The last year or so has produced some highly impressive finds, including Rox Resources at the Teena lead-zinc prospect in the Northern Territory, Minotaur Exploration at the Artemis copper-gold prospect in the Cloncurry district and Cassini Resources at the Succoth copper prospect in the Western Musgraves.

All three projects will be watched enviously by major mining companies, but are a product of greenfield exploration that many of the majors eschew because it is perceived as too high risk.

The prevailing wisdom is that advanced projects, typically in near-mine or brownfield locations, are lower risk and a better way to grow or replace production.

This approach was heavily criticised in a speech a fortnight ago by RandGold chief executive officer Mark Bristow at the Mines and Money conference in London.

Bristow pointed out that the gold industry had squandered a 300% price rise over the past decade, with the world’s largest gold miners achieving cumulative free cash flow of negative $US13 billion over the period.

He said the industry had forgotten that exploration was the core component of success for mining companies, and that current approaches of dusting off old, higher cost assets was unsustainable.

One of Australia’s most highly regarded greenfield explorers and chair of the board of the Centre for Exploration Targeting, Dr Jon Hronsky, told ILN sister publication MiningNewsPremium that many of those in the debate confused certainty with risk.

“What they are actually doing is confusing the concept of certainty (ie how much we know about a resource) with the concept of risk (ie what’s the likelihood that if we invest our capital in it we get a positive return),” he said.

“And it’s actually quite likely, and increasingly so as we go through the cycle and progressively deplete the better, advanced projects, that focusing on advanced projects will become much, much riskier than being in greenfields.

“In fact, the advanced projects have never been where value is really created. The price rises through the mining boom disguised that fact, but as Warren Buffet says, ‘when the tide goes out you get to see who was swimming naked’.”

Hronsky said a lot of the money perceived to be spent on greenfields was not spent that way at all.

“It is actually spending on sub-economic resources that were discovered a long time ago to improve certainty about the resource or find something better but probably still small nearby,” he said.

“Unfortunately all of that gets included in greenfield spending by a lot of major companies.

“But that’s a high risk-strategy because you are dealing with the assets that a first phase of exploration has already found to be not viable.

“If that old asset wasn’t worth developing in one of the greatest mining booms in history, then more exploration is not likely to be money well spent.”

Hronsky said a second factor that muddies perceptions and the real risk of greenfield exploration is the fact it “quite bi-modal”.

That is a polite scientist’s way of saying some explorers know what they are doing and others just don’t get it.

“Historically this has always been the case. There are certain people or companies that do quite well and they have certain attributes, as opposed to the large majority of the industry that perhaps don’t really don’t know how or don’t have the right management.

“That means a lot of money spent on greenfield exploration never had much chance of finding anything, whereas the groups that do understand the business get results on quite a reliable basis.”

Hronsky is a case in point, but is too modest to say so.

He led the discovery of the Nebo-Babel deposit with Western Mining Corporation back in 2000, and is part of a WMC alumni that consistently makes hits paydirt, including Sirius Resources’ Mark Bennett and Rox Resources’ Ian Mulholland.

Another example is Minotaur’s Dr Tony Belperio, who discovered the Prominent Hill copper-gold deposit with Derek Carter.

Hronsky added that improving technology was also beginning to make a real impact on greenfields exploration success.

“Over the last decade, and it is only just starting to percolate into the community, we have had started to make some significant advances in our ability to target in a greenfields environment.

“A lot of this comes from understanding the large scale, the big-scale features. Science and technology is evolving, and so is our ability to successfully manage risk with these tools.”