Chronicle Editor
Own Correspondent
THERE has been a recent frenzy and great interest around the issue of Exclusive Prospecting Orders (EPO) in Zimbabwe and as usual with the increase in interest in something so emotive around the Zimbabwean mining economy, many facts are mired in myth and misunderstanding which the ordinary person on the street may not well understand.
Therefore, in a situation like this, with the anger, the passion, the ignorance and interest running high, this tends to be the best time and situation to educate those who will have shown great investment in the topic for healthier, robust and more informed discussion, debate and decision making.
An Exclusive Prospecting Order (EPO) confers exclusive rights to prospect for specified minerals in an identified location within Zimbabwe. Exclusive Prospective Orders are issued for three years, renewable up to a maximum of six years.
In the recent hearsay, for example, UK based Duration Gold Limited, which runs, amongst others, the Vubachikwe gold mine in Gwanda, the Gaika open pit development project in Kwekwe and a portfolio of early stage “greenfield” exploration projects, was accused of owning 20 EPO’s which they were holding on to under the direct ambit of their principal.
Sadly, the facts are ignored even by usually reputable sources of news in media and other platforms as seen in some of those reports. Duration is in fact ‘associated’ with not 20 but 11 EPO’s. Furthermore, these are held by three early stage mineral exploration companies which are owned by local indigenous partners who have secured foreign direct investment to fund their exploration hence the involvement of Duration Gold, among other investors.
Some interested parties have been worked up by the misconception that land is being parcelled out in huge tracts of 50 000 hectares to local and ‘foreigners’ and EPO applicants and should be cut down to smaller sizes, but little effort, if any, has been put to explain why exploration in fact demands that one EPO gets large tracts of land and the reason behind that.
An EPO is in practical terms somewhat akin to ‘succession’ planning enabling the mining sector to discover new mines as the older ones are mined out leading to inevitable closure. The search for a ‘big mine’ inevitably means the larger the land area explored, the more anomalies (potential targets) are found in the EPO thus increasing the odds of discovering and developing an economically viable mine in the future.
Such land is however, only held over a three-year period after which the EPO applicant can ask for an extension if they have not established enough data to determine whether or not there are viable anomalies to suggest possibility or otherwise of discovering a new mine. The MAB (Mining Affairs Board) may or may not grant such a request which depends on their assessment of the application.
The use of ‘shock and awe’ by suggesting that one person or company holds thousands of hectares of land therefore does not explain why the land is needed in large tracts, for a short and limited period of exploration, nor the fact that this land is not ‘owned’ by the companies but rather held for a three-year period during which they only have the right to explore – not to mine.
In effect, a country that does not encourage exploration is killing any prospects of future big mine discovery and development and with it the potential for future generations to financially benefit from the wealth of the land. With dwindling contributions to the fiscus as a result of the failure to replace depleting mines the nation will suffer from an increasingly large “Gross Domestic Product (GDP) gap.
Interestingly, Africa as a whole is suffering from a lack of keen and added investment in exploration, something noted at the just ended Africa Mining Indaba held last week in Cape Town, South Africa. Delegates noted that “the future of the low-carbon economy is intrinsically linked to mining, and the key to mining’s future lies in the exploration and discovery of new mineral deposits.”
However, because there isn’t as much exploration investment as there ought to be, African mining exploration fell by 3.4% in 2023 to $1.27 billion, S and P Market Intelligence revealed at the Mining Indaba. That meant that as a share of global exploration, Africa continued to only attract 10 percent of such investment for the third year running after peaking at some $3.3bn in 2012 with a 17 percent share.
The time to therefore be tinkering with exploration is not now, if ever there should be a time for that, but rather the time to encourage further foreign direct investment in exploration via EPO’s. Another little emphasised fact is that in fact Zimbabwe has very few EPO’s that are currently granted. In fact, there were only 47 grants as of May 2023, while there are hundreds of applications whose assessment and state of consideration have been stalled in the legacy ‘pending’ tray issues.
No stroll in the park, exploration is a labour of love and has been equated to throwing money into a hole because there is a greater chance of not finding enough for the establishment of a viable mine in future. In fact, the odds of discovering a new mine in previously unexplored “virgin” land is a one in a thousand probability.
It is also worth mentioning as in the graph (pictured) bearing statistics compiled from Annals of the Zimbabwe Geological Survey, vol. XIX for 1997 – 1998, that most of the current operating mines are a result of the work undertaken in EPOs. It therefore means that for big viable mines to exist, EPO’s are at the heart of the process. There is a strong correlation between the number of EPOs granted and Greenfield discoveries. It is therefore in the interests of the mining industry and the nations to have an active and vibrant mineral exploration sector.
The Exploration “Value Curve” Journey – a Map with a Particular Destination
Exploration is a science and requires a meticulous, methodical and systematic approach – along with a high tolerance for risk and an unemotional, almost ruthless, decision-making approach to continuing with, or “killing” a project that does not meet the explorer’s strategic criteria.
Obviously, the goal is to find an economically viable deposit and take it into production at a profit generating value for all stakeholders. This includes the investors who put up the high-risk capital (a commensurate return for risk taken), Government which makes available the mineral rights (royalties and taxes) and once a mine is constructed, the owners, mine employees and the community at large. How and when value is allocated to the various participants (the so called “Pie Chart”) would fill an additional article
The following “Steps of the Mineral Exploration Process” are taken from The Mineral Exploration Roadmap
1. Exploration Strategy
Where do you choose to explore? There are two basic strategies, often used in combination:
(a) Working from the known
Deposits tend to form in clusters in prolific belts, and exploration occurs outward from known mineralization.
(b) Working from the unknown
If you review all available information, prospective areas with potential for discoveries can be identified.
2. Prospecting
In this stage, boots are now on the ground – and it’s time to explore the backwoods for showings. Prospectors will stake claims, map outcrops and showings, and search for indicator minerals. The goal of the prospecting stage is to find the earliest piece of the exploration puzzle: the clue that there is something much bigger beneath.
3. Early-Stage Exploration
Congratulations if you are fortunate to have found something interesting – and now it’s time to ramp up exploration efforts! This is where the amount of data and sophistication picks up. In this stage, companies are using existing maps and historical data, geophysics, ground trothing, geochemistry, and trenching to try and identify drill targets.
4. The “Truth Machine”
Geologists don’t call the drill a “truth machine” for nothing. They love and hate it at the same time as it more often than not spells the end of the road. If your target hits, you’re in business. If your target misses, it’s time to go back a step and find new ones.
5. Discovery
Eureka! You’ve found something. Now it’s time to see how far the mineralization goes! Once you have enough information, you can get an official (international code compliant) resource estimate. This data is another puzzle piece that will be crucial as you advance your discovery.
6. De-risking
Even at the best of times, mining can be expensive, risky, and tricky. That’s why your investors and backers will want you to source even more data – it’ll allow you to see a clearer picture of the deposit, and help your team see how it could take shape as a mine. At this stage, drilling, metallurgical tests, environmental assessments, 3d models, and mine designs are used to increase confidence in the project. Data starts to get very granular. Your company may do a “Scoping Study” or Preliminary Economic Assessment (PEA) to assess the potential economic outcomes of a mine.
Final Steps
By this point in the Journey, you may think the next leg of the Journey is obvious and that you have a sufficiently clear vision of the deposit and its potential. But, have you arrived at the final destination? Is it time to make a production decision, construct the mine, and start commercial production? Not quite yet – at these later stages, even more data needs to be created to make better, economically sound, decisions. More drilling, a pre-feasibility study and finally a definitive or “bankable” feasibility study. Only then is it on to the bankers and the lawyers.
In summation, the debate around exploration and EPO’s, however, drowned in misinformation, misunderstanding and in some instances ignorance, is important and timely as it brings attention to a neglected and misunderstood part of the mining story, which will hopefully end in the removal of the shroud of lack of knowledge and enlightenment of interested parties and stakeholders right down to the man on the street.
Bongani Ndlovu
Online Reporter