Mining companies face the risk of having their projects interrupted by host governments. SRK recently assisted on an arbitration case involving a company that had an operating gold mine and exploration properties in Central America but was unable to continue operating because the government suspended their licence to operate.
SRK’s role involved developing a Life of Mine Plan to show how the operating mine would have progressed, assessing the potential of the known exploration targets, and evaluating the amount of gold that could have been discovered in extensions to the known exploration targets (lost exploration opportunity).
For the Lost Exploration Opportunity, SRK conducted a detailed desktop evaluation
of each known exploration target, and further analysed those with exploration
potential. SRK relied on several sources, including existing exploration data (comprising soil and rock surface sampling), drilling, and past geological field studies.
SRK then compared the exploration targets against six deposits worldwide that were similar in deposit style (orogenic gold) and age (Mesozoic). SRK evaluated the potential gold ounces each target could have contained. This used an estimation of the potential average contained ounces per vertical metre and per strike metre for each benchmark deposit to provide a range of potential gold ounces per exploration target.
SRK then applied a modified Geological Probabilistic Approach to evaluate what the probability of discovering gold would be, depending on the stage of exploration each target may have reached since the company lost their right to operate. This provided the lost exploration opportunity in the form of a range of gold ounces that could be subsequently used in valuation analysis.
