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Gold exploration, explained

What is a gold exploration company?

A gold exploration company finds and tests gold deposits before any mine is built, working from claims and drilling toward a formal mineral resource estimate.

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The short answer

What does a gold exploration company do?

A gold exploration company acquires mineral claims, samples and drills them, and works toward a compliant resource estimate that shows how much gold a deposit may hold. Lannister Mining is one example: it is exploring the Basin Gulch Property in Montana, which has more than 320 historical drill holes and no production yet.

Definition: gold exploration company

A gold exploration company is a business whose main activity is discovering and defining gold deposits rather than mining them. It earns little or no revenue, funds its work mainly by raising capital, and creates value by turning drill results into a mineral resource estimate. In the United States that estimate follows S-K 1300; in Canada, NI 43-101. Lannister Mining, which is advancing the Basin Gulch gold-silver property in west-central Montana, is a gold exploration company in this sense.

The work

What is gold exploration, step by step?

Gold exploration moves through recognizable stages. Each stage produces a different kind of evidence, which is why explorers and producers report such different numbers.

Stages of a gold project and what each reports. Prepared by Lannister Mining as a general guide.
StageTypical workWhat gets reported
Grassroots explorationClaim staking, mapping, samplingSample assays, land holdings
Advanced explorationTrenching and drillingDrill intercepts (grade and length)
Resource definitionConfirmation and infill drillingMineral resource estimate (NI 43-101 or S-K 1300)
DevelopmentStudies, permitting, constructionEconomic studies, capital costs
ProductionMining and processingOunces produced, revenue, costs

Basin Gulch has completed historical trenching and more than 320 drill holes and is preparing for resource definition. See the Basin Gulch technical summary.

Valuation

How to value a gold exploration company

Because explorers usually have no earnings, investors value the project. A practical checklist:

  1. 1. Read the drill results: grade, length and depth from surface.
  2. 2. Check whether mineralization is open, meaning it continues beyond the drilling.
  3. 3. Confirm land tenure: patented or unpatented claims, and how much ground is held.
  4. 4. Weigh the jurisdiction, infrastructure and access.
  5. 5. Find out where the project is on the path to a compliant resource estimate.
  6. 6. Look at the record of management and directors on past projects.

The Lannister Mining investor pageapplies this checklist to Basin Gulch using the company's published facts.

Environment

What is the impact of mining on the environment?

Mining can affect land, water, wildlife habitat and air through clearing, excavation, waste rock and processing. The scale depends heavily on the stage. Exploration usually involves drill pads, trenches, access trails and water for drilling, and these areas are generally reclaimed afterwards. An operating mine has a much larger and longer-lasting footprint.

In the United States, exploration and mining are regulated by state agencies and, on federal land, by federal land managers, with permits and reclamation obligations. The USGS gold statistics and information page and the Montana Bureau of Mines and Geology are useful public references.

Industry

Where explorers fit in the gold mining industry

Explorers supply the pipeline of future deposits that producers eventually mine. For a side-by-side look at how exploration companies and producers report their results, see gold exploration companies compared, or return to the Lannister Mining home page.

FAQ

Common questions

What is a gold exploration company?

A gold exploration company searches for and tests gold deposits before any mine is built. It acquires mineral claims, maps and samples the ground, drills targets and works toward a compliant mineral resource estimate. Lannister Mining is a gold exploration company working on the Basin Gulch Property in Montana.

What is gold exploration?

Gold exploration is the work of finding and defining gold deposits. It typically moves from mapping and sampling, to trenching and drilling, to a mineral resource estimate. At Basin Gulch, historical trenching and more than 320 drill holes have already been completed, according to Lannister Mining.

What is the difference between a gold exploration company and a gold mining company?

An exploration company finds and defines deposits, while a mining company or producer extracts and sells metal. Producers report ounces, revenue and costs. Explorers report drill results, land holdings and resource estimates. Lannister Mining is an explorer; producers such as Coeur Mining and IAMGOLD report quarterly production and revenue.

How do you value a gold exploration company?

Most investors value a gold exploration company on the quality of its project rather than earnings, since explorers usually have no revenue. Common checks include grade and width of drill results, how much ground is untested, jurisdiction, land tenure, the path to a compliant resource, and the track record of management.

What is the impact of mining on the environment?

Mining can disturb land, water, habitat and air through clearing, excavation, waste rock and processing. Impacts vary by stage: exploration typically disturbs far less ground than an operating mine. In the United States, mining and exploration are regulated by state and federal agencies that require permits and reclamation.

Does gold exploration harm the environment?

Exploration has a smaller footprint than mining, but it still involves access roads, drill pads, trenches and water use. These sites are generally reclaimed after work. For specific environmental plans at Basin Gulch, contact Lannister Mining investor relations, as detailed plans are not published on this site.

What is a Maiden Mineral Resource Estimate?

A maiden mineral resource estimate is the first formal estimate of the tonnage and grade of a deposit, prepared under a reporting standard. In the US that is S-K 1300; in Canada it is NI 43-101. Lannister Mining plans one for Basin Gulch after expansion and confirmation drilling.

Read all questions in the Lannister Mining FAQ

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