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Source: Brian Sylvester of The Gold Report (7/6/12)
China may be investing billions elsewhere to locate new mineral deposits, but Geologist Noel White believes there are huge discoveries yet to be unearthed within its borders. White, an independent geological consultant with Enargite in Brisbane, Australia, says China's history and politics have slowed development of its mining at home. In this exclusive interview with The Gold Report, White reveals which companies have boots on the ground and the expertise to make the next big strike in China and South America.
The Gold Report: Noel, you're a geologist with about a 40 year history in mineral exploration. These days, public companies pay you for advice on how to run their exploration programs. What are some common mistakes junior mining companies make when it comes to exploration?
Noel White: Junior companies have difficulty developing a clear and realistic strategy.
TGR: You try to temper their enthusiasm?
NW: Not at all. In fact, I try to encourage their enthusiasm. But I try to get what they do aligned with what their objectives are in a realistic way.
TGR: Do they try to drill too quickly? Do they try to drill too much?
NW: Junior companies commonly feel that there is an expectation to drill quickly, but they also need to do their homework properly. If they jump into drilling before doing the appropriate surface techniques, such as geological mapping, geochemical sampling and geophysical surveys, they can completely waste the very expensive drilling work. It is a serious mistake because bad drilling results have a serious negative impact on how investors perceive a project. A company needs the best possible intersections at the start to raise the value of their projects.
TGR: Have you been an active consultant on projects that have reached production and gone on to be successful?
NW: I've worked a long time with Asia Now Resources Corp. (NOW:TSX.V) in China. Asia Now has produced an ore deposit in southern China. That exploration success followed a long period of very careful exploration to find a completely hidden ore body. Without that early work, that success would not have been achieved.
TGR: You often deal with technologies that are new to mineral exploration. Can you talk about how they're changing the game?
NW: The fundamentals of mining haven't changed particularly in 40 years-we just use new technologies to achieve the same goals. The major breakthrough in geophysical technology of recent times was the development of airborne gravity. That was one of the Holy Grails.
One of the most basic tools is a magnetic survey. We can get a lot more out of magnetic surveys today than we could in the past. Those surveys provide us with baseline information that's really important.
Technology is producing major breakthroughs in geochemistry. Geochemistry started off just collecting samples of soil or stream sediments and using simple analytical techniques. More and more sensitive analytical methods have been developed. Partial leach techniques extract part of the geochemical sample to maximize the sensitivity. A major recent development relies on the fact that nature has focused particular elements that are associated with ore deposits into particular minerals. It is now possible to actually look at the chemistry of particular minerals to evaluate the proximity to the target based on its chemistry.
TGR: What do all those technologies mean to the investor?
NW: Smart people follow the lead of smart people and greedy people follow the lead of greedy people. If you follow a greedy person you might get lucky and make a lot of money in the short term. Technically smart people who design exploration programs have a much higher probability of being successful in delivering a discovery.
TGR: A few years ago, the World Bank evaluated the mineral potential of China. How would you characterize China's mineral potential?
NW: To appreciate China's potential, you have to understand its history. In the early days of the People's Republic of China, the country followed the Soviet Union approach and started huge state-funded surveys over massive areas, but the Cultural Revolution disrupted the process. Thousands of state-owned companies with exploration teams suddenly found themselves with no funding. However, the government wouldn't allow them to reduce staff or stop operations-a major dilemma for management. They started mining any little thing to make money.