Mineral Exploration Companies - Greenfield Exploration vs. Brownfield Exploration
Mineral exploration companies are often broken down into two categories: greenfield and brownfield
exploration stocks. To find out in which type of mineral companies I prefer to invest in, I refer you to
the note at the bottom of the page.
Greenfield exploration refers to uncharted territory, where mineral deposits are not already known to
exist. Greenfield exploration projects can be subdivided into grassroot and advanced projects.
Brownfield exploration, also known as near-mine exploration, refers to areas where
mineral deposits were previously discovered.
Mineral Exploration Companies Categories
Greenfield exploration relies on the predictive power of ore genesis models to
find mineral deposits in previously unexplored areas or in areas where they are not already known
Grassroot Exploration Project
When a geologist has a conceptual idea about where a mineral deposit might be and spends money
to see if the mineralization is really there, this is referred to as grassroot exploration. Common
activities include: airborne satellite surveys, ground based geological and geophysical prospecting
and surveying as well as determining drill target areas. Grassroot exploration projects are
the riskiest projects in the mining business. Some statistics indicate that only 1 in
5,000 to 1 in 10,000 grassroot exploration projects ever reach the production stage.
Advanced Exploration Project
Advanced exploration projects have clearly defined mineral resources with reasonable prospects
for being developed into standalone mines or satellite mines. In the mine life cycle, these projects are generally positioned between the
near pre-feasibility stage and the near bankable feasibility stage.
In brownfield exploration, geologists look for deposits near or adjacent to an already operating
mine. As geologists are able to use existing data, the risk in brownfield exploration is
considerably lower than in greenfield exploration. Because the facilities for mining and
processing the ore have already been built and paid for, the additional capital cost for processing
the new found ore is very low.
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Note: I believe the best mineral companies to
invest in are those with a producing asset combined with brownfield exploration potential, as the facilities for
mining and processing the ore have already been built and paid for. Therefore, the additional capital cost for
processing the new found ore is very low.
In addition, I also feel myself comfortable investing in companies with an advanced exploration project combined
with a huge amount of cash on their balance sheet.
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