In the mineral exploration industry, we accept the reality that the probability of greenfield discovery success is usually less than 1%. In non-statistical terms, we say that significant technical risk confronts each promising, untested, geologic idea/opportunity/prospect.
An additional reality, however, is that the probability of economic success for each geologic prospect is even lower than the probability of discovery success. Some say that the probability that a good geologic prospect will actually become a world-class mine is less than 0.01%. This significant economic hurdle is often due to the non-technical uncertainties and risks (community, security, title, environmental, political, etc.) that could, and probably will, have an adverse impact on economic value as the geologic prospect moves through the exploration stages.
These statistics put a premium on the quality of the process that the explorationist uses to gather and assess the non-technical (non-geoscientific) information that is relevant to testing and (hopefully) developing and producing what starts out as a promising greenfields opportunity. At WMS, we call this process Commercial Risk Management (CRM).
It is not sufficient for the mineral explorationist merely to have a placeholder for CRM. The actual CRM process must be performed efficiently and with skill and objectivity. It must be tailored to each project so that the information gathered is complete, accurate, and useful for that particular project. It must be grounded in the assumption that the quality of the CRM result makes a significant difference in the effort to expand exploration search space and increase the probability of economic success for technically sound greenfield opportunities.
Most important, the CRM process must yield value, and to do so the explorationist must see CRM for what it really is: a core component of the mineral exploration process that continues throughout the project life as the stakes get higher and the need for informed decision-making increases.
CRM does not always have this stature, and the result is CRM failure that leads to project failure, or project delay that is tantamount to project failure. WMS strongly believes that project delay or failure, and accompanying value destruction, can be largely avoided through a well-designed, resourced and implemented CRM process that is an integral part of any exploration strategy and business plan.
The ultimate goal: Avoid pursuing projects that cannot become viable mines despite technical exploration success.