Mining Exploration: Driven by Algorithms.

24 05 2010

A Québec company, Exploration Azimut (TSX-V: AZM) is relying on an approach based on algorithms to better target deposits worthy of further exploration. In a way, this may well be translating the success of Google’s PageRank onto the mining industry.

The company is using algorithms to target deposits of gold, platinum group metals, uranium and rare earths in the mining-friendly province of Québec. The system analyzes geoscientific data (often from governmental sources) that it manipulates in order to determine the most interesting exploration targets in function of the type of resources sought. The data used is available to others too. Still the sophistication of Azimut’s computer system, which took 15 years to develop, is a step ahead of competition according to the company. On 20 regional projects which had not been previously explored, 18 have given positive results. The company currently has a portfolio of 23 properties covering about 10,000 square kilometres in Québec, covering 10% of the total provincial mineral claims.

The reliance on the computer system has allowed the company to reduce the technical risks to mining exploration to a certain extent. Its financial approach is also based on cleverly managing the risks through joint ventures. Exploration Azimut has managed to conclude rather interesting deals with majors (think Rio Tinto and Goldcorp) and juniors alike. Agreements reached have often involved ceding up to 50% stake in a deposit in exchange of the acquiring firm committing to a certain level of exploration expenses to be carried along a specified time-frame and a cash payment. Partners may increase their stake by banking a feasibility study. In the last 6 years the company has signed no less than 26 agreements accounting to CAD $75 million in investments. In short, the company is self-financing. Not bad eh?

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