Are Exploration Companies Giving Their Remaining Shareholders Any Value?

By Andy Randell, Published on LinkedIn July 23rd, 2014

Over the past two years, mineral exploration has faced a relentless onslaught of insecurity and plummeting metal prices, which in turn has led to mass unemployment in the exploration sector; a disease we can now see spreading to the mining and extraction folks.

Like many people, I have money tied up in shares with a few Juniors, and while I have seen a major decline in their worth, these companies still exist and I have to ask as both a shareholder and a geologist, what value are you adding for me?

The answer is all too often ‘none’. Most companies have gone into a ‘care and maintenance’ phase, which essentially means that they have shed all of their technical staff in order to keep the CEO’s behind desks and the office lights on. People have become so used to these downturns and the fact that their investors have either left or have been neutered by the general economic state that they are taking the easier route by sitting and hoping that, one day, things will get better. Essentially they became dull and unimaginative, often because they lack the knowledge of exploration staff to drive projects on.

Many exploration Juniors are very comfortable shelling out millions of dollars of investor money when times are good, because that is what we have do, right? In recent years, I have seen a huge amount of misappropriation of funds into projects that are purely the bosses favorite or are likely to generate easy news release results, over the real art of finding and defining a project. During these times they feel invincible, like the party will never end! But then come the crashes – we all know these will come; this industry is very cyclical. When the money goes, so does the bravado and confidence.

As an exploration geologist, it really pains me to see the lack of work available, long term or short term, because the heads of these companies lack any form of creative vision – so blinded they have been by writing big cheques that spending small amounts seems useless. The work is out there, we just need people to think more creatively.

So here is my list of projects a company could look at doing with their scant funds that will still drive a project forward. Sure, it might not lead to a big press release but it will enhance the science (you know, the part we all forget that this industry is actually about!). By undertaking some of this work, you, the Boss, are proving to your shareholders that you are still invested in your property and are planning for a recovery not just in your company but also their share value.

Here are my Top 9 insights that should be on your ‘to do’ list:

Data Consolidation:

It is likely that you have spent millions of dollars on data acquisition in the field and beyond. Be this mapping information, assay certificates, quality control and even land records, I have rarely found this data to be in any useable, consolidated form. More often than not, it is spread on the now abandoned laptops of the geologists in a variety of layouts and formats. If your Company suddenly raises $1m tomorrow, how much of that will go into reorganizing the data so your newly hired team can go into the field and carry on?

Quality Control:

QAQC is another one of those areas that only a few geologists seem to really grasp in depth, and is often badly recorded / analysed. Your drill results are worth nothing without intact and verifiable QC data. When did you perform a statistical analysis on your data? Do you have a report on hand that describes your QC performance up to the day the last set of assay results came in? Maybe you should be writing a procedural handbook for your project to standardize procedures?


Do you know if your assaying scheme is the best for your project? Have you ever experimented with other methods? This is a great project to do for a relatively small cost and now is the ideal time to do it, as the labs are quiet and you don’t have a lot of new data to deal with.

Not all assaying methods are the same; some simple changes in the preparation of samples alone can increase yield by 10-20% and be much more reflective of your deposit. How is that for an investor return? You are likely burning money on a monthly storage cost for your reject / pulp materials, so why not make some of them work for you? Of course, your values might not change, but at least you can say with confidence that you have tried a variety of methods now, and know the best route.

Umpire Testing:

Another hugely underrated project that every exploration Junior should be undertaking annually. Umpire testing is a simple process – you select at random a portion of your samples from a project and send them to a different lab for assay. There is not additional prep work other than remixing of the pulp samples, and then a simple assay of your main commodity, such as gold.

Umpire testing is an essential part of the quality control process and I would say that less than 20% of the Juniors I have spoken to ever do this with any regularity.


OK, this is a bit pricier, but I have often seen millions (yes, millions) of dollars going into a drill project because they produce decent results or are a vanity project, but the commodity will never be extracted at a reasonable cost because the mineralogy is wrong.

If you have a project where you have undertaken a year or two of drilling, it pays to do a metallurgical survey to see how easy it is to extract your gold (for example). Crushing, processing, circuit designs and cyanide bottle rolls will give you a great indication of recovery grades and allow you to make an informed decision into where to invest your investors money later on. Of course, if you only have one project, it might risk killing it, but at least you will get to shop around for more property to explore!


Again, this goes beyond the Geologist with their hand lens and Audubon field guide. Using a lab to study minerals so you can fully understand your deposit is extremely useful in defining the processes that emplaced the ore body into your project area. Does the gold occur as free nuggets, or is it encased in crystals of arsenopyrite? Are the minerals in your oxidized zone liberated or still secure? All good questions that a mineralogy survey using QEMSCAN or SEM would answer. Oh, you don’t have the money to send people into the field to collect samples? No worries! It can all be done from your assay pulps and rejects!

Maps and Sections:

Time and time again I have gone into a clients office and asked to see sections from their drill programs, and time and time again I have been shown a PDF file a GIS person put together from some software package. How can you have two hundred drill holes and never attempted to draw a section?? You don’t have to be an artist, but getting intimate with the data and drawing it out is a great way to really understand your deposit. Alas it is a dying art as many just rely on computers to generate the data.

Maps are a similar issue; all those wages you paid during the boom years for geologists to collect field data, and often it is sat forgotten on a computer. Get it drawn, connect some dots – you never know, you might find something new!

Summary Reports:

It is a great idea to write up reports on each property you own / lease. These summary documents are extremely useful when the day comes that you a) hire new staff or b) look to sell your property other companies who have more cash than you. Lets face it, the more together your information is, and the more valuable the project will be. It is a little like the difference between a hanglider and a Lear jet.

Program Development:

Ta-da!!! Congratulations, an investor thinks you are awesome and wants to give you a cheque for $10 million to find some ore; but what is your plan? That season is waning fast and the snows are coming – do you have the time to sit around and work out what to do? You will recruit some geologists no doubt, but the amount of data for them to digest is huge. So you do what every company does – head into the field, drill a few holes, break a few rocks open, do some assays and hope for the best!

A better way to approach this is to have your next program already mapped out and even budgeted. If you do some of the things mentioned above, you will have a good idea of where to go and what to do next. Heck, knowing that might even impress your investor enough ahead of time that he does send you that big fat cheque!

So in summary, exploration is a very fast paced industry, which makes everyone involved think on their feet and make decisions based on the moment. But is doesn’t have to be – use this downtime to invest a relatively small amount of cash into your projects (no fieldwork necessary!) and do some of the science we so often neglect or simply do not have the luxury of time to undertake during the good times.

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