Exploration requires substantial capital, and is an extremely risky business (only 1 in 100 prospects ever becomes a mine). The average lead time, that is the time between discovery and production, varies from around two years for a gold mine, to 15 years for a lead/zinc mine. Since it takes years to find, prove and develop most ore bodies, exploration must be carried out years ahead of the depletion of existing deposits. Investors in exploration are exposed to risk for long periods before knowing whether they will receive a return on the funds invested. The risk, high-cost, uncertainty and long lead times involved in exploration make it an aspect of commerce that most managers and investors find difficult to rationalise or understand._x000D_
Nevertheless, it is a given that the long-term survival of the mining sector depends on discovery of new mineral deposits, however the immediacy of the need to find or acquire new mineral deposits in order to compete and prosper in the industry is less well understood. This paper examines the commercial realities which underlie exploration for new mineral deposits. The first and foremost reason for exploration is to maintain or increase depleting ore reserves which are the asset base of mining, but there are other compelling commercial reasons for exploring, and these are: to maintain return on investment, to achieve growth or create wealth through discoveries which lead to new mining ventures, to remain competitive in the industry, to diversify, and to control raw material source for mineral processing and/or marketing ventures._x000D_
Exploration is necessary for survival of the industry, and also for survival of organisations competing in the industry. The organisations which discover the best orebodies are in the best position to compete, and mining organisations which fail to find or acquire new mineral deposits rapidly become uncompetitive and unable to maintain return on shareholders' investment.