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Geological exploration: stake on juniors

Every year, mining companies are making more and more efforts to expand their resource base. Often, in order to discover new reserves of metals, non-standard approaches to geological exploration are required, one of which is the involvement of juniors. At the same time, such companies, as a rule, need the support of majors, such as, for example, Polymetal.

We talked about the features of cooperation with juniors, the development and prospects of the junior movement with the head of the Directorate of Technologies and Joint Projects at Polymetal, the winner in the Inspirational Leader nomination of the Talented Woman in the Extractive Industry award, Tamara Golovina.

Тамара Головина, руководитель дирекции технологий и совместных проектов «Полиметалл»
Тамара Головина, руководитель дирекции технологий и совместных проектов «Полиметалл»

— Tamara, please tell us what is behind the concept of a junior company, what is the role of juniors in the mining industry, and how do they enter the market?

— In the world practice of mining, the junior sector is of great importance. This, in fact, is one of the key segments in the pyramid of reproduction of the mineral resource base: juniors are looking for deposits, developing new territories, and as a result of their work, assets that are of interest to large companies can be formed.

There is no such term as “junior” in the existing legal and regulatory framework, but the concept of “small and medium-sized enterprises engaged in mineral exploration” is often used. It is assumed that such companies should be endowed with the functions that juniors perform in international practice. In 2014, the declarative principle was introduced by law in order to stimulate this market. However, while there are no significantly more juniors.

In addition to simplifying the licensing system, funding tools are important. In other countries, for example, in Canada, venture exchanges are known to be popular, where even ordinary people can buy shares of, say, 20 juniors, realizing that only one or two of these companies will “shoot”. There are no such investment instruments in Russia yet. Therefore, practically the only real way for a junior to receive financial support is through cooperation with a large mining company such as Polymetal.

In addition to the fact that our company itself conducts a significant amount of exploration work, in recent years we have been working very closely with juniors, including organizing competitions for junior projects. In 2021, we are holding it for the fourth time. Any junior team can apply through the company’s website, talk about their geological ideas and, possibly, receive financial and expert support.

— What should be the projects proposed by juniors to be of interest to Polymetal?

– We have created a commission that selects the winners among the applicants, although as such there is no competition in the usual sense between the participants. We give priority to those projects that are potentially interesting for investment.

Many factors influence the decision. For example, proximity to our processing facilities, alignment with the company’s strategy as a whole. At the same time, a sound geological idea is always important to us in the first place. It is especially valuable if the juniors not only worked with the archives, but also carried out primary research, took and analyzed samples, and assured the data of their predecessors.

Юниоры на геологоразведке

— Isn’t it more profitable for a company to create its own structure, which will be engaged in geological exploration?

— We have a large volume of such projects, including exploration at an early stage. Still, there is a certain limit, beyond which we simply cannot go. Therefore, mutually beneficial cooperation with juniors is our opportunity to expand the scope of work without diverting our own resources. In addition, small junior companies are often more mobile and flexible in decision making. The only thing we strictly demand from them is strict observance of safety regulations in accordance with the standards adopted by the company.

– What happens next? What awaits those whose projects are of interest to the company?

– According to the results of the competition, several projects are always selected (mostly 2-3). After a thorough geological examination, we make an economic assessment, at this stage it is already possible to proceed directly to commercial negotiations. Here it is important to determine who will be responsible for what, what activities should be implemented from the start of exploration to the confirmation of our reserves. If everyone is satisfied with the conditions, then, as a rule, a joint venture is created or another form of cooperation is determined and work begins.

The junior presents us with a program for the coming year and for the long term. This is important for budget alignment. Funds are allocated in stages. Together we look at the intermediate results, and if they are positive, then we allocate funding for the next stage.

Does it happen that you have to deviate from the plan?

— Yes, sometimes juniors come to us with their problems. Still, work in remote regions for small enterprises can be fraught with difficulties. As far as possible, we always try to help them and go forward. For example, we have juniors in Chukotka. They carried out the stage of area works very successfully, but when they encountered drilling, the result depended not only on them, and then certain difficulties began. As a result, the season was not as successful as expected.

Лагерь юниоров

— And what happens to juniors after the implementation of joint projects? Companies come to the market, they have ambitions, new approaches. They are learning a lot. Are they interested in working in the junior segment after that?

— While all of our partners are young enough, they are only in the second or third season of field work. But they really learn a lot, get valuable experience that helps them become full-fledged market participants. In the future, I assume, many of them will be engaged in similar projects. After all, everyone has their own unique competencies, for juniors this is precisely search work, the early stages of studying objects.

— You mentioned a joint venture in Chukotka. Where else does Polymetal cooperate with juniors?

— The company’s portfolio also includes joint projects with juniors in the Urals, Taimyr, Chukotka, the Magadan Region, and Kazakhstan.

For example, Taimyr is a difficult region in terms of infrastructure. There is a very short field season and very difficult logistics. You can get to Taimyr by the Northern Sea Route from Arkhangelsk or by winter road. If we are talking about small volumes of transportation, then by helicopter. We cooperate in the region with two juniors who are engaged in the exploration of copper ores. By the way, these are two completely different teams. Some of them are experienced production workers, other partners based their research more on scientific research.

– What do you think, what are the prospects for the development of the junior movement in Russia?

— Of course, there may be different opinions on this matter, but my personal optimism is connected with the fact that modern life is simply impossible without minerals, which means that development, the emergence of new programs and initiatives are inevitable.

I am glad that our company, like other partners in the market, shows by its example how to attract and actually support juniors who want to engage in geological exploration. After all, it is in this way that fresh geological ideas can contribute to the overall result of the entire mining industry.