A
study was undertaken to investigate the relationship between the quantity and
value of economic demonstrated resources discovered for 12 mineral commodities
over a ten year period and the expenditure required to yield such mineable
resources. The results showed that for every dollar spent on exploration, there
is an apparent in-ground average value of around $54 dollars contained in the
economic resources found. While this appears to be a satisfactory return, it
should be remembered that more than 99.9% of exploration programs are judged to
be failures because a viable ore body or mineral deposit was not proved up. What
is behind this seeming paradox?

The
fundamental truth behind mineral exploration is the fact that the more you
explore, the more you find, and that one success will often lead to further
discoveries. It appears that one rich and viable deposit creates such surplus
that its inherent high value ('the pot of gold') makes up for all the failures.
In short, mineral exploration is a high risk business with uncertain returns.
However, with skill, enthusiasm, experience and venture capital, it can yield
larger than normal returns for the brave and the fortunate.

Analysis of exploration
expenditure and economic resources discovered for the period 1987 to 1996
revealed that the apparent in-ground value of economic ore discovered per dollar
of exploration expenditure varied from a high of $429 for iron ore and $261 for
bauxite to a low of $22 for gold and for lead, and $5 per dollar of diamond
exploration expenditure. Preliminary conclusions drawn on the reasons for the
variations observed include the inherent ease or difficulty of discovery for
different mineral commodities which may in some cases, relate to the natural
prospectivity of Australia as a
whole. Layered deposits like iron ore and bauxite appear to yield higher
in-ground value returns on the exploration dollar. To some explorationists, this
may be considered as seemingly obvious, but it may have more to do with very
large-exploration tenement grants pursued by various Australian State
Governments in the early 1950s and 1960s than the apparent ease of delineating a
stratabound deposit.

Despite the apparent
relatively low in-ground value produced by the gold exploration dollar of $22,
the 5660 tonnes of gold discovered in this ten year period was worth $9.1
billion and representing over a quarter of the new mineral wealth created in the
ten years to 1996. This contribution, along with that from the other minerals
discovered over the period, led to a significant boost to Australia's export income and
standard of living.

It
is concluded that, given the nexus between the amount of mineral exploration
expenditure and the quantity of new resources likely to be discovered, this
knowledge may help policy makers seek to influence the rate of resource
discovery in countries like Australia for the benefit of the
nation.