Major to Junior Explorer. Majors Lots of cash Cash-poor Big team Small team with contractors & consultants Broad area / worldwide Focussed area (NSW ?)

Major to Junior Explorer Major to Junior Explorer

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Majors

Lots of cashLots of cash Cash-poor Cash-poor

Big teamBig team Small team with Small team with contractors & consultantscontractors & consultants

Broad area / worldwideBroad area / worldwide Focussed area (NSW ?)Focussed area (NSW ?)

Require large depositsRequire large deposits Small deposits acceptable Small deposits acceptable and farm-out large and farm-out large mineralised systems mineralised systems

Juniors

DIFFERENCES BETWEEN DIFFERENCES BETWEEN MULTINATIONAL MAJORS and JUNIOR EXPLORERSMULTINATIONAL MAJORS and JUNIOR EXPLORERS

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Majors WHAT WORKSWHAT WORKS and WHYand WHY

Good people are a company’s essential best assetGood people are a company’s essential best asseta company cannot succeed in the long run without good people

Drill more holes into selected targetsDrill more holes into selected targetsa two-year Canadian study on how to be more successful in exploration indicated “drill more holes”

Cost effective exploration is the Cost effective exploration is the best means of adding value to yourbest means of adding value to your company in the long runcompany in the long runfor example, Newcrest’s cost per discovery ounce in NSW is A$5 per ounce vs current gold price of A$500

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Design a long-term (>10 year) programmeDesign a long-term (>10 year) programmethe main reason for WMC’s success in the 1970s(pers. Roy Woodall) eg Olympic Dam. Also Amoco identifying Selwyn

Choose mine-finders by eliminationChoose mine-finders by eliminationAmoco hired many geologists and kept the mine-finders

Explore in an ore-permissive area or Explore in an ore-permissive area or as Roy Woodall says “the right jungle”as Roy Woodall says “the right jungle”for example the Mt Isa inlier has produced world class deposits as has the N&S American Cordillera

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Devise meaningful incentive schemes Devise meaningful incentive schemes for your mine-findersfor your mine-finders

cash bonuses or shares based on achievements of inherent value of find

Organise in-house workshops with presentationsOrganise in-house workshops with presentationsof own work, mine visits and recreationof own work, mine visits and recreation

recognition of work, team bonding, exchange of ideas and viewing different deposits

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Majors WHAT DOESN’T WORKWHAT DOESN’T WORK and WHY and WHY

many foreign majors have come and gone several times

Short-term programmes. Concept of "turning Short-term programmes. Concept of "turning over ground” without getting to know itover ground” without getting to know it

Exploring from a foreign head office and Exploring from a foreign head office and comparing finds with local modelcomparing finds with local modele.g. Kennecott c.f. BinghamDe Beers c.f. South African diamond pipesAnglo c.f. Witwatersrand

tendency for regional geologists to be stifled by pre-set ideas and foreign Head Office conditions not appropriate to a particular region

Big teams controlled by head officeBig teams controlled by head office

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Majors WHAT DOESN’T WORKWHAT DOESN’T WORK and WHYand WHY

e.g. Canadian and US majors in 1970s flying huge areas with EM and covering large tracts with IP

Majors banking on one or two geophysicalMajors banking on one or two geophysicalapproaches to finding major depositsapproaches to finding major deposits

Companies limiting geologists to certain sizeCompanies limiting geologists to certain sizedeposits in early explorationdeposits in early exploratione.g. Cadia was passed over at 200,000 oz gold and now has over 20 million oz potential

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Juniors WHAT WORKSWHAT WORKS and WHY and WHY

Acquire properties that have already had manyAcquire properties that have already had manymillions spent on themmillions spent on themJuniors will not have to spend precious funds drilling but can collate and manipulate all previous data using modern methods to develop targets that will attract majors

Successful exploration can be a numbers gameSuccessful exploration can be a numbers gamefor most juniors. The more properties of merit afor most juniors. The more properties of merit ajunior can afford the better the chance of junior can afford the better the chance of success in the long termsuccess in the long termtaken to the extreme; if a Junior only has one property and it fails for whatever reason it then has nothing

Cost effective exploration is the best Cost effective exploration is the best means of adding value to means of adding value to your companyyour companye.g. Dalrymple’s Thunderbox deposit and Aztec’s Golden Grove deposit

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Take up certain majors’ properties when theyTake up certain majors’ properties when theyabandon them, e.g. Kennecott (copper porphyries)abandon them, e.g. Kennecott (copper porphyries)CRA, IncoCRA, IncoMajors looking for world class deposits sometimesoverlook smaller high grade deposits

Conserve your cash like the ultimate miserConserve your cash like the ultimate miserotherwise you will end up disappearing like 70-80%of the new floats

Adopt a flat management structureAdopt a flat management structureflatter management structure allows for faster decision-making e.g. for acquisitions, properties, vacant ground etc.

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Develop a multidisciplinary teamDevelop a multidisciplinary teamto enable a Junior company to provide, collate, manipulate data to develop targets that attract majors to farm-in

Use geochemistry as a primary grass roots tool Use geochemistry as a primary grass roots tool after choosing the best ore-permissive area from after choosing the best ore-permissive area from a combination of free historical data and the latesta combination of free historical data and the latestDMR geology, magnetics, radiometrics databasesDMR geology, magnetics, radiometrics databasesrelatively inexpensive and may lead to important discoveries e.g. Tick Hill

Be constantly prepared to raise capital during briefBe constantly prepared to raise capital during briefmarket windows caused by cycles, market windows caused by cycles, strikes, wars, US interest rates etc.strikes, wars, US interest rates etc.Juniors’ ever present worry is having sufficient funds to be effective

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Let the best mine-finders site the critical drill holesLet the best mine-finders site the critical drill holesSome geologists have developed the art of discoverybetter than others

A major consideration in exploration should beA major consideration in exploration should bestructural controlstructural controlthe vast majority of ore deposits are constrained by structureand / or stratigraphy

Be constantly alert to opportunities when depositsBe constantly alert to opportunities when depositsare abandoned by majors in foreign countries are abandoned by majors in foreign countries They may be available for a songThey may be available for a songCorporate head office may make a decision to pull out of a country or region for strategic reasons

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Provide a suitable incentive scheme of shares Provide a suitable incentive scheme of shares And options with a continuing And options with a continuing optional salary sacrifice share optional salary sacrifice share acquisition schemeacquisition scheme

to attract and keep the best mine-finders

Focus on an area e.g. NSW. Use a small, focussedFocus on an area e.g. NSW. Use a small, focussedteam and specialised contractors / consultants team and specialised contractors / consultants focus gives better knowledge with time

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Look for potential high grade “Zone 7s” in large Look for potential high grade “Zone 7s” in large but low grade mineralised systemsbut low grade mineralised systemsPorgera’s narrow but very high grade Zone 7, Cadia’s Ridgeway and (?) GCR’s Copper Hill’s 26 g/t gold 2m zone

Develop and use check lists e.g. for field trips,Develop and use check lists e.g. for field trips,drilling, surveys, agreements & feasibility drilling, surveys, agreements & feasibility studies etc.studies etc.consider arriving at a field location after a days travel to find an essential piece of equipment was left behind

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Juniors WHAT DOESN’T WORKWHAT DOESN’T WORK and WHY and WHY

funds are precious. Sooner negotiate with shares, participating interest and royalties

Paying large amounts of money to vendors Paying large amounts of money to vendors

the whole team will suffer

Do not promote your best mine-finder to Do not promote your best mine-finder to pure administrationpure administration

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Juniors WHAT DOESN’T WORKWHAT DOESN’T WORK and WHY and WHY

remain open to all opportunities for different commodities including industrial minerals because at some time that commodity will become the market’s “ flavour of the month “ and the Junior can capitalise on that to raise funds in tough times e.g. currently tantalum and palladium

Do not restrict Junior company to a singleDo not restrict Junior company to a singlecommodity or a few commoditiescommodity or a few commodities

not cost effective exploration because too much spent on travel, administration and establishment

Spreading the geographic net too wideSpreading the geographic net too wide

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Add value by cost effective exploration Add value by cost effective exploration

Select the best people ( mine-finders )Select the best people ( mine-finders )

Develop a multidisciplinary team Develop a multidisciplinary team

Devise meaningful incentive schemes Devise meaningful incentive schemes

Explore in ore permissive areas Explore in ore permissive areas

Design long-term programmes Design long-term programmes

Drill Drill moremore holes into selected targets holes into selected targets

SUMMARYSUMMARY

Documents

Major to Junior Explorer. Majors Lots of cash Cash-poor Big team Small team with contractors & consultants Broad area / worldwide Focussed area (NSW ?)