Industry collaboration adding value to exploration success - Trench et al - Mar 2015 - Centre for Exploration Targeting / Curtin University / University of Western Australia

1. WHAT ARE THE ELEMENTS OF
INDUSTRY COLLABORATION THAT
HAVE ADDED VALUE TO
EXPLORATION SUCCESS?
Allan Trench1,2, John Sykes1,2, T Campbell McCuaig2 & Mark Jessell2
Centre for Exploration Targeting (CET)
1. Department of Mineral & Energy Economics, Curtin University
2. School of Earth and Environment, University of Western Australia
10TH AMIRA EXPLORATION MANAGERS CONFERENCE
Barossa Valley, Australia: 17-19th Mar 2015

2. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia 17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
And so these men of Hindustan
Disputed loud and long,
Each in his own opinion
Exceeding stiff and strong,
Though each was partly in the right
And all were in the wrong.
A fable…
Slide 2 of 26

3. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
The conundrum…
“Whilst success in mineral exploration is clearly
achieved through new high quality mineral
discoveries – and we also comprehend what
represents best practices in industry research
collaboration in exploration geoscience, we still
remain poor at clearly linking the two together and
in tracking the impact and influence of research
collaboration upon discovery.…”
- Quoted from the abstract
to this presentation
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Slide 3 of 26

4. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
Hronsky et al., 2013
80s & 90’s Australian Gold Technology Package
‘Linkages’ are important
Many factors contribute to mineral discovery
– including critically the interplay of factors
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Slide 4 of 26

5. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
“Exploration success has many fathers…”
Selected Organisational Factors
• Confidence and trust shown by Executives and Board toward exploration
• Strong exploration leadership that values collaboration, innovation and risk-taking
• Ability to be early to enter new exploration search space
• Consistent level of funding over minimum of 10 years (related to point 1)
• High-performance teams characterised by technical excellence, innovation and
continuity
• Learning organization… effective use of learning and feedback loops from projects
tested to new target generation efforts
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Hronsky et al., 2013‘Linkages’ are important
Slide 5 of 26

6. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
“Exploration failure is not actually an
orphan…..”
Selected Organisational Factors
• Poor leadership / lack of commitment (e.g. start and stop mentality)
• Non-existent or poorly conceived strategy
• Poor understanding of key mineral exploration business driver and pitfalls (e.g.
base rate, search space, false positives)
• Lack of appropriate skill sets / capabilities
• High turnover of technical staff
• Lack of review / feedback; no learning so mistakes are repeated
• Lack of culture of success / consistent poor behaviours
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Hronsky et al., 2013
Slide 6 of 26

7. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
But how do we typically measure performance in
industry collaborative geoscience research?
Process (Input) Key Performance
Indicators (KPIs)
Example process measures:
• How many people attended the
AMIRA exploration
management conference each
year?
• How many research $ did your
research group attract to your
university this year?
Impact (Output) Key
Performance Indicators (KPIs)
Example impact measures
• What % of people who attended
changed their exploration
management decisions as a
result?
• How many of your research
papers changed thinking in both
academe and industry?
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
We know ‘Linkages’ are important – but we don’t usually measure them
Slide 7 of 26

8. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
In measuring industry performance, we generally
measure the ‘what’ more than the ‘how’ of outcomes
KEY PERFORMANCE INDICATORS – MANAGING DIRECTOR – EXPLORER
The achievement of the following will result in the payment of a bonus of up to
$100,000.
1. [Main objective] Substantial advance to a Company exploration project(s)
including some or all of:
i. ore grade gold intersection of mineable width (20g.m > 1g/t) in RC or core
drilling
ii. nickel sulphide intersection of 5m.% in a geologically compelling
environment
iii. multiple ore grade intersections of mineable widths resulting in an “Inferred
Mineral Resource”.
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
This is a classic “Impact KPI”
Source: Exploration
company MD performance
bonus contract
Slide 8 of 26

9. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
…with corporate outcomes sitting alongside
exploration performance itself
KEY PERFORMANCE INDICATORS – MANAGING DIRECTOR – EXPLORER
2. Improve register, finance and JV arrangements by:
i. Introducing a key shareholder to XYZ
ii. Placing the (BigCo) stock in the event that it is apparent it is “loose” stock,
or a substantial portion thereof
iii. Introducing projects partners as appropriate
iv. Complete successful capital raisings in excess of the Company’s proposed
exploration expenditure of $2.5 million at incrementing issue prices
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
“Process KPI” – unrelated to exploration outcomes
Source: Exploration
company MD performance
bonus contract
Slide 9 of 26

10. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
…also peer-reviewed competitive funding & relative
exploration outcomes versus others
KEY PERFORMANCE INDICATORS – MANAGING DIRECTOR – EXPLORER
3. Allocate bonus based on company share performance relative to that of a basket
of 12 peer companies which will be [peer companies named here]. In the event
that the company finishes in the top quartile of the performance of these stocks
as measured by share price movement in the calendar year, then 20% of the
bonus allocation will be applied i.e. $20,000
4. Successfully apply for Exploration Incentive Scheme grants where matching
funds amount to at least $150,000.
NB: There will have to be some discretion in these criteria and I would like to think exceptional performance
would not limit the bonus to $100,000 or $25,000 per KPI or KPI’s 1 to 4 above
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
“Impact KPI” – classic Benchmark KPI
‘Best of a Bad Bunch’ outcome the obvious weakness
Source: Exploration
company MD performance
bonus contract
“Process KPI”
Slide 10 of 26

11. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
Overall our performance measures remain
principally ‘Taylorist’ – not yet systems-based
Mostly this… …not this!
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Personal
Mastery
Mental
Models
Shared
Vision
Team
Learning
Systems
Thinking
Slide 11 of 26

12. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
What we do measure: What gets funded?
AMIRA Projects Duration Research Provider Industry funding
(2014$)
Enhanced Geochemical Targeting in
Magmatic-Hydrothermal Systems
3 yrs
ARC Centre of Excellence in Ore Deposits/
Imperial College of Science, Technology &
Medicine/ Lakehead University
3,819,900
Epithermal Gold Deposits in
Queensland
4 yrs
James Cook Uni CSIRO Division of
Exploration Geoscience
3,679,474
West African Exploration Initiative 2 3 yrs
BRGM/ UWA/ Czech Geol Survey/ Dublin
Institute Ecole Nationale d'Ingeneurs/ IRD/
Nancy Uni/ Toulouse/ d'Orléans/ Montpellier/
Ouagadougou/ Witwatersrand
2,958,344
Geochemical and Geological Halos in
Green Rocks and Lithocaps: The
Explorer’s Toolbox for Porphyry and
Epithermal Districts
3 yrs
ARC Centre of Excellence in Ore Deposits/
Imperial College/ Lakehead University/
University of Ottawa
2,888,400
Gravity Gradiometer Sensor 3 yrs CSIRO Division Material Science & Tech. 2,442,179
Yilgarn Transport Overburden 3 yrs CSIRO Division Exploration & Mining 2,236,184
Advanced Geophysical Modelling &
Inversion
3 yrs CSIRO, Division of Mineral Physics, NSW 2,048,024
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Slide 12 of 26

13. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
What we do measure: What gets cited
(CET 2012)?
Cits Title Authors Journal
48 The Geology and Tectonic Settings of China's Mineral Deposits F Pirajno Book
43
Hafnium isotope evidence for a transition in the dynamics of
continental growth 3.2Gyr ago
T Næraa, A Scherste´n, M T Rosing, A I S Kemp, J E Hoffmann, T
F Kokfelt & M J Whitehouse
Nature
37
Initiation of the western branch of the East African Rift coeval with
the eastern branch
E M Roberts, N J Stevens, P M O’Connor, P H G M Dirks, M D
Gottfried, W C Clyde, R A Armstrong, A I S Kemp & S Hemming
Nature
Geoscience
30
Komatiite Magmas and Sulfide Nickel Deposits: A Comparison of
Variably Endowed Archean Terranes
S J Barnes & M L Fiorentini
Economic
Geology
28
A unified model for gold mineralisation in accretionary orogens
and implications for regional-scale exploration targeting methods
J M A Hronsky, D I Groves, R R Loucks & G C Begg
Mineralium
Deposita
24
Generation of Early Indosinian enriched mantle-derived granitoid
pluton in the Sanjiang Orogen (SW China) in response to closure
of the Paleo-Tethys
J-W Zi, P A Cawood, W-M Fan, E Tohver, Y-J Wang & T C
McCuaig
Lithos
24
Triassic collision in the Paleo-Tethys Ocean constrained
by volcanic activity in SW China
J-W Zi, P A Cawood, W-M Fan, Y-J Wang, E Tohver, T C McCuaig
& T-P Peng
Lithos
23
District to Camp Controls on the Genesis of Komatiite-Hosted
Nickel Sulfide Deposits, Agnew-Wiluna Greenstone Belt, Western
Australia: Insights from the Multiple Sulfur Isotopes
M Fiorentini, S Beresford, M Barley, P Duuring, A Bekker, N
Rosengren, R Cas, & J M A Hronsky
Economic
Geology
23
The interaction of deformation and
metamorphic reactions.
B E Hobbs, A Ord, I Spalla, G Gosso & M Zucali
Geol. Soc. Lon.
Spec. Pub.
22
Identifying Regions of Structural Complexity in Regional
Aeromagnetic Data for Gold Exploration
E J Holden, J C Wong, P Kovesi, D Wedge, M Dentith & L Bagas
Ore Geology
Reviews
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Slide 13 of 26

14. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
What we do measure: What gets read?
Title Intro Hits
On exploration remuneration – the hard line
THIS week Allan Trench looks at remuneration for listed
mineral explorers – and unfortunately finds gross
inequity.
1,312
The perception of mining – a social licence
reality check
THIS week Allan Trench looks at the mining sector from
an outsider’s perspective – and concludes that external
perceptions are very different to internal views on
mining.
1,063
All is not well with gold
Matthew Kanakis once again joins Allan Trench this
week to look at Australian gold – with a focus on the
domestic industry’s vital statistics.
1,042
$200 million acquisition voted down
THIS week Allan Trench conveys the results from last
week’s boardroom conundrum – with a clear majority
voting against buying a $A150 million gold asset for
$200 million. So are the majority correct?
1,035
The Real Housewives of Mining
THIS week Vikki Lauritsen joins Allan Trench to look at
some of the challenges to increasing female
participation in the mining sector workforce.
1,022
A $200 million boardroom dilemma
THIS week Allan Trench poses a boardroom conundrum
to you – and wonders whether you will vote in favour of
the proposal – or against it.
1,044
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Data: Courtesy of Aspermont – number of web hits, 12 months
Slide 14 of 26

15. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
What we do measure: What is less read?
Title Intro Hits
Innovation strategies: beyond slow pizzas
THIS week Allan Trench looks at business model innovation
in mining and exploration – and cautions against the
minerals equivalent of delivering slow pizzas.
441
Exploration teamwork – Belbin-style
THIS week Allan Trench looks at how teamwork plays out in
minerals exploration – and suggests that the well-known
Belbin team roles analysis also applies to high-performing
explorers.
437
Sub-Economic Resources set for an
exciting 2015
THIS week Allan Trench talks to Sub-Economic Resources
which is optimistic on the prospects for 2015, despite a
delay to first iron ore production and a discounted Boxing
Day equity offer.
428
Commodity market ups and downs – a
compilation album
Allan Trench and John Sykes list some puns, metaphors
and clichés used to describe individual mineral commodity
markets.
377
Global competition for the exploration
dollar
THIS week Allan Trench looks at the race between
jurisdictions to entice mineral sector investment through
pre-competitive geoscience investment.
333
Discovery Day 2014 – past insights, future
challenges
THIS week Allan Trench looks back on CET Discovery Day
2014 – and looks ahead to 2015 to ask what factors will
drive new mineral discovery.
308
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Data: Courtesy of Aspermont – number of web hits, 12 months
Slide 15 of 26

16. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
What we do not yet measure well:
Linkages
• The success of any kind of social epidemic is heavily
dependent on the involvement of people with a particular
and rare set of social gifts:
• Connectors – read ‘Boundary Spanners’
• Mavens – read ‘Serial Problem Solvers’
• Salesmen – read ‘Talking Heads’
Law of the
Few
• The specific content of a message that renders its
impact memorable.
The Stickiness
Factor
• Human behaviour is sensitive to and strongly
influenced by its environment. "Epidemics are sensitive
to the conditions and circumstances of the times and
places in which they occur”
The Power
of Context
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Source: Malcolm Gladwell – The Tipping Point (2000)
Slide 16 of 26

17. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
Good R&D project management practices form a
basis for R&D performance measurement
Key Practices Description
Avoid short-termism
Clearly understood connection between a project’s success criteria and value to the company relevant to the
implementation timeline. R&D projects that will take 5+ years to complete must be connected to business
strategic imperatives, not short term objectives.
Project managers are
pivotal
Select project managers that have the ability to engage with all key stakeholders. They need to have
sufficient technical knowledge to be technical translators, as well as the communication and relationship
management skills to network and connect across functional and organisational boundaries.
Envisioning
Ensure that the people working on the “solutions” have a clear understanding of the problem and what
success looks like.
Human capital
Establish long term, trusting relationships with partner organisations as the “solution” providers in the future.
These organisations can be suppliers, clients, universities or specialist professional / consulting firms.
Openness
When a project is underway, ensure there is routine and honest two-way communication between the
“solution” providers and the end-users, not just the project manager.
Internal consultation
Build awareness of the project through regular communication to those not directly involved so that they
understand and are supportive of the outcomes when the time comes for implementation.
Implementation by
change management
Finding a solution is not the end. Implementing the solution to get positive impact requires appropriate
change and risk management. This involves clear technical and management oversight, sufficient resources,
allocation of appropriate authorities and accountabilities to achieve success.
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Adapted from Goldsworthy & Atkins (2015)
Slide 17 of 26

18. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
What we do not yet measure well:
Scenarios
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Cluedo Analogy
In this room
of the mansion…
Using the following
murder weapon….
The Murder was
committed by…..
• Colonel Mustard
• Miss Scarlett
• Professor Plum
• Mrs Peacock
• The Reverend Green
• Mrs White
• Dr Black – murder victim
• Revolver
• Dagger
• Lead pipe
• Rope
• Spanner
• Candlestick
• Kitchen
• Dining Room
• Lounge
• Hall
• Study
• Library
• Billiard Room
• Conservatory
• Ballroom
Scenario Example
324 scenarios (ignoring capabilities, alibis & suicide)
Slide 18 of 26

19. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
What we do not yet measure well:
Scenarios
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
The players…The client…
• Mineral explorers
• Research providers eg CET
• Government organisations
• The public
• Mining companies
• Investors
• Developing economies
• Developed economies
• Others?
• Mineral explorers
• Research providers eg CET
• Government organisations
• The public
• Mining companies
• Investors
• Developing economies
• Developed economies
• Researchers
• Others?
Scenario Example
Slide 19 of 26

20. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
What we do not yet measure well:
Scenarios
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
The trends…
• Resource Nationalism
• Demand towards Asia
• No political platform for
resource development
• Incremental advance – i.e.
automation
• Slower project timelines
• Environmental constraints
• Deeper ore bodies
• Lower quality ore bodies
• Flat real commodity prices
• Increased technological
consumption
• Reduced government research
funding
• Anti-mining sentiment
• Urbanisation
• Sustainable Development
• NIMBYism
• Climate change
• Water & air pollution
• Big data in mining
• Slow global economic growth
• Higher student fees
• Older populations
• Rising labour costs
• Energy & water constraints
• Resource curse mentality
• Old economy rebirth
• Nearology
• Drought in exploration spend
• Changing mineral legislation
Slide 20 of 26

21. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
A “2015 forever” scenario is clearly
untenable
“Without outlining a business as usual
scenario and showing how it will not really
work, a lot of people refuse to believe that it
won’t be business as usual.
If you do the business as usual scenario and it
all seems to make sense and look like a
probable future, then you don’t need to do the
scenario planning…
…the future is obvious!”
It is clear recent trends cannot continue
indefinitely
A “2015 forever” scenario is not realistic
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Relevant trends…
• Mining a societal pariah
• Less greenfields exploration
• No new exploration funding
• Slower development of tired old
projects
• Reduced development opportunities
as more projects ruled ‘out of bounds’
• Insufficient private sector return to
warrant mine development risk
• Supply gaps emerge and grow
• Technology ‘beaten’ by poorer quality
assets – costs rise year-on-year
• Perennial reduced research funding
Slide 21 of 26

22. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
Contrasting future scenarios show where
collaborative exploration research should focus
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Relativeavailabilityofinputresourcesi.e.
researchers,funding,organisations
Exploration ‘’Universe’ inc. societal issues, politics &
economics
‘Greyfields’* targeting
effectiveness
Good availability of $ &
researchers
Unconstrained search-space
Greenfields targeting
efficiency
Low availability of $ &
researchers
Unconstrained search-space
‘Greyfields’* targeting &
technologies
Good availability of $ &
researchers
Constrained search-space
‘Greyfields’* targeting
efficiency
Low availability of $ &
researchers
Constrained search-space
*Greyfields here
refers to only
limited greenfields
ground availability
in combination with
brownfields near-
mine opportunity
Slide 22 of 26

23. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
What are the elements of industry collaboration
that have added value to exploration success?
The answer…
Our current measurement practices
do not easily lend themselves to
answering this conundrum.
• We ‘should know’ the answer but don’t
• We will get closer to understanding this if we seek to measure systems-based
performance including linkages
• The past is useful to understand; The future is the opportunity
• To be proactive we need to start to think in terms of future scenarios for effective
industry research collaboration systems
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Slide 23 of 26

24. 10th AMIRA Exploration Managers Conference, Barossa Valley, Australia
Linkage Focus: Nurturing ‘Boundary
Spanners’
17-19 Mar 2015
What are the elements of industry collaboration that have added value to exploration success?
Fundamental
Geoscience
Research
Mineral Deposit
Research
Mineral Deposit
Systems Science
Exploration
Targeting Science
Mineral
Exploration
Technology
Development
Business of
Mineral Deposit
Exploration and
Discovery
Mineral Deposit
Value Realisation
Other
Fundamental
Science
Engineering
Research
Whole of Value Chain
Systems Modelling
Mineral Exploration Domain of Thinking
Project Development Domain of Thinking
Critical components of
interface
Source: McCuaig et al., 2014
Slide 24 of 26

25. THANK YOU
For more information:
Centre for Exploration Targeting: www.cet.edu.au
Contact information:
Allan Trench: allan.trench@curtin.edu.au
John P. Sykes: johnpaul.sykes@postgrad.curtin.edu.au
T. Campbell McCuaig: campbell.mccuaig@uwa.edu.au
Mark Jessell: mark.jessell@uwa.edu.au

26. FURTHER READING
• Hronsky, J.M.A., & Welborn, J., 2013. Senior Exploration Management
Course Handbook, Centre for Exploration Targeting (The University of
Western Australia & Curtin Univeristy) and Western Mining Services, Perth,
18-21 June.
• McCuaig, T.C., Vann, J.E., & Sykes, J.P., 2014. Mines versus
Mineralisation - Deposit Quality, Mineral exploration Strategy and the Role
of 'Boundary Spanners', Ninth International Mining Geology Conference,
Adelaide, 18-20 August, 33-41.
• Sykes, J.P., & Trench, A., 2014. Finding the Copper mine of the 21st
century: Conceptual Exploration Targeting for Hypothetical Copper
Reserves, Society of Economic Geologists Special Publication 18, 273–300.
• Sykes, J.P., & Trench, A., 2014. Resources versus Reserves - Towards a
Systems-based Understanding of Exploration and Mine Project
Development and the Role of the Mining Geologist, Ninth International
Mining Geology Conference, Adelaide, 18-20 August, 243-270.