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Latin Exploration 2011:New paradigms for junior-major company exploration business
models
Dr. John-Mark Staude (President – CEO, Riverside Resources Inc.)
October 2011 - Buenos Aires, Argentina – Latin American Mining
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How to collaborate to make more discoveries, faster, cheaper, and beneficial for all stakeholders
We made it! Please invite friends to meet through out the conference I will be here through Wednesday to discuss the key theme of this talk-
So sip your coffee, here we go…..
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Acknowledge – Thank you• Latin America Mining Organizers• Navaldo Rojas, Carolina Martinez, Lang-Reid• Riverside Resources Inc.• BHP Billiton, Kennecott, Teck
Major company partners:• Antogasta Holdings, Cliffs Natural Resources,
Kinross Gold
Junior company partners:• Mexigold, Choice Gold, Geologix, Guerrero
Exploration, Arcus, Sierra Madre Development
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Key Themes
1. ,
2. ,
3. ,
4. Types and Examples of Partnerships- are they working?
5. Implications for Exploration Targeting, programs, staffing, longevity, speed for results
6. Leverage both ways, this conference could create the next great partnerships leading to wealth creating discoveries. Exploration partnerships have led to discoveries that I have been associated with in Argentina Chile, Mexico, Mongolia, Peru. NOW is an excellent time to find the win – win deal.
7. Actions and invitation to engage by starting today at this conference.
1. Macro-drivers for commodities, need for exploration, mega-funding potential, skill sets for next ten years, communities and social realities
2. Comparison, advantages, disadvantages, needs of Majors and Juniors
3. New financing models for exploration - Exploration Paradigm Models, Junior partnerships- learning from Oil Business
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Specific Exploration Actions
• Expanding Business• Collaborations• Accessing, using, focusing with giant datasets,
data mining• Working with communities • Best environmental approaches and sustainability• Academic institutions and science• Getting capital• New ideas, “knowledge is golden”.
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World Picture1. World is developing and needing resources –
booming regional growth
2. China, India, Brazil, Canada booming
3. World is printing paper money causing rush to hard assets
4. Latin America, Africa, Shields, where commodities going to be supplied from?
5. Reality is there is vast funding for developing resources. Challenge to get funds to find new locations, grass roots resources.
6. Outsourcing and partnering permits fast growth, limited commitment, accessing entrepreneurial spirit
www.rivres.com7Madrid - this weekend, Buying gold on the street – Puerto de Sol square
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World populations are growing northern hemisphereLatin America well positioned to supply
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Demand is there.
How we going to get supply?
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Price up =
discoveries going down ???
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I believe with Partnerships
A new business alliance approach is emerging and
could launch Latin American exploration particularly in a depressed economy cycle
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Joining forces for increasing world supply and discovery success
Combining the interests into business ventures particularly major and junior
companies is proving to efficiently, rapidly, and effectively progress grass roots as well
as brownfields resource discovery and development
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Major Junior Partnerships - Different needs, skills, great for sharing and not as competition but rather allaying to better reach compatible goals
Majors JuniorsNIMBLE
INNOVATIONCAPITAL
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Market Capitalization of Major Mining Companies (demanding growth)
Source: www.mineweb.com; market data; table compiled by Barry Sergeant. January 2010
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Major vs. Junior collaboration must addressFunding
Time FrameChange of FocusScale of ProjectAccess to ScienceNeed for PerfectionRisk AcceptabilityIndividual impact at entry level
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Exploration Budgets of Juniors vs. Majors
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Exploration Targeting
MajorsSize – NPV, Gross Metal ValueCommodity –Time frame -Depth -Capital needed to develop -Location of resources -Lead to Deposit types-
Juniors
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Exploration Targeting Advantages - Disadvantages
• Major
• Junior
• Time frame (tortoise or hare)
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Exploration Targeting and Business Models – Risk SharingExploration Targeting and Business Models – Risk Sharing
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Styles of Business Models• Long time have had shared risk collaboration• Forms of selling percentage ownership in
projects• Different conditions for different types of
exploration and situations• 2011 a spread of approaches • Allaying on a common goal where the results
are split differently helps distinct groups both grow and society overall to prosper
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Evolving Business Exploration Models
Majors and Juniors are
BLURRING
the boundaries
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Exploration Business Models ways to manage exploration risk• Sole Risk• Option• Joint-Venture• Claw Back• Royalty
Alternative:• Alliance
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Exploration Models for Grass Roots and Brownfield
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Hybrid Engine Prospect Generator: The “electric engine” generates cash through property acquisition and partnerships
Drill Discoverer: The “gas engine”, focuses on making major discoveries through targeted drill programs
Limited Dilution, Exposed to Discovery
Prospect Generator Model
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Prospect Generation TWO Approaches
Alliance Funded• Partnered at beginning• Funding upfront, better
terms• Lower cost of entry• Dedicated program
objectives• Efficient, directed
expenditure
Option Generated Project• Partnered after
expenditures• Higher cost, later funding,
earning in• Objectives potentially less
aligned• Money directed more
advanced projects• Lower risk for generating
a target
Cliffs - Riverside Geologix - Riverside
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Exploration Models for Brownfield
•Drilling commitment•New ideas•Complex land or other issues•Project so advanced that other company has required skill sets
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Exploration Models for Frontier vs. Proven Areas
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Terranes
Frontier• Alliances very good for
sharing skills, proving concept
• Slower, longer term have to generate
Proven• Joint ventures strong
because known region, can raise money and test
• Lower risk and faster, not necessarily finding the new giants
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Conclusions1. Exploration Models can manage risk and partnerships can be a way
to make discoveries and develop projects faster, better, and more responsibly?
2. Macro-drivers for commodities, need for exploration, mega-funding potential this is a time for the industry to seize the moment
3. Majors and Juniors are not competitors because their needs are so different
4. Alliances and Prospect Generator business models are ways to speed up discovery and still be able to survive as a junior company.
5. Leverage both ways
6. This conference is the opportunity to meet, discuss, and come up with potential collaborative programs and unlock value from projects and ideas
Contact:John-Mark Staude778 327 6671 [email protected]
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Welcome further discussion-questions
Exploring partnerships and new paradigms for exploration business models
Contact- John-Mark Staude
Riverside Resources (RRI) [email protected]