Drilling Deeper

Aristotle, one of the fathers of geology, student of Plato, and tutor of Alexander The Great, once wrote – “Excellence is not an act, but a habit.”

So, too, is the key to getting the most out of your geos – developing the right management habits.

Although It might seem self-evident that higher quality engagement between strategic decision makers and the resource assessment teams (geology and exploration) is a source of bankable value and making better business decisions, when times get tough, exploration and mining business managers often cut exploration, perhaps without fully understanding the near or far term impact on the business. Understanding the right work for your geos is a key to unlocking more value and lowering your costs.

To expand a cliché, exploration is important but, given the time frame required to gather and evaluate the data, it is rarely urgent. So management can sometimes feel it is acceptable to cut the non-urgent expenditure and deal with the consequences later. However, sometimes exploration is both urgent and important and a rejected shipment is just the sort of reminder some management teams need.

A contributing factor to arbitrary decision making is the tendency to leave the budget setting to geologists in an annual process using a mechanistic, often spreadsheet based, process. This should result in a reliable, fully costed programme that will deliver a JORC Resource/Reserve in a timeframe known to the geologist using tried and trusted methods but it may not meet the needs of the business in a changing business environment.

So how do businesses make better informed exploration and resource assessment decisions that are aligned to strategic intent? Management’s role is to delve into and probe the exploration programme and not just be accountable for the process and the outcomes. Done well this should ensure the process of management review is comprehensive, fact based and efficient.

During this review process if the geologist cannot in their own terms explain the objectives for the programme and how achieving them will contribute to delivering the business strategy or business plan by reducing risk and uncertainty and/or improving the effectiveness of operational controls, then the communication and planning process is likely to have failed.

It may not involve rockets but geology is a science and every time we explore, the geological hypotheses being tested should be discussed, challenged and agreed. If we are proving up a resource for operations, we should be able to explain why we need the additional data, why we need it in this programme and why the proposed programme is the best means to obtain it.

If the planning process fails to clearly address business requirements, resource risk, critical issues, targets, methods, priorities and timeframes then the process should be revised because it is failing the business.

Exploration is expensive and the requirements should be clearly identified, prioritised and managed. In exploration as elsewhere, time is money and waste takes many forms some undetected, such as following a standard analytical programme but failing to address changes occurring in the market place, as with the Chinese focus on Fluorine content in coal.

The characteristics of a sound Resource Assessment Process are that it:
• provides a fact based current status of critical resource knowledge;
• is aligned to the business strategy and delivery activities;
• provides an effective means of communication between the geologists / resource investigators, engineers /project developers and key business decision makers;
• generates clarity and understanding of geological and mining risks;
• ensures the provision of timely and fit for purpose geological data, analysis and understanding to study, project and operations delivery teams and key decision makers;
• minimises delay and rework associated with the absence of critical data at decision gates by providing an assessment of the cost and timeframe to remove the critical resource knowledge gaps and progress to the following phases;
• reduces geological and schedule risk to clear and acceptable levels at least cost; and
• ensures all the inherent resource opportunities are identified, prioritised and systematically managed.

Does your business have the habits with regard to how you manage your geologists that will lead to alignment of your resource assessments and your business strategies?

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