By William (Bill) Howald, CEO of Rye Patch Gold Corp.
The globalization party meant many more consumers wanting and purchasing goods that before then were unavailable to them. More goods wanted, more raw materials needed. After all, if it’s not grown, it’s mined.
In the resource sector, this event ushered in a huge resurgence of opportunity and an expansionist philosophy for the resource industry - new areas to explore, find and develop. It was an exciting time with many mining companies beginning their expansionary dogma. Vice Presidents of Exploration mandated the increasing of their exploration staffs; the opening of new offices; traveling to far-flung places of the planet; and most importantly increasing the annual exploration budget.
New discoveries were made, and it quickly became apparent that if you could take the initial political risk in a highly prospect region of the world, you just might find a gigantic, world-class gold, copper, nickel or iron deposit. Many of my colleagues including myself packed up and picked up to go international. It was an exciting time to be an exploration geologist as the opportunity to make a new discovery was at hand.
The mining industry found themselves in places that had great geology, wonderful drill results, but no place to plug in a computer, no way to communicate with the office back home, and a logistical nightmare that sprung up a cottage industry to handle the logistics of getting things to site. Unfortunately, years of being anti-west left many countries with dilapidated equipment, outdated systems, and bloated government agencies. Past exploration programs were manpower intensive sort of a work program to keep the population employed. Want a road? Just ask for it, and the next day, 5,000 people with shovels and rakes would be out building a road – no heavy equipment required. Oddly enough you ended up with a pretty good road. Mountains could be moved, just not in an efficient timeframe. For companies accustom to working in a mechanized world, the progress was excruciatingly slow – solution send more money, problem solved!
The geologist would report great results, but the engineers had no way of building a modern mine without people, power and infrastructure. In most cases, the cost to build the mine exceeded the price of the commodity, or logistically the project was not viable. Management seemed to focus solely on the drill results and early successes, only to be shocked and surprised to learn their pet mining project was not feasible.
Twenty-five years later, the mining industry has realized that while immense opportunity exists in some remote places, the cost of extracting minerals must make economic sense. Over my thirty-year career, I’ve had the opportunity to travel and see early stage exploration and mining projects on five continents. The projects that become mines all share five common characteristics. This column will explore these crucial criterions to make better-informed decisions.
Editor’s note: William (Bill) Howald is the co-founder of Rye Patch Gold Corp, a TSX listed company. Prior to joining Rye Patch, he was General Manager of Exploration, United States and Latin America, for Placer Dome Inc. During his tenure at Placer Dome, Mr. Howald was an integral part of the teams that delivered over 100Mozs of gold resources to the Placer portfolio. A number of these resources are now being mined or are at the feasibility stage and heading for a production decisions. Mr. Howald has 30 years in the international gold exploration and mining industry gained primarily in Nevada, Mexico, and Central and South America.
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