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EXPLORATION & DEVELOPMENT EXPLORATION & DEVELOPMENT
ANDAND
MININGMINING
THE NEW PARADIGMTHE NEW PARADIGM
David J. HallDavid J. Hall
FINEX FINEX ''0808
NO MINE EXISTS WITHOUT THE PROCESS NO MINE EXISTS WITHOUT THE PROCESS
OF EXPLORATION & DEVELOPMENT (E&D)OF EXPLORATION & DEVELOPMENT (E&D)
E&D IS THE LIFEBLOOD OF THE MINING E&D IS THE LIFEBLOOD OF THE MINING
INDUSTRY & CURRENTLY NEW BLOOD IN INDUSTRY & CURRENTLY NEW BLOOD IN
SHORT SUPPLYSHORT SUPPLY
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Drilling Dominican Republic Engaging natives in Kenya
5000 metres a.s.l. Peru Drilling in Turkey
DiscoveryDiscovery DevelopmentDevelopment ProductionProduction““Excitement”Excitement” “Investment Analysis”“Investment Analysis” “Real Results”“Real Results”
VALUEVALUE
TIMETIME
GREATESTGREATESTVALUEVALUEADDEDADDEDTHROUGHTHROUGHE&DE&D
POSITIVE FEASIBILITY
FINANCING & START-UPCONSTRUCTION PROBLEMS
THE EXPLORATION-MINING VALUE CURVETHE EXPLORATION-MINING VALUE CURVE
The E & DThe E & DBusinessBusiness
The MiningThe Mining Business Business
LONG TERM VALUE ADDEDLONG TERM VALUE ADDED
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RISK REWARD DIAGRAM
LowLow HighHighRISKRISK
HighHigh
REWARDREWARD
LowLow
Project
4
3
21
1. First phase drill program
2. Second phase after initial encouragement
3. Pre-Feasibility Stage
4. Feasibility Stage
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Risk = Probability of Success By Financial Exposure
HOW MANAGE AND INCREASE PROBABILITY OF SUCCESS.HOW MANAGE AND INCREASE PROBABILITY OF SUCCESS.
1.1. QUALITY OF PEOPLE.QUALITY OF PEOPLE.
Good people are rare because all competitors don’t have them.Good people are rare because all competitors don’t have them.They are valuable because they affect the bottom line.They are valuable because they affect the bottom line.They are inimitable because they cannot be copied or substituted.They are inimitable because they cannot be copied or substituted.
2.2. QUALITY OF TECHNICAL TEAM.QUALITY OF TECHNICAL TEAM.
Teams can ensure that different viewpoints and perspectives are takenTeams can ensure that different viewpoints and perspectives are takeninto account early on, thus make better decisions.into account early on, thus make better decisions.
3.3. LEADERSHIP.LEADERSHIP.
Leadership is different to management.Leadership is different to management.
4.4. RISK MANAGEMENT.RISK MANAGEMENT.
The evaluation and controlling of risks that face exploration companiesThe evaluation and controlling of risks that face exploration companieswill ensure that opportunities are not missed, and competitivewill ensure that opportunities are not missed, and competitiveadvantage is enhancedadvantage is enhanced
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FINEX FINEX ''0808
THE RESOURCE SECTOR IS CURRENTLY BOOMING AND THE RESOURCE SECTOR IS CURRENTLY BOOMING AND
EXPERIENCING EXCELLENT FINANCIAL PERFORMANCESEXPERIENCING EXCELLENT FINANCIAL PERFORMANCES
MINING COMPANIES MUST REPLACE THEIR PRODUCTION TO MINING COMPANIES MUST REPLACE THEIR PRODUCTION TO SUSTAIN THEMSELVESSUSTAIN THEMSELVES
YET WE ARE SEEING A DECLINING DISCOVERY RATE IN E&DYET WE ARE SEEING A DECLINING DISCOVERY RATE IN E&D
E&D MORE IMPORTANT THAN EVERE&D MORE IMPORTANT THAN EVER
THE DRUG DEVELOPMENT PROCESS: WHAT HAPPENS and WHEN
Early Research/ FDA Review Process
preclinical testing Phase Phase Phase Approval On Market Phase
I II III IV
YEARS 6.5 1.5 2 3.5 1.5 15 years
to get here
Test Test tube and 20-80 100-300 1000- Patients
Population animal studies healthy patients 3000
volunteers patients
Purpose Look for Determine Evaluate Confirm Post
safety, safety and effectiveness effectiveness marketing
desired activity dosage for look for Look for side effects surveillance
next phase potential from long term use of the patients
toxic side effects to look for
potential problems
SUCCESS 5000 5 1
RATE evaluated compounds enter clinical trials compound approved
Source: Pharmaceutical Research & Manufacturing Association
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Research & Development Research & Development = = Exploration & DevelopmentExploration & Development
The R&D ProcessThe R&D Process The E&D ProcessThe E&D Process
Long-Range Research Grass-roots explorationGeneral scientific/technology research General exploration of country or region;unrelated to any specific product target generation exploration
Advanced Product Engineering Advanced ExplorationResearch and development focusing Exploration and discovery focusing on on product lines quality economic orebodies incorporating
geology, mine engineering, metallurgy and economics focusing on the product
Product Engineering Mine Engineering, Mineral processingand Geological Modelling
Adapting the product concepts for Preparing the product – reserves for use in products mining and the market
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TODAY
Commercial mining makes the difference between success and failure of a mining company.
E&D is an expensive, risky process that cannot be relied upon to support the mining companies portfolio.
Mining and E&D have traditionally struggled to work together in mining companies due to clashes in culture, objectives and priorities.
The ‘not found here’ mentality may result in exploration groups within a mining company encouraging internal projects over external projects.
VISION FOR THE FUTURE
Mining companies can focus on their priorities for success.
Mining companies are free to select the right projects for their portfolio, from the right E&D group, at the right time.
Mining companies maintain links with development.
Exploration risk is spread across a number of focused E&D groups.
A clearly defined ‘business’ relationship is defined between commercial mining and E&D.
E&D is free to sell innovations to the ‘best’ customer.
The Relationship of Mining and E&D
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Mining companies will need to balance risk in their portfolios by sourcing multiple projects from multiple E&D partners to ensure their ability to select the best projects at the right time. In order to establish this new paradigm, commercial mining will form clearly defined “business” relationships with E&D organizations providing a framework to manage their inherent differences.
The mining companies of the future will have to make better decisions endowing it the ability to select the best projects sooner and hence reduce late stage costly attrition. Deals that are often struck too late in a project development are unlikely to generate maximum value for the mining company.
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