NDLI: Examining Risk in Mineral Exploration

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Book Reviews : Natural Resources Research , Volume 8 , Issue 2

Natural Resources Research : Volume 8, Issue 1, March 1999

Natural Resources Research : Volume 7

Natural Resources Research : Volume 6

Examining Risk in Mineral Exploration

Content Provider	Springer Nature Link
Author	Singer, Donald A. Kouda, Ryoichi
Copyright Year	1999
Abstract	Successful mineral exploration strategy requires identification of some of the risk sources and considering them in the decision-making process so that controllable risk can be reduced. Risk is defined as chance of failure or loss. Exploration is an economic activity involving risk and uncertainty, so risk also must be defined in an economic context. Risk reduction can be addressed in three fundamental ways: (1) increasing the number of examinations; (2) increasing success probabilities; and (3) changing success probabilities per test by learning. These provide the framework for examining exploration risk. First, the number of prospects examined is increased, such as by joint venturing, thereby reducing chance of gambler's ruin. Second, success probability is increased by exploring for deposit types more likely to be economic, such as those with a high proportion of world-class deposits. For example, in looking for 100+ ton (>3 million oz) Au deposits, porphyry Cu-Au, or epithermal quartz alunite Au types require examining fewer deposits than Comstock epithermal vein and most other deposit types. For porphyry copper exploration, a strong positive relationship between area of sulfide minerals and deposits' contained Cu can be used to reduce exploration risk by only examining large sulfide systems. In some situations, success probabilities can be increased by examining certain geologic environments. Only 8% of kuroko massive sulfide deposits are world class, but success chances can be increased to about 15% by looking in settings containing sediments and rhyolitic rocks. It is possible to reduce risk of loss during mining by sequentially developing and expanding a mine—thus reducing capital exposed at early stages and reducing present value of risked capital. Because this strategy is easier to apply in some deposit types than in others, the strategy can affect deposit types sought. Third, risk is reduced by using prior information and by changing the independence of trials assumption, that is, by learning. Bayes' formula is used to change the probability of existence of the deposit sought on the basis of successive exploration stages. Perhaps the most important way to reduce exploration risk is to employ personnel with the appropriate experience and yet who are learning.
Starting Page	111
Ending Page	122
Page Count	12
File Format	PDF
ISSN	15207439
Journal	Natural Resources Research
Volume Number	8
Issue Number	2
e-ISSN	15738981
Language	English
Publisher	Kluwer Academic Publishers-Plenum Publishers
Publisher Date	1999-01-01
Publisher Place	New York
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Economic Geology Hydrogeology Math. Applications in Geosciences Sedimentology
Content Type	Text
Resource Type	Article
Subject	Environmental Science

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1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
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4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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