Movie aficionados and readers who are students of Cold War history will recognise the Defcon nomenclature as shorthand for defense readiness condition, an alert situation vernacular used by the US Armed Forces.

The Defcon system was developed by the Joint Chiefs of Staff and unified and specified combatant commands. It prescribes five graduated states of alert for the US military, which increase in severity from Defcon 5 through to Defcon 1 in order to match alert conditions to varying military situations.

The drama of shifting up a gear in Defcon terms has been popularised by Hollywood, with films such as War Games and Independence Day atop the list of blockbusters using the Defcon scale.

This week however, tongue-in-cheek, Strictly Boardroom has changed the Defcon definitions to suit the readiness conditions facing exploration and mining boards in their search for risk capital to continue funding their exploration and project advancement efforts.

First to the original definitions:

Defcon 5 – The lowest, normal state of readiness

Defcon 4 – Increased intelligence watch and strengthened security measures

Defcon 3 – Increase in force readiness – Yellow alert

Defcon 2 – Full war readiness footing – Red alert

Defcon 1 – Nuclear war is imminent – White alert

Now to the exploration and mining world of 2012 – and in particular to the difficult equity capital markets: Quarterly cash flows statements suggest that cash conservation mode is already in place (or perhaps should be) for many juniors

Defcon 5 – Unsolicited offers of investment; turning money away; the market loves you

Defcon 4 – Comfortably cashed-up; cash-burn under control; normal market conditions

Defcon 3 – More cash needed; no unsolicited offers; negative cash projected inside six months

Defcon 2 – Active cash hunt; stock under pressure; negative cash projected inside three months

Defcon 1 – Urgent cash search well advanced; less than one month’s cash remaining.

In the military context Defcon 1 has yet to transpire – and hopefully never will do, with the Cuban Missile Crisis atop the list of past states of readiness declared as Defcon 2. The September 11 attacks led to a Defcon 3 alert in the US.

Looking at the proposed mineral resources sector ‘Defcon’ system, however, suggests that higher states of alert are more common in civilian business – in this case the mining sector – than in military history.

So where do you currently sit on the Defcon scale? No doubt all readers would love to answer they sit at Defcon 5 but I suspect that unfortunately may not be the case.

With no imminent upturn in market conditions forecast, Strictly Boardroom suspects that the Joint Chiefs of Staff (read company directors) at many companies are already convening in war-rooms (read boardrooms) for single purpose meetings on capital raisings.

Good luck and good hunting to all – and best wishes for a return to Defcon 4 (at the very least) at your company.

Allan Trench is a Professor of Mineral Economics at Curtin Graduate School of Business and Professor (Value & Risk) at the Centre for Exploration Targeting, University of Western Australia, a Non-Executive Director of several resource sector companies and the Perth representative for CRU Strategies, a division of independent metals & mining advisory CRU group (allan.trench@crugroup.com).