Economics - Some Problems in the Allocation of Exploration Efforts

The search for ore is characterized by a great variety of uncertainties, each of which can be resolved by obtaining information at a cost. Three exploration stages may be distinguished in which information can be obtained, based on inherently different cost structure: 1) the reconnaissance or scanning stage, 2) the examination or screening stage and 3) the project stage. This exploration sequence would roughly coincide with replies to questions as to: where, how, why and how much. As complete information in each stage is too costly to acquire, we must assess the probability that adequate information will be furnished by a limited amount of effort and attempt to maximize the expected value of ore to be found for a given exploration expenditure. Several problems are discussed relative to the mathematical formulation and possible computer procedures for determining the optimum allocation of a total exploration effort. Based on the available literature possible solutions to this problem are indicated. When scanning through published literature on mineral exploration, it seems at first that there is little room for substantial and systematic improvements in the efficiency with which the problem of discovery of new ore deposits is presently being handled by large organizations active in exploration. It appears equally difficult to offer something relevantly new which could generate a break-through in exploration thinking and cause a marked improvement in the ratio of successful undertakings to the total exploration projects started. On the other hand, a number of experts in recent years have urged that the problems in prospecting be analyzed in a more skillful and sophisticated manner than in the past. Their thesis is based mainly on the premise that the cost of finding mineral deposits will increase with increasing technical difficulties. In present large-scale exploration ventures, especially in those regions where outcrops and immediately visible geologic evidence are scarce, older methods of prospecting are increasingly being replaced by more indirect and systematic geophysical and geochemical methods with more emphasis on correct statistical design of exploration patterns. It is perhaps the oil industry which has made the greatest strides in developing statistically, well justified patterns in its search for oil; possibly because oil seepages, as indicators of the presence of oil, left off at an earlier point in time than did outcrops as indicators of base metals. Among the pioneers in the field of statistics and operations research, as applied to mineral exploration, the excellent works of Allais, Slichter, Koop-man, Mickey, de Guhnin, Krumbein, Griffith, Sichel, Krige, de Wijs, and Matheron may be mentioned. It should, however, be pointed out that three subjects of basic importance to the allocation of exploration efforts have so far received only scant attention in published literature, even by the aforementioned authors. In the first place, a more precise definition of the object of the search, i.e., a minimum-size orebody, seems to be outstanding. Secondly, a decision model is not a widely-discussed subject. Thirdly, no concentrated attempt so far seems to have been made to establish probabilities of the occurrence of economic deposits on a regional scale and to arrive at a slightly more accurate knowledge of the probability laws governing the deposition of ore. It is not the purpose of this paper to create new order in the complexity of uncertainties in which our decision processes in exploration necessarily have to be conducted. Rather, we intend to highlight some of the outstanding, hitherto unmapped territory, where diligent compilation and a utilization of present and historic data may statistically improve our chances of success. We hope that the contribution of this paper will lie in bringing allocation problems into better focus and in increasing the mineral industry's realization of the magnitude of the factors involved. THE MINIMUM-SIZE OREBODY The concept of target specifications for what constitute a minimum-size orebody in exploration is a rather variable one and depends to some extent on