the extreme; if a Junior only has one property and it fails for whatever reason it then has nothing Juniors WHAT WORKSand WHY

  9. Conserve your cash like the ultimate miser otherwise you will end up disappearing like 70-80% of the new floats Take up certain majors’ properties when they abandon them, e.g. Kennecott (copper porphyries) CRA, Inco Majors looking for world class deposits sometimes overlook smaller high grade deposits Adopt a flat management structure flatter management structure allows for faster decision-making e.g. for acquisitions, properties, vacant ground etc. Juniors WHAT WORKSand WHY

  10. Use geochemistry as a primary grass roots tool after choosing the best ore-permissive area from a combination of free historical data and the latest DMR geology, magnetics, radiometrics databases relatively inexpensive and may lead to important discoveries e.g. Tick Hill Develop a multidisciplinary team to enable a Junior company to provide, collate, manipulate data to develop targets that attract majors to farm-in Be constantly prepared to raise capital during brief market windows caused by cycles, strikes, wars, US interest rates etc. Juniors’ ever present worry is having sufficient funds to be effective Juniors WHAT WORKSand WHY

  11. Let the best mine-finders site the critical drill holes Some geologists have developed the art of discovery better than others A major consideration in exploration should be structural control the vast majority of ore deposits are constrained by structure and / or stratigraphy Be constantly alert to opportunities when deposits are abandoned by majors in foreign countries They may be available for a song Corporate head office may make a decision to pull out of a country or region for strategic reasons Juniors WHAT WORKSand WHY

  12. Provide a suitable incentive scheme of shares And options with a continuing optional salary sacrifice share acquisition scheme Focus on an area e.g. NSW. Use a small, focussed team and specialised contractors / consultants focus gives better knowledge with time to attract and keep the best mine-finders Juniors WHAT WORKSand WHY

  13. Look for potential high grade “Zone 7s” in large but low grade mineralised systems Porgera’s narrow but very high grade Zone 7, Cadia’s Ridgeway and (?) GCR’s Copper Hill’s 26 g/t gold 2m zone Develop and use check lists e.g. for field trips, drilling, surveys, agreements & feasibility studies etc. consider arriving at a field location after a days travel to find an essential piece of equipment was left behind Juniors WHAT WORKSand WHY

  14. Paying large amounts of money to vendors funds are precious. Sooner negotiate with shares, participating interest and royalties Do not promote your best mine-finder to pure administration the whole team will suffer Juniors WHAT DOESN’T WORKand WHY

  15. Spreading the geographic net too wide not cost effective exploration because too much spent on travel, administration and establishment Do not restrict Junior company to a single commodity or a few commodities remain open to all opportunities for different commodities including industrial minerals because at some time that commodity will become the market’s “ flavour of the month “ and the Junior can capitalise on that to raise funds in tough times e.g. currently tantalum and palladium Juniors WHAT DOESN’T WORKand WHY

  16. Add value by cost effective exploration Select the best people ( mine-finders ) Develop a multidisciplinary team Devise meaningful incentive schemes Explore in ore permissive areas Design long-term programmes Drill more holes into selected targets SUMMARY