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Earth Explorer is an online source of news, expertise and applied knowledge for resource explorers and earth scientists. Sponsored by Geosoft.


News & Views

News Archive

December 7, 2016

Geosoft introduces IP and resistivity inversion in VOXI Earth Modelling

Geosoft has added induced polarization and resistivity data inversion to its VOXI Earth Modelling 3D inversion software service. Geoscientists are now able to create detailed 3D models of conductivity and chargeability from IP and resistivity survey data with VOXI. The resulting models can assist in interpreting and targeting regions for mineral and environmental applications...

December 5, 2016

Mexico's Deepwater Round Exceeds Expectations

Some of the world's biggest oil companies showed up Dec. 5 and agreed to invest on the Mexican side of the Gulf of Mexico, proving that deepwater exploration still has a pulse despite challenging market conditions...

November 30, 2016

Magnetic inversion results for Ngamiland available for download

A regional-scale geophysical inversion of magnetic field data in the Ngamiland region of northwestern Botswana is now available for download from the Botswana Geoscience Portal, a partnership initiative of the Botswana Geoscience Institute, industry sponsors and Geosoft...

November 30, 2016

LIGO Resumes Search for Gravitational Waves

After a series of upgrades, the twin detectors of LIGO, the Laser Interferometer Gravitational-wave Observatory, have turned back on and resumed their search for ripples in the fabric of space and time known as gravitational waves. LIGO transitioned from their engineering test runs to full science observations at 8 a.m. Pacific Standard Time on November 30...

November 9, 2016

International Volcano Scientists Unite

For the first time, the United States will host the international Volcano Observatory Best Practices workshop, previously held only in Italy. The workshop will take place this month in Vancouver, Washington. It is designed specifically for volcano observatories around the world and their staff to exchange ideas and best practices with each other...

October 4, 2016

USGS Assesses Mineral Potential for Sagebrush Habitats in Six Western States

USGS has completed a comprehensive assessment and inventory of potential mineral resources covering approximately 10 million acres of Federal and adjacent lands in Idaho, Montana, Nevada, Oregon, Utah and Wyoming...

October 3, 2016

Uganda Targets Up to U.S.$100 Million for Mineral Exploration

Uganda is well endowed with mineral resources and, like many naturally-gifted African countries, is becoming keen on ensuring that these resources play a transformative role in its long-term structural transformation dream - the Vision 2040...

September 9, 2016

Small-Scale Fishers Get A Big Boost With First-Of-Its Kind Impact Investment Fund

Conservation organization Rare announces the Meloy Fund for Small-Scale Fisheries at Our Ocean Conference. The Global Environment Facility, one of the largest funders of conservation worldwide, will be investing $6 million into the fund...

September 1, 2016

Scientists take to the skies to track West African pollution

Scientists operating research aircraft over West Africa have detected organic materials in the atmosphere over a number of urban areas, contributing to concerns of the rise in pollution across the region...

August 17, 2016

New IGS Xplore prospectivity maps for Botswana

International Geoscience Services have released a series of base metal prospectivity maps for the Ngamiland District of northwestern Botswana using free geodata available on the recently-launched Botswana Geoscience Portal, hosted by Geosoft. The maps identify favorable areas for copper, zinc and lead mineralization using geological, geochemical and geophysical datasets downloaded directly from the portal.

August 11, 2016

NexGen Makes New High Grade Discovery

NexGen Energy reported the discovery of a new high grade zone of mineralization 4.7 km northeast of the Arrow Deposit as part of an on-going summer drilling program on its 100% owned, Rook I property, Athabasca Basin, Saskatchewan...

August 10, 2016

Rampion UXO Disposal to Take Place This Week

E.ON has confirmed that the two unexploded devices, detected along the Rampion offshore cable route will be safely disposed this week following the consultation with the Marine Management Organisation...

August 9, 2016

Diamonds In The Rough: E&Ps Find New Reserves In Mature Basins

The oil industry’s history demonstrates clearly that new plays and prospects have long been found in mature basins that were thought to be well on the way to being squeezed dry. Through the acquisition of new data, developing new concepts and coming up with fresh interpretations, long-producing basins around the world from the North Sea to Malaysia have continued to reveal new riches...

August 8, 2016

Northern Shield Identifies High Quality VTEM Targets at Séquoi

Northern Shield Resources announced the results of the interpretation and modelling of the VTEM survey from the Séquoi Property in the Labrador Trough of Quebec . Séquoi is owned 100% by Northern Shield and is being explored for Noril'sk style Ni-Cu-PGE massive sulphides. After geophysical modelling and interpretation of the VTEM data from Séquoi, six VTEM anomalies of significant interest have been identified...

August 3, 2016

Rio Tinto tailors big data drive to copper

Rio Tinto will put the weight of an exploration big data push and its newly-formed Growth and Innovation group behind its desire to identify a "tier 1" copper asset. Speaking at the annual Diggers & Dealers conference in Kalgoorlie, Growth and Innovation group executive Stephen McIntosh said Australia was "overdue for a tier 1" mineral discovery of any type...

August 1, 2016

Tetra Tech Awarded $200 Million Navy CLEAN Contract

Tetra Tech announced that it has been awarded a $200 million, single-award contract by Naval Facilities Engineering Command (NAVFAC) Atlantic. Through the Comprehensive Long-term Environmental Action Navy (CLEAN) contract, Tetra Tech will provide environmental engineering support services to installations within the NAVFAC Atlantic Area of Responsibility...

May 3, 2016

NATO Science for Peace and Security (SPS), MODUM Partners announce "Young Scientist Summer School on Sea Dumped Chemical Weapons"

This international project cooperates closely with CHEMSEA (Search and Assessment of Chemical Weapons) Project for and sharing and knowledge transfer...

April 12, 2016

Monday mad rush for gold stocks

Renewed optimism about the outlook for gold saw investors pile back into gold stocks, pushing many stock to 52-week highs in heavy volumes...

April 11, 2016

Medgold Resources: Continues to Expand the Boticas Gold Project, Portugal; Proposes $200,000 Private Placement

Medgold Resources is pleased to announce new assay results from contiguous rock-chip sampling from the Limarinho South zone at its Boticas gold project in Portugal, which include a highlight of 6.0m @ 5.7 g/t Au...

April 8, 2016

De-carbonizing our energy sector

Nuclear energy currently provides around 11 percent of the world's electricity. China, the European Union, the United States, India, Russia, South Korea, and other nations’ have major existing fleets...

April 1, 2016

Follow-Up Drilling Results Indicate Wide Gold Zones at Hendricks Gold Discovery

Gascoyne Resources Limited announced that it has received the final assay results from the 10,000 metre aircore exploration drilling programme...

March 26, 2016

The Oil Market Is Finally Hitting Its Breaking Point

After a significant reduction in investments over the past two years, oil companies can no longer overcome the production declines from legacy wells...

March 15, 2016

N-Sea Expands into the French Offshore Wind Industry

Subsea IMR provider, N-Sea, has signed a letter of intent with CERES Recherches & Expertise Sous-Marine and TechSub Industrie Environement, to provide subsea survey, installation and remediation services to the French offshore wind industry...

March 9, 2016

PDAC 2016 Convention Exceeds 22,000 Attendees

Optimism and opportunity abounded at the PDAC 2016 Convention of The Prospectors & Developers Association of Canada in spite of recent industry challenges...

March 3, 2016

6 Alpha Launches EOD Contracting Division

6 Alpha Associates, a specialist risk consultancy practice, with expertise in the assessment and management of unexploded ordnance, has launched a dedicated explosive ordnance disposal division...

Risky business: Balancing the risk and rewards in greenfields exploration

Knowing when to drill and when to walk away is essential in greenfields exploration. Explorers weigh in on market realities impeding the search for greenfields , and what it will take to meet the demand for quality finds.

by Dan Zlotnikov on June 4, 2012 discovery

Many are pointing to a serious misalignment in mineral exploration between the demand for quality greenfield finds and the industry focus on brownfields, and are wondering what it will take to get the right balance to satisfy both current market realities and future requirements.

At the surface level, it’s quite simple. On the one hand there is rising need for high quality deposits to meet global demands, and this requires the industry to detect and develop new greenfields deposits. Yet on the exploration side, most of the spending and efforts focus on brownfields, exploring next to known deposits or re-evaluating previously uneconomical projects.

This has industry experts expressing concerns about the long-term future of mining: Brownfields discoveries tend to be smaller in size, lower in quality, and their total number is ultimately limited. If greenfields exploration activity continues to flag over the long term, the industry as a whole may find itself with a bad case of “all dressed up and nowhere to go.”

The concern reaches all the way to the top: at a conference in Sydney earlier this month, Rio Tinto CEO Tom Albanese acknowledged that “it is getting harder and harder to find supply, harder and harder to find resources.” He continued by pointing out that projects approval timelines were getting longer, and the approvals themselves have become less certain. All this led Albanese to make a prediction:

“The next five years is going to be a supply story; the last five years has been a demand story.”

Yet despite the industry’s growing awareness of the issue and its seriousness, it’s equally clear that there are no easy answers or quick solutions for reinvigorating the greenfields side of exploration.

Neil Briggs, whose more than 40 years of mining experience have been split roughly evenly between major firms, a Crown corporation, and junior companies, now works as a New Opportunities Specialist, helping junior explorers raise funds. Briggs says there are a couple of factors at work. First is the recent economic upheaval, which has caused many investors to shift toward lower-risk opportunities.

According to Briggs, “in this lousy market environment, you have to generate some excitement to raise money, but brokers and investors aren't excited about grassroots projects. They want to hear about a project somewhere with all these wonderful numbers. That's what gets them excited, gets the share price up, and allows juniors to raise money.”

This isn’t a new challenge, but Briggs offers a key historical insight: It used to be the majors, not the juniors, who did the greenfields exploration work. This is where the second factor comes into play: A company’s size.

For a large company, Briggs explains, it’s not enough for a deposit to be economically viable to mine; it also has to be large enough to have a noticeable impact on the company’s overall revenues. As the majors kept getting bigger,  so did the size threshold of a deposit they’d be willing to develop.

Today, the majors might “do a very broad regional program, only looking for very big targets. They'll ignore good-looking targets that don’t have the size potential. Some of the companies are so big that to affect their bottom line, you need something that's truly huge,” he says.

The recent comments to investors made by Rio Tinto’s Albanese support Briggs’ position, but Albanese also highlighted a different issue the majors face: Investors are looking askance at massive capital expenditures, and are pressuring the industry’s leaders to instead pay out more in dividends and share buybacks.

“But what that means, and we are hearing it, we know our peers are hearing it, there is going to be less supply coming in,” Albanese said. This further increases the majors’ motivation to focus on only the largest, highest-return projects – the same ones that are becoming harder and harder to find.

Targets that don’t have the requisite size potential frequently will not see any exploration activity. These may eventually be sold off to juniors and end up as profitable, if smaller, projects. But the majors’ focus on larger, much less common, finds  also means further uncertainty for the sector as a whole: Imagine what would happen to copper prices if new deposits of the metal were only found once a decade, but each was twice the size of Oyu Tolgoi.

With the majors’ narrowed focus, it’s the junior companies that must take up the slack of greenfields work. But can they? Limited in capital, most often without positive cash flow, greenfields exploration firms have always been seen by investors as a risky proposition. Even Briggs, who’s been working with juniors for 16 years, is leery of investing in straight-up greenfields projects.

“When structuring a new deal, we try to include a component of work on a known deposit, or a known good showing, with a greenfields project in the same vicinity. You can get money for one and be dangling the carrot of the other,” he says. Hardly a surprise then that so much exploration activity of late has been focused on the less uncertain – but smaller – rewards offered by brownfields sites.

So what is there to do for greenfields companies that don’t have such an investor-pleasing pairing on hand? Is their only option to forge ahead and hope they make a discovery before they run out of money? Fortunately, the answer is “not quite.”

Safety in Numbers

It’s been so long since Brian Cellura has had to put a drill hole in that he takes a moment to remember how much the process might cost. This is a rather surprising admission, given that Cellura is a senior geologist at Miranda Gold, a junior exploration company. But the notion of drilling not being part of the company’s exploration activities is central to the Project Generator approach Miranda is taking.

Suppose potential investors – the same ones shying away from true greenfields projects – were presented with a junior company that was working on not one but ten greenfields projects? Would they consider such an opportunity less risky, and be willing to invest? If Miranda’s example is anything to go by, the answer seems to be “yes.” Founded in 2000, the company now has 16 projects in its portfolio and cash reserves of CAD6.5 million, something most juniors can only dream about.

So how did Miranda get to be such a diversified, well-funded junior? In fact, how did Miranda manage to spread out to so many projects, remain an exploration company, and not run out of money years ago? The answer, says Cellura, lies in that crucial point in a junior’s evolution: The decision to start drilling.

“Drilling is what kills a lot of junior companies. It's the cost that does them in. An average drill hole will cost you upwards of $50,000. So to put a decent drill hole program in, 10 drill holes, you're talking half a million dollars, and that's a big chunk of a junior's budget.” By contrast, Miranda’s cash outlay on a single property tends to be around $20,000.

Cellura explains that Miranda does all the work leading up to the decision to drill – and then looks for a joint venture partner who would take on the actual drilling. Partners can earn a 60% ownership in the project by spending around $10 million on exploration and associated fees, Cellura says. If the project were to go on to become a mine, Miranda would remain a non-operating partner, focusing its efforts on exploring new properties and finding new drill targets.

Cellura adds that it’s also important to know when to let a project go, something Miranda does regularly – and why its portfolio today is just 16 projects, not 60.

“At some point we'll say, it's a bit of a money sink. If we can't get another company interested in, we'll let it go and move on to something else,” he says.

According to Cellura, it’s this willingness to cut loose projects before significant money is expended that negates much of the risk of greenfields exploration. Being able to do so at a rapid pace is also why both Cellura and Briggs feel that juniors have the advantage when it comes to doing greenfields work. Larger companies, despite their greater resources, simply can’t react as quickly to new opportunities.

The majors “go through exercises to ‘prioritize’ the best targets, whereas most juniors just look for an excuse to drill,” says Briggs. In Miranda’s case, being able to skip the drilling stage allows them to achieve truly impressive throughputs.

“The average evaluation period for a project, depending on how good it is, will be two-three months, maybe four at the most. So over a four-month period, because we're rotating projects around, we can get through 20-25 different projects.  That allows us to cherry-pick what we think are the best projects. It's very hard for a major to run at this speed with this sort of efficiency,” Cellura says.

Waiting For The Big Wave

Briggs does offer some good news for the pure greenfields explorers: Having been through more boom and bust cycles than he cares to count, he’s seen rising commodity prices boost greenfields exploration, as investors once more flock to the mining sector. “A rising tide floats all boats,” he says.

Briggs also points out that the definition of what is and what is not pure greenfields isn’t cut and dry: In some of the less developed nations there may be areas with a number of historical mines, but little to no regional exploration work done. A junior might do well to look for targets, “not directly adjacent to the known mines, but maybe within tens of kilometres.”

At the same time, Miranda Gold serves to remind explorers that one can get pretty far before needing major investment. Nor is the decision to try the Project Generator route an irreversible one: Cellura says Miranda Gold itself isn’t dismissing the possibility of eventually transforming from explorer to producer.

“We haven’t yet found the discovery that would do that for us,” he says. Until that day comes, he continues, Miranda will gladly continue defining new areas and feeding its partners new drill targets. In today’s greenfields-shy world, this is likely to remain a much-needed service.

More Cutting Edge Prospects to bottom of related articles.

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Cutting Edge Prospects