Talk provided by EGC at the Geological Society of South Africa (GSSA) – Technology Day 14th November 2019 given by Regina Molloy.

“My talk today is about taking a quantum leap of faith and moving South Africa forward to try and make a brighter future for everyone with innovative thinking.

The leap of faith I am referring and proposing today is to take South Africa’s Geoscience and mine related Data to an online digital portal, live and free of charge to anyone wanting to access this information for investment, research or other purpose.  I am proposing both government and private information is loaded onto the portal as both add value in mineral exploration.

Such data;

  • could be used by local villages wanting to consider sand mining for the benefit of their community
  • it could be for the hydrogeology experts to consider various aspects of historical drill hole geology to find water for dry rural communities
  • it could be for a group of local farmers wanting to learn more about the soil diversity on their farms to improve crop yields and water conservation naturally
  • and finally and most importantly, it could provide huge benefit to national and international mineral explorationists wanting to invest into South Africa’s mining industry and discover the future generation of new mines.

Knowledge is empowering.

Collective use and application of Geoscience and other related data made readily and freely available will provide opportunities for investment particularly for the mineral exploration and mine development industry but I also believe opportunities for hydrogeology, agriculture, water management and responsible environmental protection.

There are more opportunities than reasons not to move forward with a Geoscience Digital Data Platform thereby enabling Crowd Sourcing of South Africa’s excellent national data sets.  It is a matter of time before data is converted to digital, the sooner the more efficient and competitive South Africa will be for investment particularly against other African nations whom are also strategizing how to attract mineral exploration investment.

I am now going to discuss how a Geoscience Data Portal can help honourable Minister Gwede Mantashe achieve his target of 5% (R8Bn) of the Global Exploration Budget USD$10Bn globally.  Currently South Africa only attracts 1.1% so is a margin of 3.9% is catch-up, this is a steep hurdle to achieve.  South Africa sits behind DRC, Burkina Faso, Ghana and CDI and Mali with $98M exploration investment.

The DMRE are currently promising to invest R2Bn 2019-2020 to try and re-invigorate the mineral exploration industry.  We as industry specialists with the economic know-how need to assist DMRE via CGS as South Africa has this knowledge, but it needs to come together and share the knowledge and the data.

I will now show you live, some data portals from around the world of which help investors and researchers make quick and informed decisions.  These platforms are our first port of call when looking at deposits and regions for greenfield mineral investment.  We use a term “it’s a data country” or “its not data country” the latter meaning the opportunity for success will be long and hard as no prior study has been conducted or data too hard to obtain promptly.

Data portals from around the world

I now want to talk to you about the link between Geoscience data and investment.

Let me start with a quick discussion on mine and exploration “investors”, when I take phone calls from many clients all over South Africa and Africa I get asked…can you find us an investor?  I usually respond with  ….what kind of investor are you wanting?  The reply is always the same – I didn’t know there are different types.

There are many different types of mine investors, and different investors suit different projects, different commodities, different styles of mineralisation and different geographic terrains.

For simplicity for today’s talk, the most common investors in today’s mining industry are;

  1. Public listed company investors, this includes the very big to the very small and also includes the many shells sitting on ASX and TSX AIM stock exchanges, being the sophisticated mining exchanges
  2. Private companies (all shapes and sizes) including Chinese-Japanese funds (pseudo govt owned),
  3. High Wealth Individuals and groups whom are private
  4. VC – Venture Capitalists, whose role is high risk – high return investment, they take the eye off the pie.

Its important to understand not all of these investors will come and conduct high risk greenfield mineral exploration. Today its commonly funds from the public listed companies and private companies backing the greenfield exploration projects.  VC’s play a role but they are not meaningful in terms of generating and conducting effective exploration and developing new mines.

So you need to understand which type of investor are you trying to attract and what are their requirements for investment.

Investors love easily accessible data particularly geoscience data platforms.  By this I’m referring online geological maps, mineral occurrence details, rock chip grades, regional geochemistry results, regional geophysical surveys, georeferenced and easily downloadable raster geology maps as well as topographic and infrastructure maps and vector data, environmentally classified no-go zones are very helpful and stream line the investment process, contaminated sites, rehabilitated sites etc.

Platform data can be used online, some allow you to import and save your work on their portal, most allow you to download georeferenced .tiff, kml, shape etc. It’s quick and easier to download onto your computer and use in minutes.

International and national investors use this information when they assess their investments initially on a regional scale to determine the prospectivity of a project they are assessing whether it be Prospecting Permit, Mine Permit, Mining Right etc.  When this information is not readily available and requires direct visits to geological departments all at the investors cost and time, they will naturally gravitate towards those destinations with easier accessible online data.  This is what we are seeing with exploration funds retreating from Africa in 2019 and diverted to Developed Mine Nations ie Australia, USA, Canada, South America, Europe in 2018/2019.  They all have digital free and easily accessible data.

South Africa along with every other country is competing to attract greenfield mineral exploration investment which is now digitally compared on a global scale for a smaller pool of investment funds.

South Africa has all the historical information, it just needs to pool the public and private data, get it into a portal to help achieve 5% global exploration spend.

Investors know the most endowed regions in the world for each commodity and those countries without those commodity endowments have to work harder to attract exploration funds against those regions which have mature and profitable mining industries.

So who is investing in greenfield mineral exploration in 2019?  Here are some points to consider to answer this question:

  • Greenfield exploration has been on the decline globally since the end of the boom in 2013 for various reasons. Investors have retreated to the mines and in 2019 only about the top tenthile per commodity has been able to attract external mine development funding if at all.
  • Equity financing models have been used however most proved largely unsuccessful in exploration and mine development projects over the medium term.
  • Deb financing is now more common and rates are becoming competitive between 10-12% down from 15% a year or two ago.
  • Its now common occurrence to raise funds via debt as stock exchange brokers have been unable to raise capital due to shareholder dilution and lack of available risk capital in the global investment industry.
  • We have seen a gradual retraction of public listed company funding firstly on the TSX in 2018 and more recently on the ASX in 2019. Commodity investment appears to be decoupling from mining share value and investors preferring ETF rather than gold stocks.
  • In 2018 the TSX previously considered a mining exploration fund hub raised CAN$4Bn for marijuana investments compared to CAN$217M in mining. The marijuana bubble however is now starting to burst in terms of market correction.
  • What we are feeling here in South Africa is the pressure the mining industry is under in the ability to fund and support high risk mineral exploration – greenfields. It is this greenfields exploration that we need here in South Africa to discover our new mines of tomorrow, be it national junior or international mining companies.

So where is the opportunity for new deposits in South Africa?

There is one aspect that is common to nearly all of South Africa’s known mineral endowment, be it coal in Mpumulanga, gold in the Witwatersrand Reefs, platinum in Bushveld Complex and Iron Ore- from the Kuruman Formation …..all these deposits were found because they were mostly outcropping, once discovered ores were traced, defined and mined. This proves there is massive endowment potential in South Africa.

When I hear people comment …. South Africa has all been explored and there’s nothing left to find…. I don’t believe this is true.  The outcropping deposits may well have all been found, however the near surface concealed deposits have never had serious focus and the last exploration boom in South Africa was 30-40 years ago therefore modern techniques have not been applied adequately to South Africa.  This makes it a relatively fertile place to consider blind deposit exploration.

Geophysical techniques and costs have vastly improved since 1960-1970’s and international explorers now work in 3D combining mapped geology, geophysical and geochemical data to target drill holes.  I believe this is the opportunity for South Africa’s near surface concealed deposits particularly for precious and base metals and favourable polymetallic deposits.

As economic geologists we go the extra mile for polymetallics as we know they have the ability to be clustered, long life and these mines have capability to produce great wealth for the state in taxes and royalties as well as meaningful community employment in much needed regional areas, all these factors are bi-products of a successful mining industry with a healthy pipeline.

Mapped geology, geochemistry and geophysics are the best regional data sets to target mineral exploration, after this historical detailed project scale information is used to target at a project scale. Applying this information collaboratively enables great think-tank work which results in mineral discoveries.

Just imagine the dollar spend of all exploration work conducted in South Africa and if this was readily available to anyone wanting it for licenses no longer held, new deposits will likely be found. The Crowd Sourcing model is really about spending the most time evaluating and interpreting the data rather than too much time spent sourcing and compiling the data, this is why you want a Geoscience Mine data portal.

What has changed in Mineral Exploration in this IoT and Crowd Sourcing era?

  • Exploration has become significantly more digital in the past 5 years
  • More money is getting spent on geochemistry and geophysics prior to drilling than ever before, this has definitely impacted the global exploration funds expenditure.
  • If data is readily available in digital format, the decision of project investment is easier and quicker to make. If one has to travel to source data, its possible they may not even travel.
  • Those Developed Nations with huge mine development pipelines have invested heavily over the past 20 years to ensure data is readily available to the public to use for investment purpose. South Africa must follow this trend to meet its target of 5% Global Exploration Funding, we really should want South Africa’s data to reach as many computers both in South Africa and around the world to motivate to come and invest in South Africa.
  • The days of come and pay for our data are over, its now offered free of charge in many countries.

Conclusion

If South Africa can take a leap of faith and digitalise its public and privately-owned Geoscience and mine related data and make readily available for free online, I believe this will provide a greater opportunity to find new mines.

It will also break open the doors for international investors to take a closer look at investing into South Africa with the hope that a technical specialist will see an opportunity and want to come and test that opportunity.

In addition, making the data readily and easily accessible will enable feedback to entities such as DMRE and CGS of areas where data is in deficient and where portions of the R2Bn could be focussed.  The more heads that interpret and analyses data the better the outcome, this is essentially what Crowd Sourcing is.

I thank-you for your time today and I ask each of you to go forward and talk about the benefits that can be achieved via an online Digital Mine Data Portal.”