Former Newcrest Mining exploration general manager Dan Wood believes a greater pooling of financial resources will need to happen to increase the chances of exploration success and a sustainable future for the sector.
“In effect, junior gold explorers will need to find a way of replicating the oil and gas industry’s approach to funding exploration, where several companies share risk,” Wood told the NewGenGold conference in Perth this morning.
“Whether this will be accepted by the market is a moot point, but unless a way is found to do this it is difficult to see how junior companies will be able to explore, except in their traditional way which has had a poor discovery record since 2005 and which is probably unlikely to improve.”
Woven into all of this is Wood’s thesis that all the easy discoveries have been made and the big discoveries henceforth will, in all likelihood, be at depths of 300m and beyond.
Hence, more expensive exploration needing to be undertaken by juniors.
Proof that all the easy discoveries have been made can arguably be seen in the relatively poor amount of gold found in the past decade versus the funds expended.
Wood quoted Richard Schodde’s numbers suggesting US$65 billion was spent over the period 2007-16 for the discovery of only $30 million in gold.
Even if those numbers are debatable, Wood’s suggestion that investors are unlikely to continue forever backing a sector with anything like that sort of record doesn’t seem disputable.
For improved hit rates, Wood believes explorers are going to have to increase their understanding of the pointers towards economic mineralisation.
“One of the keys to future discovery will be the ability to detect and correctly interpret distal signatures to potential ore deposits,” Wood said.
“In most instances where the target is deeper, knowledge of vertical distal signatures will be crucially important if filtering of potential targets is to be employed, and discovery is to be achieved cost-effectively and efficiently.”
A case in point was the Ridgeway discovery made by Wood’s Newcrest back in the 1990s, following a diamond core hole that 118m grading 0.1% copper – with the diamond hole itself a follow-up hole to an RC intercept of 8m grading 0.4 grams per tonne gold.
The low grade copper was assessed as leakage from deeper mineralisation (as were a couple of other intersections), leading to the decision to drill another four deep holes.
The result from the fourth hole of 145m grading 4.3gpt gold and 1.2% copper was discovery of Ridgeway 500m below surface.
