The future of any mining company depends on maintaining and growing its access to high-quality mineral resources. Often the true size of a given resource is not fully recognised until after mining has commenced. Also, the strong desire to increase production puts pressure to expand the resource base of the mine to get maximum value out of the capital employed. This, plus diminishing M&A opportunities and declining world-class greenfield discovery rates, makes brownfields exploration a high priority activity in any operating company. For the success and long-term survival of the company it is critical that this is done well._x000D_
The primary aim of brownfields exploration is to find or acquire new deposits within economic transport distance of an existing mine that will add materially to shareholder value through: mine or capacity expansion, displacement of lower-margin ore from the mine plan, preserving and extending the mine life, and ensuring potential value is understood in order to maximise potential future mine development or exit._x000D_
A number of strategic principles are important in any program designed to achieve these aims: understanding the life of mine (LOM) production profile and the related key drivers for exploration, understanding the dynamic nature of the brownfields search space, understanding and measuring depletion of the brownfields search space, understanding the potential of the near-mine region, investing in exploration technology to expand the search space, and investing in a basic geological understanding of the ore-environment._x000D_
Examination of the LOM profile will highlight critical issues facing development plans for the mine including future grade and throughput issues, key technology requirements or innovations and scenarios for increased production._x000D_
Exploration targets in the brownfields program should address these key issues._x000D_
Often it is as simple' as keeping mine development sufficiently far ahead of extraction to allow time for the various phases of exploration and resource assessment drilling._x000D_
Because of the low additional capital costs required, expansion of the brownfields search space is strongly leveraged to: metal prices, development of new markets, incremental operating cost reductions, strategic changes in downstream requirements in integrated businesses, depletion of higher unit-value ores, and new technologies (both extraction and exploration)._x000D_
Therefore the brownfields search space is likely to incrementally expand through time and must be regularly reviewed. This is also important as any given search space will be progressively exhausted, resulting in smaller and higher cost discoveries. It is therefore important to monitor and critically review sustained trends of increasing brownfields discovery cost._x000D_
The first wave of discoveries in any camp are usually empirically driven and do not need a strong geological understanding. However, an improved geological understanding is critical to making the next generation of hidden discoveries._x000D_
To illustrate these points, a case study was carried out on the exploration and development history of the Kambalda nickel camp. Over a period of 40 years, more than 40 deposits were found containing over 1.7 million tonnes of nickel metal._x000D_
Efficient mines need to maintain reserves for operating flexibility._x000D_
Consequently, the company needs to clearly understand the global resource in order to maximise its full potential. In addition, understanding the full brownfields potential earlier in the development of a deposit rather than later, creates optionality through the flexibility that this understanding brings to future development choices._x000D_
To ensure best practice in attaining this aim, the roles and responsibilities of the exploration team and the mine operation should be clearly understood. It is important for the explorers and the operators to have shared views about what needs to be done. Typically, mine operators would be accountable for identifying future resource requirements to support the life-of-mine production schedule whilst explorers would be accountable to ensure best-practice assessment of brownfields exploration opportunities. This would include an assessment of the global undiscovered endowment in the regional near-mine area. The balance between brownfield exploration drilling and resources to reserve conversion will need to be decided to ensure efficient operations are maintained. Both need to agree the optimum level of brownfields funding taking into account: urgency to replace or grow reserves, and quality of opportunities (relative to those elsewhere)._x000D_
The ultimate cost of ignoring the full brownfields potential of an operating asset can be significant, ranging from inefficient and poorly planned operations, lost opportunity cost and resultant value through under-utilised resources and, in the worst case, early exit from the asset at the bottom of the commodity cycle - leaving behind huge amounts of shareholder value.