Explore or acquire? The dilemma

Abstract To satisfy their continuing need to replenish or expand their ore reserves, mining companies are faced with the dilemma of arriving at a proper balance between the dual avenues of discovery through in-house exploration and of acquisition of properties that are relatively proven or are even in production. The returns from exploration activities may be spectacular, but are unpredictable. The allure of an acquisition lies in its promise of quick and risk-reduced addition to reserves. However, it is historically clear that quantum increments in shareholders’ values have arisen primarily through major exploration discoveries, rather than through major late-stage acquisitions. Late-stage acquisitions can prove highly profitable, sometimes based upon the planned use of superior mining or metallurgical technology, but more often occur as the result of unexpected windfalls. At the other extreme, they can become expensive failures through inadequate due diligence, or unforeseeable factors.

Citing numerous case histories and industry statistics, it is concluded that a judicious combination of both exploration activity and the acquisition of prospects is the most advantageous strategy for adding new ore reserves. A skilled exploration staff is essential for success, be it through exploration discoveries or through opportunistic acquisitions, preferably at their early stages. In the future, it is anticipated that there will be fewer opportunities for acquisition because of reduced funding for junior exploration companies, leading to increased competition and higher costs for fewer properties, both in the advanced exploration and mining stages.
Keywords: Ore reserves, Exploration, Acquisition.
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Summary: A method is described for determining the viability of hard rock orebody extraction by block caving. Using a very limited amount of geotechnical data, the procedure enhances Laubscher’s empirical stability graph method by using the complex structural modelling system (ChaSM) to assess cavability and block cave tonnages.
Publication: CIM Bulletin
Author(s): R.J. Butcher
Keywords: Block caving, Hard rock orebody, Extraction, Tonnage.
Issue: 1058
Volume: 95
Year: 2002
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Summary: Noranda has successfully developed and implemented two leading-edge mineral exploration technologies — hyperspectral remote sensing and 3-D seismic surveying. Airborne hyperspectral imaging provides detailed geological and mineralogical mapping capability at both a regional and project scale that facilitates improved selection of prospective terrain and an accelerated exploration cycle. Noranda, in partnership with Falconbridge, has licensed the exclusive use of the Earth Search Sciences Inc....
Publication: CIM Bulletin
Author(s): J.C. Gingerich, L.W. Matthews, M. Peshko
Keywords: Exploration, Hyperspectral technology, 3-D seismic technology, Sensing, Surveying.
Issue: 1058
Volume: 95
Year: 2002
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Summary: The development of a DC resistivity instrumentation system for data acquisition in extreme topography yielded an unexpected bonus in the quality and information content of the type of raw data gathered. Not only were traditionally too-rough areas being investigated systematically for the first time, the unique high-density, multi-directional raw data were providing the opportunity to greatly expand the range of conductive and resistive signatures that could be accurately recognized. Using a...
Publication: CIM Bulletin
Author(s): G. Shore
Keywords: Resistivity mapping, Inversion, 3-D, Imaging resources, Resource settings, Exploration, Geophysics.
Issue: 1058
Volume: 95
Year: 2002
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Summary: The financial performance of the mining industry, measured by return on equity and capital employed, has been inadequate for many years. Consequently, mining companies are not valued highly by stock markets. Among the more important causes for the decline in the sector are the conservative working practices and reluctance to adapt to change or to develop new technology, although some relatively recent developments such as SX-EW copper and heap leach gold have made a significant impact on the...
Publication: CIM Bulletin
Author(s): R. Horn
Keywords: Mining, Geology, Exploration, Orebodies, Junior companies, Financial performance.
Issue: 1058
Volume: 95
Year: 2002
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