Majors

Juniors

Lots of cash

Cash-poor

Big Team

Small team with contractors and consultants

Broad area (worldwide)

Focussed area

Require large deposits

Small deposits acceptable and farm-out large mineralised systems

What works?

Why?

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

Two-year Canadian study on how to be more successful in exploration indicated "drill more holes"

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.

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 in identifying Selwyn

Choose mine-finders by elimination

Amoco hired many geologists and kept the mine finders

Allow project mine-finders plenty of discretion

Mine-finding geologists will get frustrated and leave if not given enough discretion, budgets and encouragement.

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.

What doesn't work

Why

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

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.

Do not promote your best mine finder to administration

The discovery rate will suffer

Companies limiting geologists to certain size deposits early in 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 confining their explorationists to one basic metal while disregarding all other metals and industrial minerals

e.g. Plutonic gold deposit only assessed for nickel in 1970s.

What works

Why

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 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.

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. Kenecott (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.

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 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.

Let the best mine-finders site the critical drill holes.

Some geologists have developed the art of discovery better than the others.

A major consideration in exploration should be structural control.

The vast majority of ore deposits are structurally controlled.

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.

The Juniors' Managing Director should be a servant to the front-line explorers, providing all that is required including delegating authority, direction, inspiration, latitude for individual expression of ideas and approaches, giving credit and praise when warranted.

Explorationists need to feel self-fulfilled by playing a meaningful part in a multidisciplinary team.

Provide a suitable incentive scheme of shares and options with a continuing optional salary sacrifice share acquisition scheme.

To attract and keep the best mine-finders.

Focus on an area e.g. NSW. Use a small, focussed team and specialised contractors/consultants

Focus gives better knowledge with time.

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 26g/t gold/2m zone .

Develop and use check lists e.g. for field trips, drilling programmes, agreements, etc.

Consider arriving at a field location after a days travel to find an essential piece of equipment was left behind.

What doesn't work

Why

Paying large amounts of money to vendors.

Funds are precious. Sooner negotiate with shares, participating interest and royalties.

Junior Managing Director must not dictate.

Stifles ownership by and enthusiasm of employees

Do not promote your best mine finder to pure administration.

The whole team will suffer.

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.