Win us with honest trifles

Mineral Exploration and Nancy Reagan, by Alan Stephens

Today IKN is honoured by the presence of Alan Stephens, a highly-experienced, peer-respected exploration geologist who has been banging rocks around the world for longer than he’d probably care to remember (for more on his background, check the biography at the foot of the page).

This month Alan took it upon himself to write the following note, entitled “Mineral Exploration and Nancy Reagan” and this morning, offered this humble corner of cyberspace the opportunity to publish it to a wider audience. Of course I jumped at the chance, so grab a coffee, sit back and get ready to be entertained and educated by the insights of a world-class geologist and successful mining entrepreneur. With no further ado, I’ll leave you in his capable hands.

Mineral Exploration and Nancy Reagan

Alan Stephens

March 2022


Much has been written about what is required for companies to be successful at exploring for mineral deposits. However, less has been written about what distinguishes the successful explorationist or ore finder; the necessary interactions with other disciplines to turn a discovery into a mine; and the pitfalls that must be avoided to ensure that success.

This short article is aimed at those geologists who want to find economic mineral deposits, recognising that this is a single-minded pursuit. You must be able to wake up every morning thinking that this will be your day but being prepared to go to bed every evening after finding out that it wasn’t. Again. Failure is the norm in this business so you have to be able to deal with disappointment with equanimity. Your employer has hired you in the expectation that you will be successful as quickly and cheaply as possible, often without truly understanding how difficult this task is. It may also be helpful to investors in junior exploration companies who want to put their money where it has the best chance of making a return.

I will attempt to provide a personal and somewhat eclectic list of things which have been important to me in my involvement in the discovery or recognition of eight deposits and how they progressed; four deposits that went into production; one deposit that is heading that way; one that hasn’t yet overcome political opposition and may never do; and two more that may see the light of day eventually. Or not.

The eight deposits were found in seven countries over a thirty year period by the exploration teams of five different companies, large, mid-sized and junior, and represent five discoveries made with the drill bit and the recognition of three, more advanced, but underappreciated opportunities, although one of the “opportunities” turned out to only offer the opportunity of losing money.

Exploration Philosophy

Exploration’s role is to make money, by identifying mineral deposits that exceed corporate criteria for size, grade, production costs, and return on investment. This should be achieved before the cumulative expenditure prior to discovery negates the required return on investment from the discovered deposit. It doesn’t matter how the deposits are found or obtained.

The three most important variables for this success are people, time and money. Employing a proven ore finder is the single most important aspect that will determine the outcome of the effort. Without them, no amount of money or time will likely produce discoveries. The team must take personal responsibility for their expenditures and treat their budget like it was their own money. Having funding for a reasonable period of time permits persistence, but too much money only encourages profligacy and testing of low priority targets. 

Nancy Reagan Was Right

Continued expenditure on a project should result in increased success, but one must also know when to say no, and not get locked in to gambler’s ruin. Following Nancy’s advice to “Just Say No” must be at the forefront of an explorationist’s thinking when they are visiting a prospect but they also need to be highly receptive to the rocks or the data not letting them say no. It may be that as a prospect turns into a project and then into a mine, it was never possible to say no and walk away, but one should never stop asking the question. The fact that it is the company or group’s only project; or that you have already spent a lot of money on it; or that it is in an agreeable location; or that third order targets can be developed to keep the project alive, are not good reasons to keep spending money on it. Bear in mind that the time and money spent on a project that is not going to make it, deflects from the effort to find one that might.

That said, it is often the fourth or fifth company to review a prospect or project that makes the discovery, so be open to new interpretations of existing data generated by your predecessors. Recycled projects where nothing has changed should be avoided, however.

What Is Ore?

Ore is mineralization that can be mined at a profit after all capital investment has been repaid in a timely manner. It is therefore crucial that the explorationist has a solid grasp of mineral economics and understands the difference between ore and waste, although, of course, one can become the other over time as metal prices and costs change. It is particularly important to be familiar with the time value of money as expressed in discounted cash flow analysis, which leads to return on investment and project valuation criteria. 

The definition of ore self-evidently varies from deposit to deposit but also by geography. An economically mineable deposit in a good location well served by infrastructure would host an orebody while the same deposit in a poor location might be waste. This also applies to jurisdictions as lack of political consent or a social license to mine or insurmountable environmental constraints can quickly turn your nice orebody to waste. 

An explorationist needs to know when to cut his or her losses and retire to fight again somewhere else. But when it is your only project and you have already spent a lot of the shareholders money and boy it’s a great project in every way, except for the jurisdiction, but we can convince the politicians, right? Hubris. You should have listened to Nancy.

Look at The Rocks

The old adage has it that the best geologist is the one who sees the most rocks and this is undoubtedly true. Another truism is that you need to be in the field to look at them. Be prepared to systematically walk the ground, bang the rocks and build up a mental picture of the geology of your new prospect and its potential as you go.  Make sure you are fully versant with the ore forming processes that would have led to the type of deposit you are seeking and be able to recognise their products in the field. Learn how to think in three dimensions.

Proficiency can only come with experience and by spending as much time as possible in the field to gain it. While modern computing, remote sensing and the internet provide wonderful tools and sources of information, an explorationist is unlikely to find a mine by sitting in front of a computer.

Ore Is Where You Find It

This is a common euphemism that while essentially meaningless, has a kernel of utility. Being empirical is essential in ore finding, meaning strenuously avoiding dogma and being sceptical of conventional thinking. A good example of this is the recent discovery of a significant leachable copper deposit, located in an unfashionable part of northern Chile. It comprises an oxidised enrichment blanket hosted by fractured, coarse grained, intrusive rocks, the primary mineralization is Jurassic in age, and it is located 22km from the coast. Conventional wisdom holds that major copper deposits do not occur in deeply eroded intrusives of the Coastal Batholith where only narrow vein deposits can be expected. The few previous visitors to the project only saw veins, even though none are present, and did not recognise the potential for significant, fracture controlled, Tertiary age, supergene mineralization in the intrusives. The key was to look at the rocks, which are well exposed in outcrop and surface workings, and see what they had to say rather than assume in advance that their story had already been written. 

Another good place to find ore deposits is in filing cabinets. Prospects that had been looked at under one set of circumstances and found wanting may represent interesting opportunities if looked at with different eyes. A large, partially oxidised, copper enrichment blanket, located in Mexico, languished in its owner’s files for many years until a re-evaluation of the information demonstrated the potential for a sizeable underground mineable deposit. 

Perhaps advances in metallurgy have made hitherto uneconomic projects viable, or perhaps a new geological interpretation of existing data may make a difference. Or the politics of a country change and it may become investable. Or a company with greater risk tolerance is prepared to go where others won’t.

Sometimes it is just a case of being in the right place at the right time. What is now the world’s seventh largest copper mine, was “rediscovered” in the map cabinet of the state owned mining company, where cross sections illustrating 10s and 100s of meters of multi percent copper mineralization had apparently not been looked at since the holes were drilled, some 20 years previously. 

The evolution of the geological understanding of the Central African Copperbelt over the past 25 years also provides an object lesson in looking at the rocks rather than the textbooks that described them. Conventional wisdom from the 1960’s held that the enormous sediment-hosted copper deposits of Zambia and the DRC were syngenetic or diagenetic. Once it became clear that the mineralization could occur at any location within the stratigraphy where appropriate structural and reductant traps were present and not just at the base of the pile, major new deposits were discovered. 

Engineers Versus Geologists

Turning mineral deposits into profitable mines is a tough business.It is no good saying that it is the geologist’s job to find mineral deposits and the engineer’s job to turn them into mines. Part of an explorationist’s job should be to assess “mineability” by considering inter alia; the physical characteristics of the project with respect to infrastructure; the political, social and environmental aspects of the area; and any other potential legal or technical impediments as to why the project may not be viable, good geology notwithstanding. 

A wise man once said that 10 out of every 5 mines shouldn’t have been built, by which he meant that most mines struggle to make their desired return on investment over their lives. This could be because the mineral deposit was not fully understood; or the geometallurgy was not correctly defined; or the capital and or operating costs were underestimated; or the engineers overcapitalised the project; or insufficiently conservative metal price assumptions were used. Or God forbid, a combination of these factors was applied due to ignorance, incompetence or negligence. 

As an explorationist, you should be prepared for disappointment and frustration if you are successful at finding a deposit because the engineers will do their best to put the kibosh on it through excessive conservatism; lack of familiarity with the country or deposit type; lack of skin in the game; incompetence; or any other reason. As the discoverer, you will feel attached to your deposit and will want to see it go into production, but apart from disappointment, there is no real downside to you if it doesn’t. 

The engineers, on the other hand, usually have minimal upside in a successfully built mine, unless they come in under their budget or are shareholders in the company. But they have plenty of downside, including loss of jobs, pension, health insurance, credibility etc. if they don’t. Therefore, it is understandable when they err on the side of caution and if their inflated capital estimate means that your project doesn’t fly, too bad. Frequently, someone else will then pick up your project for a song and develop it for the correct cost and make lots of money. You will get nothing. 

It is also no good hearing from the engineers that if only you had told them in advance what type of deposit you were looking for or where, they would have told you not to bother. For example, finding an underground mineable copper deposit when there is no tradition of underground mining in the company. Or dealing to acquire a great gold project in a country your company doesn’t really want to operate in, despite initially tolerating your months of effort to find it and agree terms with the owners. Once again, someone else will likely benefit from your efforts when these projects get sold on, and once again, you will get nothing. The lesson here is to liaise closely with the people who will be turning your discovery into a mine, from the get go. 

If you are working for a reputable junior company, it is up to you to figure out who might buy your discovery if you make one. Spending the shareholders’ money, assuming there is any, and then finding out too late that there is no market for your project for whatever reason, means you should have listened to Nancy. You will be much better off not working for a disreputable junior company that doesn’t care about the shareholders money, so long as there is enough to pay the execs.

The Explorationist Defined

Exploration is self-evidently a wealth destroying exercise given the amounts of money spent on it compared to the value of the discoveries that this money brings. It is also a necessary undertaking if we are not to run out of the things that a modern society requires. The only way that this circle can be squared is through the more efficient expenditure of exploration budgets and the better management of exploration programs. Much, or even most of the shareholder’s money currently spent on exploration by the mining industry is wasted, chasing ever more difficult and unlikely targets. Exploration teams seem to have great difficulty following Nancy’s advice.

Being a successful explorationist can be very rewarding and is one of the few professions where your successful wealth creation may lead to lots of other people benefiting directly and indirectly from your efforts. Exploration that leads to the ethical development of mining operations has a hugely positive impact on society, particularly in the poorer parts of the planet where new mines will increasingly be found. 

To be that successful explorationist, you need to be a good geologist and crucially, have the ability to recognise a good prospect when you see one. But you also need to have the ability to recognise ore when you see it and waste when you see it too, by taking into account all the factors that impact that definition. You need to achieve that recognition as early as possible in the life of a project. Finally, you need to be a good salesman and have the courage of your convictions to persuade whoever controls the purse strings to loosen them.

Disclaimer; the views expressed in this article are solely those of the author, Alan Stephens. They are not intended to provide, and do not constitute, investment advice. The article should not be used in connection with making any investment decision, and should not be relied upon for any reason.

Alan Stephens is a Non-Executive Director of Marimaca Copper Corp. He co-founded the Company in 2005 and transitioned from his executive to non-executive role in 2018. Alan is a respected exploration geologist, known for his involvement in the discovery of some of the world’s most significant copper deposits.  

Alan has served as the Vice President of Exploration for First Quantum Minerals and Exploration Manager for Cyprus Amax Minerals, managing exploration teams in Latin America, Africa, Europe and Asia. Alan is a Fellow of the Society of Economic Geologists and of the Institute of Materials, Minerals and Mining. He holds a Bachelor’s in Mining Geology from the Royal School of Mines, Imperial College, London, is a British and US national resident in the UK, and is fluent in Spanish.  

He is currently advising a private equity group on their copper projects and can be reached at alanstephen@btconnect.com


    Reading this article I find interesting points. Just so we all know I am a Mining Engineer and I might be inclined towards defending mining Engineers plus the conservatism as discussed thereof. There are many examples of failed mines due to overestimation of the resources; it is undeniably true also mines have failed due to bad engineering. I just want to say, non of this is exact science that one would stand in public and point a finger at others for getting it wrong.


    good article


    Great article Alan.
    There is no short cut to exploration and all disciplines must be involved.
    To quote Ron:
    There is no limit to the amount of good you can do if you don’t care who gets the credit.


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