What makes a great geologist by Allan Saad, presented at the 2018 Junior Indaba in Joburg.

1. WHAT MAKES A GREAT GEOLOGIST
By: Allan E Saad
Director:
RED SANDS MINING AND EXPLORATION (Pty) Ltd

2. The Blind Man and the Elephant - A Hindu Fable
It was six men from Indostan
To learning much inclined,
Who went to see the elephant
(Though all of them were blind),
That each by observation
Might satisfy his mind.
1st
The First approached the elephant,
And happening to fall
Against his broad and sturdy side,
At once began to bawl:
“God bless me! – but the elephant
Is very like a wall!”
2nd
The Second, feeling of the tusk,
Cried: “Ho! what have we here
So very round and smooth and sharp!
To me ‘tis mighty clear
This wonder of an elephant
Is very like a spear!”
3rd
The Third approached the animal,
And happening to take
The squirming trunk within his hands,
Thus boldly up and spake:
“I see”, quoth he, “the elephant
Is very like a snake!”
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3. The Blind Man and the Elephant - A Hindu Fable
4th
The Fourth reached out his eager hand,
And felt about the knee.
“What most this wondrous beast is like
Is mighty plain,” quoth he;
“ ‘Tis clear enough the elephant
Is very like a tree!”
5th
The Fifth who chanced to touch the ear,
Said: “E’en the blinded man
Can tell what this resembles most;
Deny the fact who can,
This marvel of an elephant
Is very like a fan.”
6th
The Sixth no sooner had begun
About the beast to grope,
Than seizing on the swinging tail
That fell within his scope,
“I see”, quoth he, “the elephant
Is very like a rope!”
And so these men of Indostan
Disputed loud and long,
Each in his own opinion
Exceeding stiff and strong,
Though each was partly in the right,
And all were very wrong.
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4. MORAL
“So, oft in theologic wars
The disputants, I ween,
Rail on in utter ignorance
Of what each other mean
And prate about an elephant
Not one of them has seen.”
John Godfrey Saxe (1816-1887)
One hundred and thirty years later, the poem is still commended to those who
find themselves involved in geological disagreement.
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5. WHAT MAKES A GREAT GEOLOGIST
The world is a big place and created under extremely complex and varying
conditions over 4.6 billion years;
Only small clues are provided – like the blind man and the elephant;
To understand this, a geologist has to be a special person and has to wisely
apply his mind.
He needs (besides a strong budget):
• To be a scientist;
• To be a detective;
• To be a thinker with a vivid imagination;
• To be a poet and a philosopher;
• To be passionate and determined;
• Perseverance;
• Have good business sense or get screwed;
• Secure rights before giving away ideas.
• To be a street fighter;
• Ability to execute (not the mining engineer)
• Presentation (story teller)
• Sale (patience)
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6. So where do you start?
The King said to Alice: “Begin at the beginning, then go on till you get
to the end: then stop!”
So what is the journey?
1. Choose your commodity;
2. Choose your country (the world is a big place);
3. What criteria do you use?
3.1. Country risk
◦ Stability
◦ Political risk
◦ Security of tenure
◦ Corruption
◦ Favourable minerals policy
◦ Transparent and accommodating government
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7. The Journey
3.2. Return on investment
◦ Commercial terms
◦ Royalties
◦ Taxes
◦ Free carried interest
◦ Infrastructure (commodity dependent – Iron ore vs diamonds)
◦ Language
3.3 Mining culture
◦ Realization of the value of mining
◦ Stable and productive workforce
3.4 Geology
◦ Access to information
◦ Geological information
◦ Landholding information
◦ Avoid re-inventing the wheel
◦ Search for elephants in elephant country
◦ Select target area
◦ Establish the threshold (how big, how rich)
3.5 Secure prospecting right
◦ He who controls the remote controls the household
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8. The Journey
4. Raise funding (before or after securing right)
◦ Exploration is high risk high return
◦ Best done with other peoples money by agile junior companies
◦ Usually funded through private and listed equity
◦ Australian Stock Exchange >578 listed mining companies (>500 juniors)
◦ Toronto Stock Exchange >200 listed junior companies
◦ Johannesburg Stock Exchange 41 listed mining companies
➢ 12 seniors
➢ 10 juniors
➢ 8 dual listed
➢ 11 suspended
◦ Most funding is available through these alternate stock exchanges
◦ Benefit through tax incentives
◦ Time limits after raising capital
◦ Expectations by investors to see results
◦ Senior companies allocate budgets annually to the best projects
◦ Use it or loose it – this applies to budgets and therefore governments
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9. Where does South Africa fit into the investment
pictureCountry risk
◦ Goalposts keep changing
◦ Bad record and bad attitude
◦ Disinvestment drive?
◦ Security of tenure
◦ Perceptions count
◦ SA ranked 81 out of 91 on the Fraser Institute PPI (Policy Perceptions Index)
Return on investment
◦ Royalties and taxes acceptable
◦ 100% risk for 74% return – killer for investors
◦ BEE in exploration discouraging for investors
Mining culture
◦ Labour unrest
◦ Culture of strikes damages perceptions
Geology
◦ Excellent potential for new discoveries
Secure rights
◦ Tedious and difficult process
Secure funding
◦ Little interest in investing in SA
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10. The quick-fix solution
Country risk
o Create certainty
o Encourage rather than discourage investment
o Create positive perceptions
Return on investment
o Replace charter with incentives
o BEE in exploration needs phased approach
Mining culture
o Discourage labour unrest by empowering the labour force and community rather than outside BEE
Geology
o Make geological and cadastral information freely available
o Reinstate a Geological Survey which serves the people paying the taxes to support it
Secure rights
o Simplify and speed up the application process
o Learn from other countries – they have already invented the wheel
Secure funding
o Encourage foreign investment
o This will lead to job creation
o Revenue generation
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11. The Way Forward
So now we have acquired the rights
We have bent over and taken one for the team because you did not secure the rights yourself
So what is the next step…
Firstly…defy the king…go to the end (establish the
threshold)
◦ Determine roughly how big a deposit you need to find to meet your
criteria - back of a matchbox calculation
◦ Estimate costs for plant
◦ Estimate processing costs
◦ Estimate mining costs
◦ Estimate labour costs
◦ Estimate transport and shipping costs (if bulk commodity)
◦ Roughly estimate total costs per ton
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12. Establish the target criteria
Now determine the in-situ value of the rock per ton
◦ Examples:
GOLD
◦ 1g/t gold @$1300/oz = $42 per ton rock
COPPER
◦ 1% Cu @ $6500/t = $65 per ton rock
DIAMONDS
◦ 0.5ct/t diamond @ $1000/t = $500 per ton rock
Costs per ton minus value per ton = go big or go home
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13. The End - Think BIG
◦ Same effort to find a big orebody as it is to find a small one
◦ Sweat to bread ratio
◦ least cost and effort for greatest return.
◦ Do not overkill a target that will never reach criteria
◦ Do not fall in love with your project
◦ Mines are not found on computers – break rocks
◦ Always keep an open mind
◦ Many mines have been found after five or more geologists have reviewed the
property
◦ Scorpion
◦ Many other commodities have been found while searching for the target
commodities;
◦ Always look for all minerals, and remember what you have seen
◦ Venetia
◦ The more you see the more you learn
◦ "The best geologist is he who has seen the most rocks.“
◦ Stay honest
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14. By: Allan E Saad
Director:
RED SANDS MINING AND EXPLORATION (Pty) Ltd
Email: asaad@mweb.co.za
THANK YOU