An introductory overview to mineral exploration, focusing on exploration done by Canadian companies outside of Canada. Outlines the main types of risk faced by mineral explorers. Role of trade commissioner service in providing support and advice.

1. EXPLORATION 101
Nadim Kara, Senior Director, Policy & Programs
PDAC
Trade Commissioner Workshop
PDAC 2016 Convention

2. • Sustain a vibrant and responsible Canadian mineral
exploration and development industry
• Support the Canadian exploration industry, worldwide, to
secure access to land, skills and capital
Vision
Mission
A competitive Canadian exploration and development industry that
operates responsibly around the world to find the minerals and
metals that are essential to modern life
PDAC: A national association with
global reach
2

3. • Why you should care about juniors
o Role in the exploration ecosystem
o Discovery performance
o Benefits to host country
o Benefits to Canada
o Alignment with 2014 CSR Strategy
• Exploration Basics
o Exploration activities
o Financing risk
o Discovery risk
o Social & political risk
• Working together
PRESENTATION OVERVIEW
2

4. 2
www.rt.com

5. 0%
20%
40%
60%
80%
100%
1960 1970 1980 1990 2000 2010
5
Source: MinEx Consulting estimates © March
2015 based on data from NRCan
THE ROLE OF JUNIORS IN THE EXPLORATION ECOSYSTEM
(Canadian Exploration Expenditures: 1960-2014)
Senior Companies
Junior Companies
67%
27%
52%
63%
13%
36%
est
5%
25%

6. 0%
20%
40%
60%
80%
100%
1960 1970 1980 1990 2000 2010
Junior Companies
Senior Companies
Source: MinEx Consulting © March 2015
JUNIORS OUTPERFORM MAJORS IN TERMS OF # OF
SIGNIFICANT DISCOVERIES MADE
Juniors: 76%
of all discoveries
in Canada
(2004-2014)
% of significant mineral discoveries by type of company

7. Value/
Spending
SeniorCos $12.5 46% 21 24% 8.7 54% $ 7.9 39% 0.63
JuniorCos $14.6 54% 66 76% 7.3 46% $12.1 61% 0.83
----- ------ ------ ------- ------ ------- ------- ------- -------
TOTALinc Bulks $27.2 100% 87 100% 16 100% $20.0 100% 0.74
TOTALexclBulks $24.6 79 15 $19.1 0.77
Exploration
Spend(2014$b)
Noof
Discoveries#
Tier1+2
Discoveries
EstimatedValue
(2014$b)
JUNIORS OUTPERFORM MAJORS IN TERMS
OF VALUE FOUND / DOLLAR SPENT
From R. Schodde, MinEx Consulting©
March 2015. All Rights Reserved

8. 8
Advance projects and feed the pipeline of future mines
Discover and develop mineral deposits and new areas for exploration
Create rural employment and economic development opportunities
Support the development of remote and northern regions, and
Indigenous communities
Contribute to the economic sustainability of single-industry
communities
Extend the life of existing mining and metallurgical complexes
Generate business for suppliers in small regional municipalities and
large urban areas
BENEFITS OF JUNIORS TO HOST COUNTRIES
Source: NRCan

9. 9
Listing and financing: High-paying jobs in Toronto and Vancouver
Exploration services: Supporting Canadian businesses
Shareholders: The potential for “ten-bagger” returns on penny stocks
Pipeline renewal: Generating projects for larger Canadian companies
Direct employment: High-paying jobs for highly trained Canadians
Sustaining the industry: Globalization of Canadian companies
BENEFITS OF JUNIORS OVERSEAS, TO CANADA

10. Alignment with 2014 CSR Strategy
Sources: Natural Resources Canada.
Notes: Values are those reported in financial reports, for the accounting period nearest to December 31, 2014, for public companies headquartered in Canada that are not under foreign control.
Mining assets, in this context, reflect non-current assets, including mineral properties, deferred mineral exploration expenses, and royalties, investments in non-Canadian mining companies and
other non-current assets related to mining that can be reconciled to a geographic location.
United States
$3.2 billion
Latin and South
America and the
Caribbean
$4.0 billion
Africa
$2.6 billion
Europe
$295 million Asia
$408 million
Oceania
$495 million
$0
$0 - $10 M
$10M - $100 M
$ 100 M - $1 B
>$1 B

11. 2015 Interviews by PDAC: Top concerns
1) Fears of environmental impacts, specifically
water (quantity, quality)
2) Social changes in community
3) Impact on agriculture/food security

12. EXPLORATION BASICS
www.yukon-news.com

13. EXPLORATION: RISKIEST STAGE OF THE
MINING CYCLE
Exploration Discovery Development Production Reclamation
Financing
Risk
Discovery
Risk
Social/Political
Risk

14. $4,225
$910
$766
$1,245 $1,284 $1,188
$443 $379
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
Millions
14
In 2014, 90% of exploration
financing in Canada used
flow-through shares
FINANCING RISK PART 1:
SHIFTS IN INVESTOR INTEREST

15. $0
$2
$4
$6
$8
$10
0% 20% 40% 60% 80% 100%
Cash Reserves (C$ Million)
Note: Based on an analysis of the cash reserves (as reported in Sept-Dec 2014) for 1956 publicly listed Junior Explorers
- 1231 on the TSE/TSX/TNX, 623 on the ASX and 102 on other exchanges (such as the CSE, NYSE, AIM, NEC,
NZE, OTC and NEC and Pink Sheets). Based on ExRate of C$1.00 = A$1.055 = US$0.909
Cash ASX TMX Other
<C$0.2m 18% 53% 71%
<C$0.5m 35% 65% 79%
<C$1.0m 53% 74% 83%
ASX
TSX/TSE/TNX
Other Exchanges
Source: MinEx Consulting © February 2015
FINANCING RISK PART 2:
SURVIVING THE DOWNTURN

16. Probability of discovering an economically viable
deposit (greenfield)
 0.9% (all sizes): 23 in 2670 exploration programs
 0.3% (major discovery): 1 in 333 exploration programs
 0.07% (world-class discovery): 1 in 1000 exploration
programs
Probability of discovering an economically viable
deposit (greenfield)
 Brownfield: 5% or 1 in 20 exploration programs
 Mine site: 20% or 1 in 5 exploration programs
DISCOVERY RISK:
GREENFIELD EXPLORATION IS HARD WORK

17. Collecting a stream
sediment sample
Collecting a moss mat
sediment sample, BCGS
Geofile 2007-6
DISCOVERY RISK MITIGATED WITH A RANGE
OF TOOLS AND STRATEGIES

18. Geochemical data can help focus on targets
for more detailed exploration
DISCOVERY RISK MITIGATION -
GEOCHEMISTRY

19. DISCOVERY RISK MITIGATION -
GEOPHYSICS
Airborne surveys can help find
mineralized
rocks below cover

20. EXPLORATION GRID

22. DISCOVERY RISK MITIGATION - DRILLING

23. SOCIAL / POLITICAL RISK:
FRUTA DEL NORTE DEPOSIT (ECUADOR)
2001 Aurelian Resources created
2003 Initial financing on TSX-V
2006 Drilling confirms spectacular
grading. $95M financing.
2008 Ecuador suspends exploration.
Kinross buys Aurelian for $1.2B
2013 Ecuador imposes 70% windfall
profits tax on FDN project.
Kinross writes off project.
2014 Lundin Gold buys project for
$240M (via Fortune Minerals
2016 Lundin Gold announces deal
with Ecuador government
Photo: Aurelian Resources
Portable drill arrives

24. Portable drill arrives