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What Citi misses about mining revolutions

Advances in mineral exploration are needed to support discoveries.

Citi Research takes a stab at so-called disruptive technologies concerning metals and mining in a recent research report. It’s a nice overview on a number of fronts especially as far as solar and silver, lab-grown diamonds and metal-use in cars go. In short: silver’s there to stay, lab-grown diamonds could disrupt the industry in the years to come (but consumers will decide), and PGMs look solid.

But the report misses, or doesn’t treat, a few areas that deserve some attention. In particular, there was scarce mention of exploration technology, seabed mining and mineral processing.

I won’t go into all these areas here. As it stands, I have some questions out to mineral processing specialists for their thoughts on what technologies or processes stand to have revolutionary (or at least pretty meaningful) impacts on the mining sector. That is, like the impact of heap leaching, what technologies might unlock hitherto uneconomic deposits or cheapen the conventional flow sheet? Seabed mining, I’ve recently touched on, so I won’t go back there right now.

Which leaves us exploration technology to consider.

First, recall why technology that makes it easier or cheaper to find economic metal and mineral deposits is revolutionary stuff: mineral exploration is increasingly expensive and less effective. It’s a subject we’ve touched on before after conversations with researchers on the cutting edge of exploration technology and also in the know when it comes to exploration costs.

There’s some debate over the extent of the decline in mineral discoveries. But suffice it to say it is happening and they are trending deeper, especially in more mature exploration districts. The easy – and cheaper – stuff at surface (but certainly not all of it) has been found.

So discoveries increasingly require more expert geological knowledge featuring, I would emphasize, creativity – along with geophysics, geochemistry and drilling. That drilling is now more an act of faith – or educated gamble – than ever before. Companies have to drill blind beneath cover to test geophysical anomalies they deem prospective or into alteration halos, for example, that they hope might lead to a discovery.

Yet drilling, especially deeper, is costlier than ever, often prohibitively so. It’s also clunky from a get-the-results point of view. Develop target. Budget. Drill. Cut/split core (or other downhole samples). Send to lab. Wait. Make more exploration decisions based on what you see. And what you see is so often not a smoking gun discovery, but something interesting nonetheless that a geologist might like to follow up. The main trouble here, apart from cost, is the waiting – not being able to act quickly in the field.

So in these respects – cost and speed – innovation in hard-rock drilling technology is increasingly crucial to promote discovery. It’s also getting more plausible.

At a recent conference – Mexican Roundup in Hermosillo – Cindy Collins, a business development manager with Reflex, a drilling technology company, made a nice analogy about the advances now available to us in exploration. If we can put a track-mounted drill with real time on board mineral sampling on Mars, she wondered, why can’t we do the same on Earth? (For a lot less, it might be added.)

Indeed, it is happening, and that was part of her sales pitch.

CSIRO – a research organization in Australia – along with supporting industry, including miners, is at the forefront of developing some of this technology. So are companies like Reflex, which are working with some of the same contractors that developed technology on the latest Mars rover.

Some of these innovations, which we’ve covered in Mineweb before, will soon make their way to exploration sites. In particular, you will increasingly see on site sample analysis, and often in real-time or near so, from downhole. Indeed, Reflex, Collins notes, is showing that sludges from a drillhole can be sampled as they come and correlated well to depth, just as well as testing core later on. The geologist gets to see these results as they come.

It seems this type of analysis will be available in the next few years.

A little further out is cheaper, faster and directional drilling with coiled drill rigs. This is a staple of oil and gas, but the question remains whether it can be well adapted for mining.

The Deep Exploration Cooperative Research Centre (part of CSIRO) is now testing a rig with the aim of bringing drill costs down to about $50 metre. The huge advantage here – if field trials prove the case – is that a coiled rig requires no drill rods. It can be faster, and theoretically cheaper, and at the same time more useful by allowing it to be guided in different directions on the fly. Meantime, CSIRO is adapting them with real time sensors.

So the revolution here is this: More, and possibly better drilling, for less. Say, for example, you’re sniffing through an alteration halo of a porphyry target 500 metres beneath surface. It could help to know (or interpret) where you are in the system as a drillhole progresses. And then what if you could choose to vector in toward inferred mineralization? And what if that drilling was cheaper than diamond drilling by a considerable amount?

Recall the words of renowned explorer Siegfried Muessig: “IQ gets your there, but NQ finds it.” For discovery – to make more of it happen than otherwise possible with conventional technology and current budgets – these kinds of innovations, along with advances in geophysics and data management, could be something of a revolution for the mining sector if it proves feasible and easily adaptable.

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