Mineral industry needs to change its exploration and financing model if dearth of green fields discoveries to be overcome

Australia’s chronic shortage of Greenfields mineral discoveries can only be overcome by changing the sector’s exploration, financing and training models, according to a keynote speaker at a major international geoscience forum in Adelaide today.

Addressing the inaugural four-day Australian Geoscience Council Convention, Western Mining Services principal, Dr Jon Hronsky, said the current financing model for encouraging and sustaining exploration was broken.

“What we continue to see in Australian resources exploration is a highly inefficient use of capital,” Dr Hronsky said. The availability of risk capital for exploration is volatile and sentiment driven. Our financing model strongly favours recycling of old, marginal to sub-economic mining and exploration projects rather than genuine Greenfields exploration for new Tier 1 deposits,” he said.

“We need to move on a sooner rather than later basis to breakthroughs in undercover exploration to unlock what we believe is enormous potential to add to Australia’s rich mining history of minerals discovery, albeit at surface or shallow depth. This at a time of a continuing fall in Greenfields share of exploration spending. Junior explorers offer flexibility but do not have access to adequate funding. They are financed mostly from the retail sector, which is strongly sentiment driven and short-term focused.”

Dr Hronsky said major mining and exploration companies were not incentivised to prioritise genuine Greenfields undertakings.

“Majors have the funding but not the flexibility, and struggle with the nimbleness required for effective Greenfields exploration outcomes,” he said. There is also a misconception among many majors that junior explorers and miners will do the job for them.”

Dr Hronsky pointed also to a strong need to upgrade the industry’s training protocols.

“We train geoscientists at university but need explorers in the industry,” he said. Exploration skills need to be learnt and the current practice is ad hoc and largely on-the-job.”

“There is the challenge of transferring the tacit knowledge of long-term experience to university students and graduates through progressive curriculums and greater use of simulated environments.”

“We need to focus on the best deposits to be found in the covered search space, not the best deposits already found and, in this sense,, regional-scale Geoscience Data Sets are becoming increasingly powerful.”

Any new model should better aggregate sophisticated capital with specialist third parties or miners to deliver more strategic partnerships underpinned by greater technical discipline and specialist expertise.

For more information, visit www.agcc.org.au.