Pasminco Ltd, 7th Floor, 380 St Kilda Road, Melbourne, Vic 3004
Key Words: zinc, exploration, strategies
Being a medium sized zinc producer and explorer, Pasminco has developed several useful strategies to be effective with a budget ranging from $10 to $20 million per year. Our current activities are focussed in the districts surrounding our ore bodies in the Mt Isa Block, Cobar Basin, Broken Hill and NW Tasmania, plus in Peru. Other areas of increasing interest are Ireland and Mexico.
While the huge discovery still eludes Pasminco, success has come in the following projects:
a) the K lens at Rosebery: 5 million tonnes of high grade Zn-Pb-Ag-Au-Cu ore that is the mainstay of current production;
b) the Potosi deposit at Broken Hill mined as an opencut from 1995-2000;
c) the Duddar deposit in Pakistan: 13 million tonnes containing 13% Zn/Pb which has been adjudged currently uneconomic because of the remote location;
d) Dugald River, where the tonnage was doubled (up to 50 million tonnes) at an increased grade (11.5% Zn and 1.9% Pb);
e) Benagerie Ridge, where a small high grade gold resource was discovered at Portia as well as several other Cu/Au mineralised zones;
f) a good looking polymetallic prospect south of Cobar.
Small Companies vs Large Companies - The Best Of Both Worlds
Arguments can be made whether a large company or small company approach is better in exploration. Certainly in greenfields zinc exploration, big companies have been more successful in the last 20 years, though one might argue that the cost of success was prohibitive. Figure 1 shows the major greenfields discoveries since 1978. Nine of the twelve discoveries were made by major mines.
However, the key to cost effective discovery must be to combine the cost consciousness, low cost base, enthusiasm, flexibility and entrepreneurial outlook of the small explorer with the broad overview, excellent tools and financial backing of the big explorers. Key elements are flat and lean structures, good people, easy systems (accounting, safety, community relations) and lots of activity.
Risk Analysis Leading To Focus
Pasminco has developed an intuitively based, rigorous Risk Analysis process that helps explorers work out the best belts to explore and what methods to use in there belts. The basis of the process is the expected value calculation that is spelt out in Figure 2. The application of the process allows all assumptions to be carefully considered, forcing many important issues to the surface. Group wide support of the outcomes allows a focus on the best belts for zinc and for Pasminco. Because of the focus, an adequate budget on each chosen belt allows the geology and ore forming processes in these outstanding belts to be understood to the maximum possible degree.
Three things must be subject to continual improvement in an Exploration group: people, processes and the quality of the exploration projects.
As in any business, development of human resources is very important through training, monitoring and honest/useful performance appraisals.
Process, especially the leading edge processes like risk analysis, need to be constantly refined and reviewed for effectiveness.
Quality of projects must also be continually reviewed. Pasminco uses an Exploration Process Triangle to measure how a project is going at a particular instant in time (Figure 3). Lack of upward movement, or bouncing around like a ball at a particular level over an extended period, signals the right time to relinquish a project.
New Data and/or New Eyes
New data and/or new eyes is essential to successful exploration. This can come about by the simplest new mapping, magnetic data or multispectral image in a new area, or the application of a sophisticated new technique in a heavily explored area. New eyes looking at old data can be equally as effective.
Co-operation on all scales pays dividends. This includes cooperation with:
a) other companies in sharing ideas, data and even properties;
b) universities and other researchers who may be able to solve problems you don’t have the resources to address;
c) metallurgists and mining engineers who may be key in making a discovery economic and,
d) local communities.
A few attributes to avoid are:
a) justifying every piece of work to the nth degree, thereby eliminating all intuition;
b) gyrating budgets with ensuing mass retrenchments and lack of continuity;
c) letting people have pet projects or allowing any territorialism/empire building;
d) having a preference for any one specific tool in a great majority of situations;
e) persevering with marginal projects for too long because they are perceived to have some value and,
f) allowing secrecy, arrogance or complacency as a company culture.
Exploration is a tough business that has proven to be an uneconomic proposition for most practitioners in the last 20 years. This has led to the rapid shrinking of the exploration industry. To survive and thrive, I believe that we have to be on the lookout for new ideas from anywhere - inside or outside the industry. This includes the best people management strategies, the best risk analysis strategies, the best project management strategies, the best intelligence gathering strategies, the best communication strategies and finally the application of the best science available to our very challenging problem. Only then will we have the success that will ensure funding for our future successes.
1) Small Companies vs Large Companies
· Small - low cost base, cost conscious, enthusiasm, flexible, incentive, entrepreneurial.
· Large - good tools, backing.
· Stress - flat structure, good people, lean structure, easy systems (accounting, safety, community relations), lots of activity.
2) Risk Analysis
· Focus (on the belts);
· Really understanding your belt and the ore forming process;
· Critical mass/serious explorer success.
3) Constant Improvement
· Continual critique of where you are;
· Exploration Process Triangles;
· People - performance reviews - honest and useful - mentors all important.
4) New Data and/or New Eyes
· Slides: Expected Value Formula
Exploration Process Triangle
Zn of Discoveries in the Last 20 Years
7) Metallurgists / Mining Engineers who will make the project work.
9) Working Closely with the Mine Geologists
6 geologist Proj Gen, 10 geologists Mining Districts, 5 geologists Peru, 2 geophysics, 2 geologists, 4 professional support, 10 field and admin support.