EXPLORATION is the lifeblood of the mining industry, yet securing funding for it remains an uphill battle, not because the value isn’t there, but because it is often hidden, requiring years of patience before returns materialise, a seasoned exploration geologist said.
By Rudairo Mapuranga
Speaking at the Chamber of Mines Annual Conference Gold Symposium, sponsored by Mutapa Gold Resources, Geoprobe Advisory Services Managing Geologist Kuda Muchenje drew on his decades of experience, having worked on both sides of the fence as an exploration geologist and as a business development professional assessing projects for potential investment, to make a compelling case for why exploration deserves a seat at the funding table.
“Exploration expenditure causes heated debates when you ask for exploration funds in boardrooms. There are always people who support exploration, and there are always people who are opposed to spending that money,” Muchenje said.
“That is largely because exploration is quite expensive, and because exploration is so expensive, it tends to be very difficult to actually raise the funding.”
The Exploration Value Chain
Muchenje positioned exploration at the very front end of the mining value chain — the entire process from the discovery of mineral deposits all the way to mining, processing, and getting the product to market.
“Without exploration, there’s no mining; there are no new mines that are going to be found,” he said.
He distinguished between greenfield exploration, starting from nothing to find a new deposit — and brownfield exploration, which occurs around operating mines to extend their lives. His presentation was particularly focused on the small-scale investor “who’s taking money out of his pocket and trying to find a new mineral deposit.”
Success Stories That Prove the Case
Muchenje pointed to Zimbabwe’s own track record of exploration success, citing the Murowa diamond mine and the Marange diamond fields as examples of greenfield exploration programmes that delivered results.
“I was involved with the exploration programme that led to the Murowa diamond mine, and there was nothing there before. Eventually, the exploration work discovered a new mine,” he revealed. The Murowa discovery resulted from a four-year regional exploration programme by a Rio Tinto Exploration joint venture, with three diamond-bearing kimberlite pipes discovered in 1997.
“Same thing with Marange,” he said. Diamonds in Marange were discovered in 2002.
At a national level, he noted, operating mines discovered through exploration make “a meaningful contribution to the fiscus, through taxes paid by these mining companies, jobs that are created, and dividends that are paid out to shareholders.”
Internationally, Muchenje cited Robert Friedland, who made a fortune by finding world-class deposits, including the Voisey’s Bay nickel deposit in Canada, which was sold for US$3.1 billion in 1996.
Why Funding Remains Elusive
“If there are so many success stories related to exploration, why is it so difficult to raise money?” Muchenje asked.
His answer: “Exploration value is often hidden. It’s not obvious. You’re not going to put a dollar in today and have $10 a week later.”
“Exploration is a process that takes years, and it can take five years of exploration, seven years of exploration, before all your effort actually pays back,” he said. “That is why a lot of people struggle to understand the value that comes out of exploration, and that is why a lot of people get scared and stay away.”
De-risking and Value Creation
Muchenje described exploration as a “de-risking exercise”, a balance between reducing risk at each stage and creating value in the long run.
“You only proceed if you get acceptable results at stage one before you then proceed to stage two,” he explained. “As the exploration process continues, the risks should fall, and value should rise.”
However, he cautioned that value creation is “not a straightforward upward trajectory.”
“The greatest value at the beginning is typically created when you find something, when you have declared a mineral discovery. But after that, the value actually tends to fall because reality sets in.”
The feasibility study stage, Muchenje noted, is particularly challenging to fund.
“Your banks are not going to give you money to do a feasibility study. The bank wants that feasibility study when you apply for funds for mining.”
“The greatest value is then reached when that project gets into production, and it starts paying dividends.”
Principles for Increasing Exploration Value
Muchenje offered practical advice for explorers, particularly smaller investors with limited budgets.
“Stay within known mineral provinces. Your chances of finding a new deposit are actually better if you stay within known mineral provinces,” he said. “In Zimbabwe, we have very well-established mineral provinces — the Greenstone Belts for gold and the Great Dyke for PGMs.”
He cited the Dokwe Gold Project as an example of explorers who ventured into uncharted territory and succeeded.
“Dokwe is a classic example of guys who were brave enough to go and look for gold under the Kalahari sands, and they made a stunning discovery,” he said. “To me, one of the best discoveries ever made in this country. It’s a fascinating project.”
Quality Over Quantity
Perhaps Muchenje’s most pointed advice was on the quality of exploration data.
“The quality of information that you generate is probably one of the most important things,” he stressed. “You can spend a lot of money on percussion drilling, but when the valuers come to look at your project, they’re going to say, ‘But this information is useless to us.'”
He also emphasised the importance of QA/QC procedures.
“A lot of people spend thousands and thousands of dollars on laboratory assays, which do not have QA/QC procedures. That information is heavily discredited when it comes to the evaluation of mineral projects.”
“It is very important that you not only generate quantities of exploration data, but that quality is also quite critical.”
Government’s Role
Muchenje called on the government to create an enabling environment and protect exploration investment. He singled out national data management as “one of the most critical roles.”
“Making data available online is now very critical. It makes you a very competitive country,” he said. “A lot of countries are even making this data free now. You don’t have to pay for anything. You just go to a government portal and get all the geophysics and geology maps that you need.”
The Artisanal Miner as an Exploration Tool
In a striking acknowledgement, Muchenje paid tribute to artisanal miners.
“As a geologist, I’m forced to acknowledge that the artisanal miner is probably the most effective exploration tool that we have. Those guys have found so many deposits,” he said.
“The question is, what are we going to do with the information that is generated from all the work done by the artisanal miners?”
