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EXPLORATION & DEVELOPMENT
AND
MINING
THE NEW PARADIGM
David J. Hall
FINEX '08
NO MINE EXISTS WITHOUT THE PROCESS
OF EXPLORATION & DEVELOPMENT (E&D)
E&D IS THE LIFEBLOOD OF THE MINING
INDUSTRY & CURRENTLY NEW BLOOD IN
SHORT SUPPLY
FINEX '08
Drilling Dominican Republic Engaging natives in Kenya
5000 metres a.s.l. Peru Drilling in Turkey
FINEX '08
THE EXPLORATION-MINING VALUE CURVE
VALUE
The E & D The Mining
Business Business
POSITIVE
FEASIBILITY LONG TERM VALUE ADDED
GREATEST
VALUE
ADDED
THROUGH FINANCING & START-UP
E&D CONSTRUCTION PROBLEMS
TIME
Discovery Development Production
“Excitement” “Investment Analysis” “Real Results”
FINEX '08
Risk = Probability of Success By Financial Exposure
1. First phase drill program
1 2. Second phase after
2 initial encouragement
High
REWARD 3 3. Pre-Feasibility
Stage
4
Low 4. Feasibility Stage
Project Low High
RISK
RISK REWARD DIAGRAM
FINEX '08
HOW MANAGE AND INCREASE PROBABILITY OF SUCCESS.
1. QUALITY OF PEOPLE.
Good people are rare because all competitors don’t have them.
They are valuable because they affect the bottom line.
They are inimitable because they cannot be copied or substituted.
2. QUALITY OF TECHNICAL TEAM.
Teams can ensure that different viewpoints and perspectives are taken
into account early on, thus make better decisions.
3. LEADERSHIP.
Leadership is different to management.
4. RISK MANAGEMENT.
The evaluation and controlling of risks that face exploration companies
will ensure that opportunities are not missed, and competitive
advantage is enhanced
FINEX '08
THE RESOURCE SECTOR IS CURRENTLY BOOMING AND
EXPERIENCING EXCELLENT FINANCIAL PERFORMANCES
MINING COMPANIES MUST REPLACE THEIR PRODUCTION TO
SUSTAIN THEMSELVES
YET WE ARE SEEING A DECLINING DISCOVERY RATE IN E&D
E&D MORE IMPORTANT THAN EVER
FINEX '08
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 FINEX '08
Research & Development = Exploration & Development
The R&D Process The E&D Process
Long-Range Research Grass-roots exploration
General scientific/technology research General exploration of country or region;
unrelated to any specific product target generation exploration
Advanced Product Engineering Advanced Exploration
Research 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 processing
and Geological Modelling
Adapting the product concepts for Preparing the product – reserves for
use in products mining and the market
FINEX '08
TODAY VISION FOR THE FUTURE
Commercial mining makes the difference Mining companies can focus on their
between success and failure of a mining priorities for success.
company.
Mining companies are free to select the right
projects for their portfolio, from the right
E&D is an expensive, risky process that E&D group, at the right time.
cannot be relied upon to support the mining
companies portfolio. Mining companies maintain links with
development.
Mining and E&D have traditionally struggled Exploration risk is spread across a number of
to work together in mining companies due to focused E&D groups.
clashes in culture, objectives and priorities.
A clearly defined ‘business’ relationship is
defined between commercial mining and
The ‘not found here’ mentality may result in E&D.
exploration groups within a mining company
encouraging internal projects over external E&D is free to sell innovations to the ‘best’
projects. customer.
The Relationship of Mining and E&D FINEX '08
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.
FINEX '08
THANK YOU
FINEX '08
