The case for exploration in Nevada: What it takes to be successful

Why explore in Nevada? The obvious reason is because Nevada is “Prime Elephant
Country.” Nevada has been the leading gold producer in the United States since 1980
and presently ranks as the third largest producer in the world, behind South Africa and
Australia. Twelve of fifty-four (or 22%) of the world-class base- and precious-metal
deposits discovered in the world during a 25 year period from 1970 to 1995 came from
Nevada. Because elephants are known to travel in herds, Nevada became and continues
to be ranked high on the priority list as the place to hunt for multi-million ounce gold
deposits. So when looking for elephants, why not stay in elephant country?
As is the case in all businesses, you either grow or die, there is no standing still.
The only way to grow in the mining business is to add reserves and the only way to
add reserves is through acquisition or discovery. Historically, exploration has been
the preferred method for adding reserves, but as corporate downsizing of the mineral
exploration industry became commonplace in the 1990’s, mergers and acquisitions
became the preferred method for major mining companies to add “new” reserves.
However, “Growth through mergers cannot be sustained for very long and, at best, it
is a short-term fix” (Freeman, 1996). The obvious way for a company to offset this
short-term fix is to explore for and discover its own ounces. But because rapid reserve
and production increases has become more important to major mining companies
than long term success, these companies have eliminated exploration geologists in
order to afford acquisitions. This reduction of exploration geologists working in the
field makes it impossible to discover those new ounces. Hence, Nevada Pacific Gold
was founded as a pure exploration company, based on the belief that the cheapest
ounces you can mine are those that you can find.
So how do mining companies maintain rapid growth and still maintain long-term
success? The key to a successful long-term strategy is a corporate commitment to
reducing both production and discovery costs. In addition to boot leather, a rock hammer
and a drill rig, the “ten round clip of ammunition” that elephant hunting teams
need are: 1) adequate and consistent funding over a reasonable time period; 2) dedication
of the group to finding economic gold deposits; 3) competent geologists and leadership;
4) a judicious selection of high quality projects; 5) allocation of a large portion
of exploration budgets to drilling; 6) excellent communication and team work up and
down the corporate ladder; 7) ability to make decisions with an absolute minimum
amount of delay; 8) flexibility in organizational structure and in budget allocation; 9)
long term patience; and 10) good relationships between major and junior companies.
With the above mentioned “bullets” in hand, an exploration team can track down
that elephant, take aim, slowly squeeze the trigger and bag themselves a multi-million
ounce gold deposit, thereby providing their company with the true wealth that discovery
brings.