Probability of an Exploration Discovery in Canada

The probability of making an exploration discovery in Canada can be calculated from Derry's (1970) data on exploration expenditures and number of discoveries over the last nineteen years. Considering an average exploration "try" to be $30,000, the probability of a discovery with one try has decreased tenfold from about 0.01 in 1951 to 0.001 in 1969. A plot of these probabilities can be extrapolated to the future, giving a 1969-71 three-year average probability of 0.00096 with 90 per cent confidence limits of 0.00042 and 0.00153. Using this probability, various calculations can be made, such as (1) the probability of making at least one discovery for any given exploration expenditure, (2) the probability of ultimate ruin or survival of the exploration investment process and (3) the expected value of an exploration investment. There is a critical minimum amount per discovery that must be re-invested in exploration, no matter how large the original investment is, for exploration to survive at all in the long run. Currently, this critical minimum is $31,200,000 with 90 per cent confidence limits of $19,600,000 and $71,400,000.