Small junior mining companies have often been credited with outperforming senior companies in mineral exploration. It is widely believed that the juniors have found more mineral deposits than the seniors and that they have done so at lower average cost. An analysis of nearly 1,000 discoveries of metallic mineral deposits in the period 1947-1982 revealed that 123 contain more than $1 billion worth of metals and that, of these major deposits, nearly three out of four were found by senior companies.
Furthermore the total gross value of the seniors’ major discoveries was four-fifths that of all major discoveries. But the seniors also account for four-fifths of all exploration expenditures. Therefore, the average finding cost (value found per exploration dollar) of the 35-year period was roughly the same for seniors and juniors.
The impression that the seniors have played a relatively modest role in mineral discovery has found apparent support in occasionally published compilations of simple numbers of discoveries regardless of size and value. But such compilations are meaningless because the total gross values of metals contained in the largest and smallest Canadian mines differ by a factor of at least 3,000.
The best efforts made to date to examine relative exploration success (Kalymon et al., 1978, and Freyman, 1978) have tended to confirm the notion that the seniors did not match the juniors’ impressive performance in mineral exploration. With the benefit of hindsight and further data, however, the evidence offered by these authors is not convincing for one or more of the following reasons: only a fraction of the record of discoveries was known to them at the time; the fraction used for analysis was not a representative sample of all discoveries; initial estimates of discovery sizes turned out to be much too low; excessive extrapolations were made from region to nation, or from some commodities to all commodities; and expenditure records by companies were not accessible to the above- mentioned authors.
The compilation of a much larger record of discoveries, the development of a method for compensating for initial underestimation of discoveries, and access to detailed Statistics Canada records on exploration expenditures make it possible to revisit with better data the two questions: 1) Have the juniors found more mineral deposits in Canada than the seniors, and 2) Have the juniors made their discoveries at less cost?
Because it was not practical to attempt to identify the discoverer of each of the nearly 1,000 metallic mineral deposits found in Canada in the 1947-1982 period, deposits which have been selected for analysis — referred to as “major” deposits or discoveries in this paper — are those containing more than $1 billion worth of metals (at January, 1979, metal prices in 1979 dollars). I counted 123 such deposits; they represent 84% of the total gross value of metals contained in all 1,000 discoveries.
Of these 123 major discoveries made in the 1947-1982 period, senior companies were responsible for 85 and junior companies for 28; 10 were made jointly. Thus, when half of the 10 joint discoveries are allotted to the senior companies, the seniors may be said to have found three out of four of these major deposits. The value of the metals contained in their discoveries accounted for four-fifths of the total so that, for the average discovery, the gross value of the seniors’ major finds was slightly greater than that of the juniors.
Therefore to the first question posed, “Have the juniors found more mineral deposits in Canada than the seniors,” the answer is clearly no as far as the major discoveries are concerned — discoveries that make up the bulk of the value discovered.
As to the nearly 900 smaller discoveries representing the remaining 16% of total value discovered during 1947-1982, the proportion of values of the discoveries made by senior and junior companies appears to be comparable with the proportion for the 123 major discoveries. A check of two- dozen of the largest among the 900 smaller deposits, representing about one-sixth of their total value, showed the same proportion; and a cursory examination of the other deposits also suggested no significant difference in the proportion.
The quantities and value of metals discovered by senior and junior companies — discussed above — are a measure of their relative exploration success but not of their exploration effectiveness, which requires that their success be measured against the amount of money spent on mineral exploration.
The numbers for the same 123 major deposits show that, in terms of value of discoveries per exploration dollar, senior companies as a group were about equally effective as the junior companies throughout the 1947-1982 period. In that period as a whole, the seniors accounted for 79% of all exploration expenditures and found 79% of the value representing all major discoveries (70% of the value of those that were developed into mines). In the latest interval, 1974- 1982, the seniors spent and found close to 87%.
On the basis of these figures, the answer to the second question, “Have the juniors made their discoveries at less cost,” is that their finding costs over the whole 1947-1982 period were about the same as the seniors’. In the 1947-1955 period, the juniors were slightly more cost-effective, but in the intermediary 1956-1964 and 1965-1973 periods, the seniors were doing better. In the 1974-1982 period, finding costs were the same for junior and senior companies.
It must be noted that the quantity of metal discovered per exploration dollar measures technical exploration success, not necessarily aeconomic success. The true measure of economic success of mineral exploration can be taken only when all the deposits discovered in a period have been mined out. Only then can these deposits’ net values be fully known because changes in costs, prices and technology cannot be reliably foreseen. Therefore, one is forced to fall back on an admittedly imperfect mixture of technical and economic measures; the definition of a discovery as “a deposit attractive enough to have warranted the expenditures necessary to establish its tonnage and grade” reflects the discoverers’ gamble on economic value.
The percentages of the total value of the major discoveries that have to date been developed for production may provide some crude measure of the relative economic success that junior and senior companies have attained compared with their relative expenditures. According to that measure, the juniors were ahead, having found 30% of the total value for 21% of the total expenditure.
This is reflected also in the numbers, apart from the value, of discoveries: of the 33 major discoveries credited to junior companies, 18 (56%) have to date been developed for production, and of the 90 credited to senior companies, 41 (46%) have been developed. (Of the nearly 900 smaller discoveries, 38% have been developed.)
These numbers are heavily influenced by the fact that juniors deserve credit for eight of the nine major uranium deposits (which developed into mines) discovered at Elliot Lake, Ont., in the 1947-1955 period. Owing mostly to these, 11 of the 12 (92%) major discoveries credited to junior companies in that period were developed to production; of the discoveries credited to senior companies, eight of a total of 13 (62%) were developed. Over the next 27 years (1956 to 1982), the scales tipped in favor of the seniors: 39% of the major deposits discovered by junior companies and 43% of those discovered by senior companies were brought into production.
Assigning the juniors’ exploration expenditures to their discoveries makes them look more effective than they were, for three reasons:
* Few junior companies had the funds needed to delineate large mineral discoveries entirely, so that much of the follow-up exploration on large deposits discovered by the juniors was undertaken and paid for by senior companies. In these cases, the juniors are nonetheless given credit for the entire deposit value, even though they met only part of the delineation costs.
* Statistics Canada’s exploration expenditure data for junior companies appear to be less complete than those for senior companies The reason for this is the ephemeral nature of some of the juniors. This relative incompleteness of the data would tend to lower the juniors’ apparent expenditures per discovery value and make them look relatively better than they are.
* Some juniors were less reluctant than the more conservative seniors to publicize large-tonnage discoveries on the basis of scanty initial drilling without further follow-up.
The complementary effects of the exploration efforts of junior and senior companies are evident from the histories of many mineral deposits and districts. There are numerous examples of independent finds by junior companies, in virgin areas, which have triggered the discovery of similar deposits nearby by senior companies– and vice versa.
Some deposits eluded recognition for several decades despite intermittent exploration of the same showings by several companies, junior and senior; claims staked on some showings were allowed to lapse more than once. In some cases, a prospector enterprising enough to revive such an old prospect and induce a company to drill it once more was behind the final discovery of a mineral deposit.
Thus senior companies, junior companies and prospectors have all played significant roles and made numerous important contributions to the discoveries of Canada’s mineral wealth. Clearly, none of these three groups could have been as successful without the activities of the others.
The widely-held notion that senior mining companies have been notably less successful than junior companies in Canadian mineral exploration finds no support in the data on the major discoveries.
Both junior and senior companies have made worthy contributions to the success of Canadian mineral exploration. In proportion to the one- fifth of total exploration expenditures that the juniors contributed in the period 1947-1982, their share of major discoveries was commensurate. Donald Cranston is an exploration specialist with the Mineral Policy sector of Energy, Mines and Resources in Ottawa.
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