The changing face of exploration: A conversation with Eric Finlayson
Interview with senior HPX business adviser Eric Finlayson
Eric Finlayson knows the exploration industry better than most.
He spent most of his career with Rio Tinto, becoming their Global Head of Exploration and CEO of Rio Tinto Coal Mozambique before joining HPX as Senior Adviser-Business Development in October 2013.
In this in-depth interview, Eric explains how smart data management and new technologies able to explore through cover will play leading roles in future discoveries. He also explains the importance of attitude, predicting that companies willing to take a long-term view, learn from petroleum industry successes and improve the image of the industry will have true exploration success.
How do you see the current and future challenges of the exploration industry?
While high-grade surface deposits have been the mainstay of the mining industry to date, these deposits are becoming very difficult to find in the well-explored major mining districts. Average mined grades are declining within these districts as the high-grade surface deposits are depleted.
However, there are opportunities in these districts to reverse this decline through finding buried high-grade deposits. This follows from the observation that mineral deposits tend to occur in clusters. Some of the deposits will be exposed at the surface while others remain hidden below some form of cover.
Exploration through cover is particularly challenging with very few discoveries reported. However, the leading-edge technology developed by HPX will now make covered ore bodies more detectable.
The alternative strategy for finding high-grade deposits is to search in under-explored jurisdictions. Many prospective countries remain poorly explored and offer the potential for surface discoveries. However, there are usually good reasons why these countries remain under-explored by the mining industry.
Exploring and mining in these frontier environments – provided it is safe to do so – requires a favourable long-term outlook on a country’s sovereign risk. Yet adverse changes can never be ruled out with the potential to threaten an investment.
There are therefore two basic options are available to companies when choosing where to explore: covered-area exploration in established mining districts or surface exploration in under-explored jurisdictions. Most mining companies pursue the second option as they have no ability to explore through cover.
How sustainable are current mining and mineral exploration practices?
Mineral deposits are relatively common and form by geological processes of concentration. Low-grade deposits are widespread whereas high-grade deposits are much rarer. Deposits may be exposed by erosion or remain hidden beneath the Earth’s surface.
Any speculation about "peak metals" is premature given the Earth’s enormous untapped endowment of low-grade mineralization. While of little near-term economic interest, technology or incentive price will allow the industry to mine lower and lower grades out into the future.
Your thirty-year career in exploration has spanned multiple countries and multiple commodities. What are the most significant changes you have seen?
The most positive change has been in health and safety management and in environmental and social performance. What was quite frankly a cavalier industry thirty years ago has become much more socially responsible. This can only be good for the reputation of the industry.
Another change has been in the commodities that the exploration sector targets. While gold still dominates global exploration spend, a resurgence of interest in bulk commodities has occurred in the last fifteen years. It is no accident that the largest and most profitable companies in the sector are the diversified miners.
However, some things haven’t changed. Exploration expenditure still fluctuates strongly in response to global economic cycles. This “boom-and-bust” pattern of behaviour does present opportunities for those with a longer-term view of the industry. However, there is tremendous waste of human capital in many less-enlightened organizations.
Can you comment on data collection, the role of big data, and the possibility of making discoveries through data mining?
Exploration data is a product of the exploration process. As most exploration fails, there are, unfortunately, some in our industry who view data as the embodiment of failure or as the token prize of unsuccessful programs.
This negative association may help explain the dismissive attitude towards exploration data management and data mining that is observed in many mining companies. That reaction is understandable - after all - why spend money on managing or collecting something that appears to have no value?
However, the simplest and probably least appreciated benefit of good exploration data management is in preventing duplication of work. Knowing what you and other companies have done in the past saves dollars that can be used on other opportunities.
Another opportunity that well managed exploration data can provide is the recognition of overlooked targets through powerful modern techniques of data processing and visualisation. We all know the old adage about there being an undiscovered mine in every exploration archive and this hope underpins every data review we conduct.
The strategy of data mining works particularly well in brownfields environments where the volume and complexity of data may have confounded previous interpretative approaches.
Collaborative work adds another dimension to effective data management. While the simple sharing of information helps ensure that decisions in an organisation are as fully informed as possible, collaboration has a catalytic effect in that it yields better ideas and outcomes than through the work of individuals. This style of work is invaluable at every stage of the exploration process as it stimulates creative and critical thinking.
You may well ask if my belief in the value of data collection and mining can be backed up with hard personal experience of exploration success. Well, the simple answer is yes. Collation and re-interpretation of historic exploration data was instrumental in the 2009 brownfield discovery of the giant Escondida Este deposit.
What other skills will the next generation of explorers need?
It depends very much on where you believe the next world-class mines can be developed. If the answer is the OECD, we need to improve our ability to collate and interpret data with covered ore bodies in mind. We also have to re-invent the image of the industry to maintain our social licence to operate and to attract the talent that the industry requires.
The mineral exploration industry is spending more but finding less. What is the role of technology-driven exploration in the future?
The petroleum industry has transformed its exploration effectiveness over the last thirty years with more sophisticated approaches to basin evaluation. A similar transformation in exploration effectiveness is required by the minerals sector.
Exploration technology will be the enabler in minerals as it has been in the petroleum industry. And it will allow our return to covered-areas within the low-risk OECD jurisdictions where traditional exploration methods are ineffective.
HPX is a technology-based mineral explorer aiming to transform the effectiveness of covered-area exploration and to become the preferred partner of investors, host governments and other mining companies in established OECD mining districts. There are several strands to our value proposition;
Firstly, we have distinctive capabilities in target identification via sophisticated data mining. When applied to regional data, it allows highly targeted land acquisition.
Secondly, we have deep-search IP and EM capabilities for target evaluation using our proprietary Typhoon system and proprietary modelling software.
Thirdly, our senior management has global multi-commodity expertise and a track-record of world-class discoveries.
HPX is in a strong position to succeed in a new era of technology-driven exploration and discovery.