How the business of mining works.

Companies prospect and explore over large areas using techniques with extremely low environmental footprints.   Once they find an ore deposit that can be economically mined, the mining itself takes place over very small areas – this is because for a resource to be economic, the valuable component sought must be highly concentrated by geological processes.

Because exploration is a high-risk, low-return business, NZ has a very effective regulatory environment to govern exploration activities.

A company to wanting to explore or mine in New Zealand has to navigate three resource management regimes:
i)    Title for the mineral rights if the mineral is Crown owned. These are the mining (or prospecting, or exploration) permits;
ii)    Land access; the landowner can veto the proposal – in reality, this seldom happens because the value of the mine is so much greater than other land uses, and;
iii)    Consents for activities under the RMA, and other relevant legislation.

This regime aims to ensure that mineral sector activities are carried out safely and responsibly and that the Crown’s mineral assets are developed efficiently and effectively to provide a good return to the country.

Prospecting

Prospecting is the first stage of looking for an economic ore deposit. This always occurs over large areas, often over 1000s of square kilometres or more. Prospecting activities include: aerial surveying; studying existing maps and data; retrieving and analysing historic mining records; field mapping; and soil and/or chip sampling.
The environmental impact of these activities is negligible to non-existent.

The approach to prospecting differs for coal and many industrial minerals, because these occur as strata or seams rather than as minerals within a host rock.

Exploration

Exploration is more intensive with a smaller footprint, typically over 100s of square kilometres or less.

Exploration is carried out in areas identified as prospective during the prospecting phase, and typically the success rate is low – on average, one economic ore deposit will be found for every 1000 prospects.

A key success factor for exploration is testing and understanding the geological setting, that is, the geological factors that caused the resource to be where it is, and the extent and grade of the resource itself. For almost all minerals, drilling of rock core is a necessary component of the activities required to understand these factors.

The level of environmental impact is low.  Drill sites are rehabilitated. Drilling is expensive and is, therefore, not carried out over large areas, or unnecessarily. Where a drilling programme is established to define a potentially mineable resource, around 3% of habitat may be disturbed.

Where road access is not possible, drill rigs will be carried in by helicopter, with the area of disturbance for each drilling “platform” being up to 10m x 20m. Often, a number of holes are drilled from one platform.

Development

When a potentially economic ore resource is identified a company will carry out feasibility studies. Typically, these will go through a number of stages: scoping, pre-feasibility, feasibility, and full feasibility, often referred to as “bankable”. Each stage involves more detailed engineering, financial, social and environmental studies covering all aspects of the project (including stakeholders and iwi consultation), and progressively de-risking the project from a financial perspective.

The culmination of these studies has three components: consents, so that all activities proposed can be carried out legally and responsibly; bankability, so that funds (debt and equity) can be raised; and Board approval.

Mining

Every mine is different and there are many approaches to mining depending on a myriad of factors. It is not normally possible to choose in advance between surface or underground mining although option analyses may be carried out in some cases. The geological setting of the ore deposit will normally dictate the mining method.