5. Delineation Drilling Investment Decisions ? Introduction

Mineral exploration is a sequential information gathering process. Primary exploration programs filter favorable areas through a series of geological, geochemical, and geophysical tests resulting in the discovery of mineral occurrences. The most favorable of these discoveries provides economic justification for a delineation drilling program. The purpose of delineation drilling is to provide information for estimating relevant physical characteristics of the mineral occurrence. These estimates are used to evaluate the exploration project and, eventually, the economics of mine development. Delineation drilling normally completes the exploration process. If the assessed economic characteristics of the delineated occurrence provide justification for mine development and production, an economic mineral deposit is the end result of the exploration process. Subsequently, a development drilling program is initiated to obtain the necessary data for detailed mine planning. The delineation drilling stage is in itself a sequential investment process. As delineation information accumulates, the reliability of geological estimates is improved and, thus, the uncertainty associated with the assessment of profitability criteria is reduced. Delineation drilling should continue as long as the marginal benefits, which result from improving the reliability of profitability criteria, exceed the marginal costs associated with the additional drilling.