General introduction
The history of mining is marked with many major paradigms shifts that have transformed the industry. Each one has improved process, productivity, safety, and sustainability, while expanding the reach and scope of mineral exploration and extraction. We believe the CTAC #MineralFinderTechnology (MFT) is the next paradigm shift for remote and field mineral exploration. While attractive for geologists, #MFT also has major benefits for investors and for shareholder value.
What is the MFT paradigm shift in exploration?
The traditional approach to exploration first surveys geology for indicators of possibilities and probabilities for resource presence. Over years, geologists combine the geological data from multiple sources and increase their confidence. But they do not have certainty about what is undercover, and where it is, until after drilling. The extended time frames, low drilling success rates, and high costs are not a testament to the efficacy of the traditional exploration processes.
With MFT the exploration process starts by looking at large areas for the specific minerals of interest. Once they are found, MFT provides accurate maps of their location for minimal targeted confirmation drilling, 3D models of the reserves for mine planning, and affirmation of economic viability, all within 3 months. This slashes time, cost, and risk, profoundly changing the Lassonde Curve in ways that make investors sit up and take notice.
Traditional exploration process involves prolonged surveys and uncertain drilling outcomes. The inefficiencies, low success rates, and high costs associated with this approach have been a longstanding challenge. However, with MFT, the entire landscape of exploration is transformed. By targeting specific minerals of interest across large areas, MFT provides precise maps of their location, 3D reserves models, and economic viability confirmation in just three months. This remarkable reduction in time, cost, and risk fundamentally alters the traditional trajectory of mining investment, catching the attention of investors.
What is the Lassonde Curve?
The Lassonde Curve, a well-established concept in mining valuation, tracks the industry's cyclical nature and its impact on company valuation. MFT disrupts this curve by accelerating exploration while drastically reducing risk, particularly in the critical pre-feasibility period.
The Lassonde Curve, named after Pierre Lassonde, is a concept in the valuation of mining companies that provides insights into the unique challenges and opportunities associated with investing in the mining industry. It was developed to help stakeholders understand the cyclical nature of the mining sector and how it can impact the valuation of mining companies. It consists of three distinct phases –resource (exploration and resource development consume significant money without generating revenue), production (extraction, processing and sales generate revenue, profits, and return on investments), and depletion (as mining progresses the quality and quantity of ore decline, margins can shrink, and returns can decline).
The Lassonde Curve is often employed by financial market analysts when looking at mine company valuation across the life cycle of exploration (concept, pre-discovery, and discovery, feasibility), development, start-up, production, depletion, and rehabilitation.
The red curve in the image above defines a standard Lassonde timeline and valuation sequence. It starts with the desk top studies and first surface exploration proving the geology concept. As initial drill results provide undercover insights the early speculators buy-in and ride the wave before exiting when drilling amounts to a real mineral discovery and before the orphan period when large amounts of money must be raised for development, and the mine is not recovering cash flows. When development starts the experienced mine developers and financiers invest and valuation rises again. Once the mine is operating, cash flows begin, reserves deplete and valuation dips again.
The blue curve shows what happens to the Lassonde when you use MFT to reduce the exploration cycle time by 80% and increase success rates by more than 10 times. In particular, the blue curve draws attention to the reduction in size and duration of exploration risk, technical risk, and funding risk during the pre-feasibility period.
How does MFT reduces risk?
In mineral exploration, the success rate of exploration and drilling can vary widely depending on several factors, including geological conditions, the expertise of the exploration team, and the specific objectives of the drilling program. While there is no fixed or universally applicable success rate for mineral exploration drilling a commonly cited average is 30%; with success rate from exploration to operating mine sitting at around 5%.
In CTAC internal projects, and hundreds of client external projects, where drilling has been done based on the MFT maps and models the success rate has been 100%. After drilling, the success rate from the MFT exploration phase to developing an operating mine is between 50% and 70%. Both numbers often elicit a “too good to be true response." But the track record is hard to debate against.
Conclusion
In conclusion, the introduction of CTAC MFT represents a significant paradigm shift in the world of mineral exploration. This innovative approach not only benefits geologists but also holds immense promise for investors and the enhancement of shareholder value. In a world where mining and resource exploration have historically been marred by uncertainty and high costs, the advent of MFT offers a beacon of hope.
Get in touch with Onirik for more information
The mining leaders who have evaluated or employed MFT get excited because they grasp the impact it has on their exploration business model and the potential to accelerate of greenfield development targets to production.