What is an exploration strategy?
Why do you need an exploration strategy?
What are examples of exploration strategies currently deployed by junior explorers?
Let's start with what a strategy is in the business terms.
HBR on the strategy: "A business strategy defines what an organization does differently from or better than rivals to create unique value." "Strategy involves a clear set of choices that define what the firm is going to do and what it’s not going to do."
Pre-discovery mineral exploration companies have only one goal: TO MAKE AN ECONOMIC DISCOVERY. Why only one goal? With success rates of 1/1000, the focus MUST be on the discovery aspect.
Exploration companies must be able to show how their strategy will lead to: 1) Economic discovery in a timely manner. 2) Beating the 1/1000 odds. You probably did not see this part explained in company decks.
Let's walk through some exploration strategies out there.
Brunswick Exploration ($BRW.V) focuses on lithium pegmatites in Canada. It has built a very large portfolio and plans to test many targets to increase the odds of success. The company has implemented a faster and smarter exploration process to prioritise targets by utilising: XRF and helicopter = speed. Many investors loved the strategy, which pushed the market cap to +150m CAD. Alvo Minerals ($ALV.AX) focuses on a VMS belt in central Brazil with already proven discoveries. The company bought own air core rig, IP and EM equipment, which will make exploration much faster and cheaper. Company has already generated 10s of geochem-geophysics supported targets. It has a downside of being focused on one area, but is diversified with many propspective targets. Sensore ($S3N.AX) and Kobold are using AI to accelerate and improve the quality of exploration targets generation. Sensore, a prospect generator, sells its properties while retaining a free carried share. Kobold collaborates with majors possessing large proprietary datasets. These are examples of AI/Big data based strategies. We are likely to see more in this space over the next years. Kenorland Minerals ($KLD.V) is a prospect generator that focuses on new greenfield ideas in favorable geological settings. The company partners with majors and executes large work programs while keeping a free carried share. It fills the niche of exploration departments that were cut by majors in 2012-2014.
Some more common strategies out there include:
Exploring along a favourable trend from a major discovery ($NGEX.v $WIN.ax are great examples).
Hiring several exploration geos with discovery track record.
Old-timers area, new exploration model.
Key take away
Exploration companies must be able to show how their strategy will lead to: 1) Economic discovery in a timely manner. 2) Beating the 1/1000 odds.