Not Making Toasters
Not Making Toasters – Part One
Junior exploration companies don’t obviously make toasters! There’s no production line on a factory floor in a light industrial estate 25kms from a CBD.
In the Australian context, explorers ply their trade in the open expanses of the great outback. If the company is lucky, it has a mining town as its nearest supply point within a couple hours easy drive. More commonly, it’s a 500km drive across the desert along gravel roads to its project where the exploration team has set up a remote camp (little more than a collection of second hand dongas). Drillers are keen, it’s their bread and butter. The Traditional Owners are skeptical. Investors are hopeful.
Explorers have to look harder, further and wider than ever before to find a deposit. Most of the “easy” deposits, those that stick out of the ground, have already been discovered.
The easy deposits have all been found.
And exploration costs money. Deploying best-practice exploration from proof of concept to the completion of first pass drilling, for a single project, there’s no change of $2million. Typically, more than one phase of drilling is needed if results are positive. The exploration costs of a single project stack up!
Exploration is a costly business.
The best practices that a toaster maker might apply to its business of making toasters might be the broad principals like minimising production costs, maximising sales margins, maximising reliability, increasing production, increasing market share, increasing factory automation, workforce wellness, workforce equity, etcetera, etcetera.
All are best practices that makes the toaster better quality, cheaper to make and quicker to sell as an optimal margin. This makes the toaster maker more successful, more profitable and for its owners/shareholders, it makes them wealthier and happier.
In the exploration sector, best practice do not guarantee success. It doesn’t guarantee profits and it doesn’t guarantee shareholder wealth.
Best practice exploration does not guarantee success.
“Best practice” for an explorer is the deployment of exploration processes that maximise search efficiencies relevant to the style of mineralisation it is trying to find.
Another way of conceptualising the exploration process is this. It is not the job of an exploration company to make an economic deposit, it is the job of the exploration company to find an economic deposit. It sounds obvious, but it is so often not understood in the junior explorer-investor space.
Imagine a vast tract of ground that “we know” (because we are playing god) hosts a large-scale deposit. It is there… it just hasn’t been found yet. Now…imagine that that tract of ground was pegged by an exploration company. It is the task of the exploration company to find the deposit. Deploying best practice exploration enhances and optimises (but not guarantees) the chances of discovery.
Now imagine another vast tract of ground that “we know” (because we are still playing god) does not host a large-scale deposit. It isn’t there… there’s nothing to find. Now imagine again that that tract of ground was pegged by an exploration company. No matter how efficient the exploration effort is, this exploration company will not find a deposit on this tract of ground, “best practice” or not.
Best practise does provide comfort to the exploration company, and its investors, that it has left no stone unturned, and it can drop the project area with confidence that it has not missed something.
But there’s no tweaking the production line….. increasing the market share though a media blitz… the ground does not host a deposit. There’s nothing to find.
Indeed, the selection of the project area(s) is the most important aspect of an exploration company’s ultimate success.
Ground or Project selection is perhaps the single most important action taken by an exploration company.
In Not Making Toasters – Part Two I will describe what is “Best Practice” exploration. What exploration tools are used, in what order, and the strategies deployed for finding deposits… not making toasters.
