|
THERE has been a progressive shift in recent years towards junior companies replacing major companies in exploration, particularly in the Asian mining industry, with juniors now accounting for more than 50% of the total exploration budget.
So noticeable, and effective, has been the trend that the president of international mining consultants Lowell Mineral Exploration, David Lowell, says major companies should progressively down-size their exploration departments.
“The major company emphasis should shift away from prospecting and grass roots exploration to evaluating and delineating deposits, and designing development programmes for new discoveries probably found by prospectors or syndicates or juniors. They should stick to mining, and processing and selling minerals and metals which they do better than juniors.”
He says the organization and mission of a typical junior company allows it to be very flexible and decisive.
“It has become progressively more expensive to find new mining resources with increasing scarcity of targets and increasing depth. Juniors are more willing to accept risk and often replace majors in longer odds exploration targets.
“Juniors can generally be divided into two groups. The larger group tends to be more promotional and lacks some of the elements to do effective exploration while the second, smaller group account for most of the success by juniors in finding and sometimes developing new mines.
“They tend to concentrate less on promotional activity and sometimes have part time employees handling shareholder relations and regulatory compliance. Their important talent is the capability and strong desire to carry out prospecting and exploration campaigns.”
David Lowell says exploration by majors tends to be done in a very risk-adverse fashion while successful juniors tend to jump from one shaking limb to another. They save their money for property acquisition, prospecting, geochem sampling and, more than anything, drilling.
“There are two approaches to mineral exploration – attempting to replace depleted resources with a new one of the same kind, and attempting to make a profit by finding an ore deposit. Since mineral exploration tends to be non-selective it is difficult to be sure that your epithermal gold programme will not turn up a porphyry copper or your Mississippi Valley lead programme will not turn up a coal deposit. Narrow targeting increases the dollar cost per pound of metal developed and from the standpoint of replacement of depleted resources it may make more sense to buy these resources rather than try to discover them.
“The mining industry is divided into two groups with very different talents, philosophies and functions. On one side are the mine operators, process managers, accountants and marketing staff who depend on complex organization, sophisticated operating technology, high efficiency, and standardized labour relation policies and political relationships.
“On the other side is the group whose function is to replace the raw material being extracted. They are treasure hunters. If successful they need to be innovative, jack-of-all-trades, probably loners and non-team players. It is counter-productive to try to force the exploration group into the other mould, but this is often done in large organizations. The junior company man is much more likely to succeed because if he does he may become rich.”
David Lowell says majors tend to look down on juniors but a more realistic attitude might be the acceptance of their exploration efficiency and the opportunity created in which the majors have the chance to select the specific type of deposit needed. If they want first choice they may need to subsidize selected juniors that seem to have the right approach to exploration.
“The low budget approach forces the explorationist who finds and recommends the prospect to also do the sampling and mapping, to talk to the property owner, stake the claims, line up the contractors and log the core. He ends up clearly identified with the project but also has all the blame, which makes him think long and hard before recommending it just to spend the budget. On the other hand he has all the credit which improves his chances of getting part of this rabbit, or the next rabbit.”
Yolanda Torrisi - Managing Editor and Director of The ASIA Miner, the international online mining magazine and mining news service for mining Asia.
|
|
SIGN
UP FOR FREE
