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The High North – NordMin Network Conference November 2012
Oslo Nick Rose, Avannaa Resources Ltd
Challenges for Mineral Exploration in Greenland
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Mineral Exploration
Discovery
Development
Construction Mining
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Exploration Spending in Greenland Increasing
0
100
200
300
400
500
600
1995 2000 2005 2010 2015
Mill
ion
USD
Year
Cumulative Exploration Spend in Greenland
From Mining Journal, March 23, 2012 Sourced from Raw Materials Group
From Greenland Bureau of Minerals and Petroleum
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But so is Exploration Expenditure Worldwide
2012: about $12 billion to date From Metals Economics Group 2012
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Challenges in Greenland Mineral Exploration
• Industry Perception of Greenland
• Investor Perception of Greenland
• Level of discovery focused exploration
• Cost of exploration
• Logistical challenges
• Cost of mining
• Developing jurisdiction
• Education and local participation
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Industry and Investor Perception of Greenland
• Cold, remote and inhospitable • No mining tradition • Expensive to operate • Expensive to explore
Government highly active in promoting Greenland:
Representations and delegations to Canada, China, Korea, Australia, EU and others
GEUS promoting to technical decision makers Private companies active in selling the country as well
as their project Mining success needed Discoveries needed
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Exploration Costs Drilling $400 – 600 per meter Sweden costs would typically be less than $200 / meter in most areas
Helicopter $2.500 - $3.500 / hour dependent on location and hence fuel cost Avannaa typically uses 250 to 300 hours each Summer
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Logistical Challenges Short season – year cycle – get it right first time No margin for error Most logistics revolve around transport and in particular fuel Helicopter requires 180 kg fuel per hour
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NE Greenland Good: 12-24 hours Bad: 48 hours or more !
2012 NW Greenland Good: 12 hours Bad: 48 hours
W Greenland Good: 5 hours Bad: 16 hours
CE Greenland Good: 8 hours Bad: 36 hours
Time to reach a hospital under good and bad conditions
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So Why Bother ?
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The Balanced View of Greenland
• Highly underexplored with fertile geological environments throughout
• Government and population is highly pro-mining • Egalitarian classless society, which speaks with one
voice • No issues of land ownership • Political stability and favourable fiscal regime • Well organised transparent licensing system and
regulations • Coastal access means transport much easier than
perceived • Strategic location on planet
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Sea Ice August 1988
August 2009
National Snow and Ice Data Center, Boulder, Colorado
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Sea Ice August 1998
August 2009
National Snow and Ice Data Center, Boulder, Colorado
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Sea Ice August 2012
August 2009
National Snow and Ice Data Center, Boulder, Colorado
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What Greenland Needs
• Successful operating mine
Underway: Isua iron ore, Citronen Fjord zinc, rare earths in South Greenland
• Several new BIG discoveries
Large scale long-sighted investment in exploration = Large Mining Companies
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Level of Discovery Focused Exploration
Number of companies conducting discovery phase exploration
2007 - 2009: 2 to 3
2009 : 4
2010: 6
2012: 8
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Who is operating in Greenland ?
Company Market Cap in US dollars
KGHM (PL) 10 billion
London Mining (UK) 290 million
Greenland Minerals & Energy (AUS) 180 milion
Jiangxi Union Mining (CN) ??
All the rest (about 25) Less than 50 million each
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High Cost of Mining
• Mining company has to build all infrastructure
• No grid power
• High labour costs
• High transportation
Bigger mines needed that produce major commodities -> More Exploration
More research on arctic mining technology -> opportunity for Nordic collaboration
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Developing Jurisdiction
• Taxation, immigration and labour laws are adapting to a developing resource nation, but are inherited from Denmark
• Mining Codes Best Practice needed • Health and Safety Codes • Environmental Standards • Impact Benefit Agreements – what they should contain, how
they are negotiated
Learning from other countries and networking ->opportunity for Nordic collaboration Greenland Mining Association established in September
2012 – a network of exploration and mining companies that can engage with authorities, unions and other stakeholders to build the resource sector
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Education and Local Participation
• Exploration Industry worldwide challenged by shortage of well qualified manpower
• Economic geology and basic geological skills becoming de-prioritised in education
• Greenlandic citizens actively participating but need skills
Artek program – a joint study program on arctic
technology between Sisimiut Construction School and Danish Technical University
Produce Greenlandic leaders and decision makers (exploration managers, mine captains etc)
Companies may help with internships / scholarships etc. Part of Impact Benefit Agreement ?