Framing business complexity in exploration: First, some things around risk & value complexities….. Then, some thinking around everyday frameworks and standards….. Some thoughts on a framework for project-level complexity… And a simple example: The Sinclair Zone Cesium Mine, Western Australia Finally, the exploration organisation study that keeps on giving…

1. A. Trench, R.S. Davies, J.P. Sykes & S. Ulrich
Business School &
Centre for Exploration Targeting,
School of Earth Sciences,
University of Western Australia
Recent Advances in Economic Geology Day 4:
20th February 2020
Exploration and discovery: Do frameworks &
organisation matter?

2. First, some things around risk & value complexities…..
Then, some thinking around everyday frameworks and standards…..
Some thoughts on a framework for project-level complexity…
And a simple example – The Sinclair Zone Cesium Mine, Western Australia
Finally the exploration organisation study that keeps on giving…
Framing Business Complexity in Exploration

3. Concept Exploration Discovery Economics Development Mining
Value
Time
MINING
High Risk – High Potential Lowered risk
Full Value
Speculation
Orphan Period
Speculators Leave
Institutional
Investment
EXPLORATION DEVELOPMENT
Uncertainty driven Risk driven
Source: Cook (2010) and other similar depictions
Framing the exploration to mining value profile

4. Corporate
Risk
Technical
Risk
Sources: Modified from Trench et al., (2014); Trench & Packey (2012)
Driven (in part) by technical & corporate risk

5. Convex minerals:
• Gold,
• Diamonds
• Copper
• Nickel sulphide
• Hematite DSO
• Oil
Concave minerals:
• Nickel laterite
• Vanadium
• Rare earths
• Graphite
• Magnetite
• Gas
Sources: Modified from Trench et al., (2014); Trench & Packey (2012)
But dependent upon commodity…
(actually upon the risk ‘pinch-point’)

6. Convex project
development
Concave project
development
Sources: Modified from Trench et al., (2014); Trench & Packey (2012)
‘Concave’ commodities present more risk
Corporate
Risk

7. First, some things around risk & value complexities…..
Then, some thinking around everyday frameworks and standards…..
Some thoughts on a framework for project-level complexity…
And a simple example – The Sinclair Zone Cesium Mine, Western Australia
Finally the exploration organisation study that keeps on giving…
Framing Business Complexity in Exploration

8. A ‘Framework’ can just be a ‘List’

9. https://www.greatbigcanvas.com/view/cuneiform-clay-tablet-and-stylus,1140121/
Some ‘frames’ require expert knowledge

10. https://www.britannica.com/topic/hieroglyph
‘Framing’ can be ‘Pictorial’

11. …making the ‘complex’ simple

12. https://techcaption.com/qwerty-keyboard-not-abcde/
A ‘Framework’ may set a ‘Standard’

13. A ‘Framework’ accommodates moving parts
(and does it simply!)

14. Allowing clear guidance as to risks…

15. A ‘Framework’ should be straightforward
(yet insightful)

16. A ‘Framework’ should consider ‘MECE’
MECE – Mutually Exclusive, Collectively Exhaustive

17. A ‘Framework’ should consider ‘MECE’

18. A ‘Framework’ should improve over time

19. Adding granularity along the way…..

20. A ‘Framework’ need not be exact

21. As being ‘exact’ may be unwieldy…

22. There is a trade-off between ‘exactness’
and clarity

23. A good ‘Framework’ has broad application

24. And is widely accepted…. A standard again

25. A ‘Framework’ needs to be memorable
(i.e. not forgettable)

26. A ‘Framework’ needs to be memorable
Threat of New
Entrants
Bargaining
Power of
Buyers
Bargaining
Power of
Suppliers
Threat of
Substitute
Products
Rivalry
Among
Existing
Competitors
Threat of New
Entrants
Bargaining
Power of
Buyers
Bargaining
Power of
Suppliers
Threat of
Substitute
Products
Rivalry
Among
Existing
Competitors
Threat of New
Entrants
Bargaining
Power of
Buyers
Bargaining
Power of
Suppliers
Threat of
Substitute
Products
Rivalry
Among
Existing
Competitors
Threat of New
Entrants
Bargaining
Power of
Buyers
Bargaining
Power of
Suppliers
Threat of
Substitute
Products
Rivalry
Among
Existing
Competitors
Li
Fe
Au
Cu

27. A 2 x 2 Matrix is usually memorable
(e.g. Ansoff)

28. A 2 x 2 Matrix is usually memorable
Market Growth versus Market Share
(e.g. BCG)

29. CONTACT
CONDITION
ENDOWED
RESIDUAL
UNKNOWN
RESIDUAL
COVER
ENDOWED
COVERED
UNKNOWN
COVERED
A 2 x 2 Matrix is usually memorable
(e.g. Kambalda-style nickel sulphide exploration?)

30. First, some things around risk & value complexities…..
Then, some thinking around everyday frameworks and standards…..
Some thoughts on a framework for project-level complexity…
And a simple example – The Sinclair Zone Cesium Mine, Western Australia
Finally the exploration organisation study that keeps on giving…
Framing Business Complexity in Exploration

31. Revenue-Side
Complexity
Below
Ground
Complexity
Cost-side Complexity
Above
Ground
Complexity
Project
Capital
Design
Project Scope
Trench et al. 2018 Australian Complex Orebodies
Corporate
Contextual Factors
Framing Complexity in Projects
(From exploration onwards)

32. First, some things around risk & value complexities…..
Then, some thinking around everyday frameworks and standards…..
Some thoughts on a framework for project-level complexity…
And a simple example – The Sinclair Zone Caesium Mine, Western Australia
Finally the exploration organisation study that keeps on giving…
Framing Business Complexity in Exploration

33. Sinclair Caesium Zone Deposit, WA

34. Sinclair Caesium Zone Deposit, WA
Revenue-Side
Complexity
Below
Ground
Complexity
Cost-side Complexity
Above
Ground
Complexity
Project
Capital
Design
Project Scope
Corporate
Contextual Factors
Project Scope

35. First, some things around risk & value complexities…..
Then, some thinking around everyday frameworks and standards…..
Some thoughts on a framework for project-level complexity…
And a simple example – The Sinclair Zone Caesium Mine, Western Australia
Finally the exploration organisation study that keeps on giving…
Framing Business Complexity in Exploration

36. Small
Organisation
Character
Bite-sized
Project
Management
Good Explorers
can be made
Budget
Opportunity
not Control
Few, thoughtful
targets
Commitment
through spending
Believable
Rationale
Direct
Board
Involvement
Risk-Taking
Encouraged
within Good
Science
New Technology
Adoption
Good Idea
Environment:
Structured Chaos
Pattern over
Structure:
Administration
Abhorred
Management Style
EXPLORATION
SUCCESS
Based upon McKinsey & Company
Board Leadership
A recipe for corporate exploration success

37. Successful companies spent a higher fraction of the
budget on drilling
More Successful Companies Less Successful Companies
40% 20%
SUCCESSFUL EXPLORERS DRILL MORE HOLES THAN THEIR PEERS
…where not surprisingly drilling holes helps!

38. Exploration Budget per Annum - Company X
0
5000
10000
15000
20000
25000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
$
000s
10 YEARS CONSECUTIVE DATA
...and long-term commitment to exploration

39. * Footnote
Source: Source
Exploration to Sales Ratio - Company X
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
10 YEARS CONSECUTIVE DATA
…(but) ‘framed’ versus company revenues

40. A. Trench, R.S. Davies, J.P. Sykes & S. Ulrich
Business School &
Centre for Exploration Targeting,
School of Earth Sciences,
University of Western Australia
Recent Advances in Economic Geology Day 4:
20th February 2020
Thanks