Exploring for minerals is like sex…..
You only have to have been doing it for a short period when you start believing that you are the world’s expert and know more about it than the rest. Unfortunately, it is not quite that simple!
My name is Steve Collins. I have been the chairman of the committee which organised this Symposium. I welcome you all here to what is sure to be an interesting and informative day.
Actually, I was discussing recently with another consulting geophysicist whether it was a bit risqué to use sex to gain everyone’s attention at such an austere occasion. They replied that the SMEDG/AIG crowd were a rough and tumble lot and that it would not matter but that I had missed the most important part of the analogy between mineral exploration and sex.
I thought about it for a while and asked, "Do you mean the excitement or perhaps the anticipation?" They shook their head. I said, "Do you mean the emotional attraction such as a geologist has for his project?". They replied, "No - we haven’t been getting much lately!"
Many a true word is spoken in jest. Things are pretty grim in the mineral exploration business at present. We no longer have the multinational oil companies pouring in money and the easily found, near surface, supergene gold deposits of Western Australia are almost all gone. The exploration business is in as deep a depression as has been seen for several decades.
Things have certainly changed from the situation seen over the last two or three decades in this field.
There are many reasons for this, some cyclical and some structural.
Small companies are suffering from the flight of speculative capital to the dot com startups. Although the dot com boom has ended, the money which fled the speculative exploration field is showing little sign of returning. However, I suspect that a decent discovery by a small explorer may remedy that situation.
Large companies are suffering from the almost universal trend toward globalisation. Where two or three mining companies each had independent exploration teams, there is now perhaps only one, and sometimes none. Our industry is not alone in this and may not even be the worst affected by the trend. Globalisation is underway with a vengeance and has a long way to go. Who knows what the final result will be? This is a problem for our industry but it is also a problem for people generally.
A third factor in the current depressed state of exploration is the downward trend in real terms in the price of commodities. With the exception of gold, which has been erratic in the long term, the discounted value of metals has been on a general downward trend for at least several decades, with occasional upturns followed by the relentless downward trend. To a large extent, this is because we have been too successful! We are now very efficient at finding, financing, mining and processing metallic ores and it is this efficiency which has led to the downward real dollar price trend.
Occasionally people to whom I speak remark that it would be nice if it were easier to find ore deposits. My usual reply is that if it were any easier then we would all be out of work! To some extent the current low commodity prices are a result of the fact that it has been too easy to locate mineral deposits in the past.
A fourth and very worrying reason for the current state of exploration in Australia is the problem of ‘sovereign risk’. Ten or twenty years ago Australia was considered one of the least risky places in the world to explore. We have a stable government, stable financial system, educated population and a history of mining which leads to an acceptance of the industry by the general populace.
But things have changed.
I was talking to a group of people from a large foreign mining company recently and they expressed the opinion that Australia was considered by their management to be a ‘relatively risky’ country in which to make exploration investments. How things have changed! Their reasons for this evaluation was that there was too much red tape involved in gaining approval for mining ventures and that there was no security of tenure.
What has happened to our stable mining laws?
It seems to me that the legal and political masters in this country are content to spend a large amount of time and resources defining miniscule pieces of black and white in an environment which is shades of gray. I am sure that the people who are making the important decisions are trying to do the best by everyone, but it is easy to be cynical. After all, the decision making process is very lucrative for those involved and so there is no need to hurry the decisions along. That is unless, of course, you are concerned for the thousands of unemployed and underemployed people in our industry or the future of our nation in ten or twenty years time when our balance of payments heads south.
Which brings me to the bible reading for this Symposium.
The reading is from the New Testament, the gospel of St Luke, Chapter 11, Verse 46.
"And he said, Woe unto you also, ye lawyers! for ye lade men with burdens grievous to be borne, and ye yourselves touch not the burdens with one of your fingers."
It seems that in two thousand years some things never change!
So into this changed exploration world steps our intrepid exploration manager or regional geologist. And he finds that it is not so simple as he thought it would be. Clutching an inadequate fistful of dollars in one hand and with his G-pick welded to the other he faces the following questions.
JV or not JV - that is the question. Is it better to share the risk or to take all the risk but keep the rewards, if any, to yourself.
Should some of the available money be spent on high-tech methods in the hope of getting the jump on your competitors in well explored ground or should you spend your money on systematic and thorough appraisal through field mapping in the hope that previous explorers have missed something.
Should you take the beaten path or the path less well trod? Knowing that, in words of Jerry Seinfeld, "Sometimes the road less well traveled is less well traveled for a reason".
These are some of the topics we will be discussing today. We have an amazing line up of interesting, informative and provocative speakers and I am sure it is going to be a great day.
I thank you all for coming today and I also thank our major sponsors, Billiton, JBWere and ALSChemex. A Symposium such as this is complicated to organise and the generosity of our sponsors means that the possibility of a large financial loss is reduced and that is one less thing to worry about.
I also sincerely thank our speakers who have given up many hours of their valuable time to come here today and to make this Symposium an interesting and informative event.
Welcome to you all.