Page 32 - Introduction to Mineral Exploration

1: ORE, MINERAL ECONOMICS, AND MINERAL EXPLORATION 15

of less than a tenth of a percent is the norm and assessed on the global, national, and company
only in favorable circumstances will this rise scale.
above one percent. With such a high element of For a company, success requires a reasonable
risk it might be wondered why any risk capital financial return on its exploration investment.
is forthcoming for mineral exploration. The Exploration productivity can be determined
answer is that successful mining can provide a by dividing the expected financial return by
much higher profitability than can be obtained the exploration costs, after these have been
from most other industrial ventures. Destroy adjusted to take account of inflation. For Soci-
this inducement and investment in mineral ety, on the global or national scale, the cal-
exploration will decline and a country’s future culation is much more involved but has been
mineral production will suffer. Increases in en- attempted by a number of workers.
vironmental constraints as well as an impres- Data on exploration success is rare and
sion that the area has been thoroughly explored scattered. The study of Blain (2000), originally
led, for example, to a flight of exploration com- based on a proprietary database, has attempted
panies from British Columbia to Latin America to analyse the mineral exploration success
in the late 1990s. rate. Such an analysis is complicated by many
discoveries only being recognized some years
after initial drilling. The overall appearance
1.6.2 Exploration productivity
of Fig. 1.7 is however of a peak in exploration
Tilton et al. (1988) drew attention to this im- success in the late 1960s and a distinct fall
portant economic measure of mineral explora- in the mid-1990s. Blain considers the discover-
tion success and rightly pointed out that it ies as a series of waves, offset over time, in dif-
is even more difficult to assess this factor ferent commodities, uranium, nickel, copper,
than it is to determine trends in exploration poly-metallic base metals, and gold (Fig. 1.10).
expenditures. It is a measure that should be Most of the discoveries in the 1980s and

(a) Copper 1.4 12 (b) Gold 700
Number of discoveries 12 8 6 4 Price 1.0 Copper price ($ lb −1 ) Number of discoveries 14 8 6 4 Price 500 LME gold price ($ oz −1 )
600
10
1.2
10
400
0.6
300
0.4
200
0
0
0 2 0.2 2 0 100
1950 1960 1970 1980 1990 1950 1960 1970 1980 1990
(c) Lead-zinc (d) Nickel
6 0.6 4 7
Number of discoveries 4 Price 0.4 Lead price ($ lb −1 ) Number of discoveries 2 Price 5 Nickel price ($ lb −1 )
6
0.5
5
3
4
3
0.3
3
2
0.2
2
1
0
0
0 1 0.1 0 1
1950 1960 1970 1980 1990 1950 1960 1970 1980 1990
FIG. 1.10 Discovery rate by commodity: (a) copper; (b) gold; (c) lead-zinc; (d) nickel. The metal prices (in US$)
are uncorrected for inflation, compare them with Figures 1.4, 1.5 and 1.8 in which prices have been corrected.
(From Blain 2000.)