Neil PhillipsUniversity of Melbourne &Phillipsgold P/L, Australia

Adding value in gold exploration

28 October 2010

London UK

30+th SirJulius Wernher Memorial LectureInstitute of Materials, Minerals and Mining

• Gold supply shortfall• Discoveries• Discovery – why it matters• Exploration in the future• Repeated discoveries – learning from these.

Supply and demand for gold

Discover gold

Mine gold

Sell gold to meet demand

Supply and demand for gold

Discover gold

Mine gold

Sell gold to meet demand

4000t pa

2500t pa

Supply and demand for gold

Discover gold

Mine gold

Sell gold to meet demand

Central banks

Individuals hoarding

Supply and demand for gold

Discover gold

Mine gold 2500

Sell gold to meet demand 4000

Central banks 30000

Individuals hoarding ~30000

New Generation Gold Conference

• 2009, 2007, 2005, 2003.

• Also previously 2001, 1999, 1997, 1995.

Recent discoveries - conclusions

• Mature gold provinces– Archaean of Australia, Canada

• Established gold regions– Ghana

• Less-traditional gold areas (wrt 20th century)– Mali, Peru, China.

Recent discoveries - conclusions

• Decreasing dominance of gold-only

• Increasing role of gold-plus– Copper-gold– Larger tonnage– Longer life (50-100 years)– Lower gold grade.

Witwatersrand 1886 and 1951

1886: Rand (George Harrison)Klerksdorp

1930s: Carletonville1940s: Welkom1951: Evander.

Witwatersrand 1951 to 2010

1951 to 2010: no new goldfields.

Gold production: 1970 - 2010

South Africa World

Future exploration focus

Future exploration focus

Lots of dollars, projects, drilling

or

Raise discovery rate (σ)

Discovery rate (σ) Adds real value

σOunces discovered per exploration dollar

Future exploration focus

• Country?• Technique?• Idea?• Who?

• How to add value.

Which country?

Appetite for riskParticular knowledge or expertiseSpecial opportunity

geology or commercial deal

But not everywhere.

What techniques?

Classic success stories- Ground magnetics in Witwatersrand- EM in Noranda, Canada (Cu, Zn, Au)- Regolith methods, Western

Australia.

What ideas? – Gold genesis

Syngenetic on seafloor- Follow horizons, stratigraphy- Only for Cu-Pb-Zn-Ag-Au (VMS).

What ideas? – Gold genesis

Epigenetic (after rocks have formed)

- Host rocks – mechanical & chemical- Alteration – CO2+K+H2S- Orogenic – role of structural geology

Hogan 2004

New ideas – Gold genesis

Hydrothermal gold deposits do not form at 700oC

- Continuum model is inappropriate.

Future exploration focus – Who?

Discovery is a rare eventWithin exploration it is atypical

Future exploration focus – Who?

Rarely is a discovery so obvious that everyone can ‘see it’, and agrees that it should be drilled.

Future exploration focus – Who?

It follows then that .. - Harmonious group, consensus- Large collaborative team

- May not correlate with discovery.

Reproduced from Antrobus (1986)

5 km

Welkom Goldfield

Hydrothermal model

Wits formation

• Since 1900 two ideas• Placer dominates exploration• - no source, no universal sorting mechanism

Reproduced from Antrobus (1986)

5 km

Welkom Goldfield

No gold in source area

No special sedimentary sorting

Witwatersrand gold - ideas

A winner was selectedCommitment to idea, not to discoveryNo alternatives.

What would Wernher do?

Sir Julius Wernher

• Rand goldfields of Johannesburg• Wernher, Beit and Co.• Imperial College

Development of Yandal gold

1894 Alluvial gold

1987 Mt McClure

Yandal

Perth

Yandal story – field work

• Fe-rich host rocks• Structural style• Carbonate, mica, pyrite alteration• Quartz veining• Anomalous gold• Akin to prospective gold areas.

Minsaco Resources 1986

Development of Yandal gold

1894 Alluvial gold

1987 Mt McClure

1992 Bronzewing1993 Jundee, Nimary1996 Jundee deeps- Barton, Centenary1999 Thunderbox

Future exploration focus – Who?

Smart, motivatedDirected – we are here to make a

discovery.

Future exploration focus – Who?

Line-of-sight (priorities).

Future exploration focus – Who?

Confidentiality

Confidentiality?

“Good!I will use your idea in my next talk”.

Don’t worry about someone else stealing your idea; if it is any good you will have to ram it down their throat.

(Kerr Wan-Tass, 1997)

Conclusion

• Discovery – the magic may lie in the people.