Walking a fine line between delusion and brilliance
My name is Cory, I am the President of Creative Return and the host of The Insider’s Guide To Finance. The following are my insights and learnings from the interviews and dealings I have with talented entrepreneurs, operators, and financiers. I hope you find them valuable in your endeavours.
I did my damnedest to stay away from the mining industry. I naively thought it was just too boring to serve. How wrong I was!
Let's focus on the early-stage exploration of precious metals like gold and silver and the real mining entrepreneurs (promoters step aside) swinging the proverbial picks and axes.
These individuals straddle a fine line between delusion and brilliance.
Especially considering the probability of successfully staking a claim and moving it through the stages of exploration to commercial production is so small that it is nearly impossible. Probably easier to win the lottery. You can only admire their perseverance.
In reality, the industry rarely sees moose pasture become a producing mine.
Instead, these rock-hound entrepreneurs use their geological and operational experience to identify potential deposits and advance them through stages of exploration. For example, the earliest stages of proving a potential deposit require geologists, usually the young blood, to collect baggies of soil samples following a grid system through dense forests or scorching deserts.
With each stage, it often takes new financing and more technical forms of proving that there is actually value in the ground underfoot. Should intuitions be correct and the exploration project demonstrates enough potential to be an asset; this is when the actual producers will begin to take notice and buy the asset for future development.
With each stage in the exploration and development process, the project advances. The diagram below shows the level of geoscientific confidence that comes from the continued exploration of a target asset. Progress is measured in years and sometimes decades.
What blows my mind is the amount of luck, sheer damn luck it takes to ever see an exploration target become an actually proven asset of minerals in the ground, let alone a producing mine. Just look at the highly uncontrollable variables on the bottom which have the potential to kill a project if the stars (or gold nuggets) don't align.
Once an exploration project is proven and probable and capital is harnessed for its development, the project moves into a whole new phase of life. This is where big money and big budgets step in and a new chapter unfolds - or the likes of Phil Rickard who is reimagining how to extract value from the asset in the ground.
To the exploration geologists out there, you are crazy and I salute you.
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