New mindset needed for exploration – by Douglas Morrison (Northern Ontario Business – February 25, 2016)

Discovering new orebodies and opening new mines in Northern Ontario is urgent and necessary.

In the past, providing a stimulus to prospectors — as the Ministry of Northern Development and Mines has recently done — and making an investment in exploration to provide better returns would do the trick.

The government has now done about as much as it can on this front, but in 2016 the field of mineral exploration needs much more than a short-term financial jolt.

The impact of the current downturn means the industry has to make fundamental changes in the way it conducts this part of the business.

The problems began about 30 years ago, when the major mining operators realized that adding reserves through mergers and acquisitions was far easier and cheaper than adding them using teams of knowledgeable and experienced geologists to find them.

They outsourced their exploration, and the risk of ore discovery, to the junior mining companies — most of whom could only attract adequate funding in boom years and scrape by the rest of the time.

In the merger game, there were a few early successes, but eventually most ended in major write-downs.

Mergers do not find new orebodies; they simply accrue existing resources and reserves to one bottom line.

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