The Environment of Exploration: Economic, Organizational, and Social Constraints

Abstract

Exploration has a positive value to society. For example, about $60 million of new wealth or economic surplus results from the discovery of an economic base metal deposit in the Canadian Shield. To make its contribution to society, the exploration organization operates in an environment comprising the public, governments, the mining organization, geology, and the mineral endowment of the earth. Exploration is the first and most strategic phase of the mineral supply process. Corporate exploration decisions affect profit, growth, and survival considerations of the mining company. Mineral exploration is a sequential information-gathering process, punctuated by a succession of tests which provide perceptions of costs, risks, and returns of alternatives. The balance between the competing factors of depletion and technological evolution and fluctuating metal prices are variables in the assessment of risks and returns. A study of Canadian Shield exploration from 1951 to 1974 shows that about 2,100 mineral occurrences were discovered, at an average cost of $450,000 each. Of these, 40 were economic. In this context, about one economic mineral deposit was found for every 50 mineral occurrences discovered. A well-directed exploration program considers short- and long-term investment criteria. The long term is evaluated using various measures of Expected Value, the average value exploration will yield in the long term. The risks associated with the variability of commodity price, the variability of lifetime, and the profitability of a discovery, and the low probability of success should be considered in exploration planning. Because the future of the exploration industry and of society is inextricably bound, the industry must demonstrate to governments the positive potential value of exploration. Governments should respond so as to optimize the contribution from the mineral endowment of the land by enlightened tax and land use policies. Mineral exploration will increasingly contribute to the needs of society. There may never have been a better time to be an economic geologist.

Gold exploration success

“…The undesirability of a groupthink environment in exploration is not a new revelation, and underpins the hunting pack size of a group of around 4–8 people and the need for diversity amongst that team (e.g. Snow and MacKenzie, 1981; Woodall, 1994; White, 1997). Sub-dividing a large exploration effort of a major company into several smaller autonomous teams achieves this end of reducing the chance of groupthink; but the need to seek approval of all drilling targets outside and senior to the small team could nullify some of the benefits of the hunting pack concept.…”