Gold in the Custard – Hidden Elephants and the Art of Mineral Exploration

Why do elephants paint their feet yellow?

So they can hide upside down in the custard.

Although I confess a fondness for such absurdist humour, even I have to admit that this joke is pretty much pitched at a level such that only someone under the age of six could truly enjoy it for its comedic value. If you will indulge me though, it does possess a kind of simple beauty that can serve to illustrate a useful concept for us. The image of someone failing to recognize an elephant in their custard is both vivid, and clearly ludicrous – painted feet or not. But hold on there a second – let’s pursue that particular surrealist idea down the rabbit hole to see how deep it goes. What if, perchance, you’d been warned about those devious pachyderms and their propensity for hiding on the dessert cart, and you were so busy checking for them that you were trampled to death by a wildebeest that had camouflaged itself behind the rhubarb?

Consider the process of mineral exploration. There are very few parts of the world where you can genuinely be the first person to explore the landscape and assess its potential mineral endowment. Others have almost invariably been there before you, evaluated the economic potential of the geology, and moved on. The art of exploration then is to find things that others have overlooked – or perhaps not even known how to look for. To look at the landscape in a different way.

The discovery of the rich Telfer mine in northern Australia presents a salient example here.

Telfer’s mineral endowment is hosted in ancient sediments folded into a series of elongated domes, the strata dipping away in all directions. Structures like this are sometimes referred to as dolphin-backs for their resemblance to one of our cetacean friends breaking the surface of the water – an apt metaphor here given the whale-like size of the mineral resource. Although also host to significant copper and appreciable silver, it’s gold for which Telfer is best known – and in respect of that commodity the deposit is truly world class, with around 10 million ounces of gold produced to date and another 20 million in the ground in the currently defined resource. Surely a jewel in any portfolio, and one of the most productive mines in Australia throughout the past 25 years.

Aerial oblique view of the Telfer Dome in 1976, prior to the start of major excavations of the deposit. Image is drawn from the archives of Newcrest Mining Limited, and was published in Ferguson et al. (2005) - 'Mineral Occurrences and Exploration Potential of the Paterson Area' - Report 97 of the GSWA.

Aerial oblique view of the Telfer Dome in 1976, prior to the start of major excavations of the deposit. Image is drawn from the archives of Newcrest Mining Limited, and was published in Ferguson et al. (2005) – ‘Mineral Occurrences and Exploration Potential of the Paterson Area’ – Report 97 of the GSWA.

By official reckoning though, at least three resource companies evaluated the Telfer deposit and walked away before Newmont Australia made the call and pegged it. How could they have missed this opportunity?

Therein lies the tale.

As with many major finds from the glory days of trail-blazing back country prospectors, the details of Telfer’s discovery have always been a little murky, and remain vigorously argued in some quarters up to the present day. What is not in debate, however, is that the first non-indigenous explorer to recognise the dome and consider its mineral potential was a Frenchman named Jean-Paul Turcaud, back in 1971.

Turcaud, had he but realised, was probably nine tenths of the way to what surely would have been a discovery of epic scale for an independent prospector, and rendered him an Australian legend, perhaps even a fitting subject for a heroic movie. Hollywood producers would have loved the story of a pioneering iconoclast who single-handedly opened up a whole new mineral province. Of course, they would have tried to make the main character American, and given him a wise-cracking but essentially lovable sidekick – but if the Turcaud of our alternate reality – his ‘Sliding Doors’ moment having gone the other way – balked at these narrative improvements, he could just have financed the film himself.

Turcaud recognised the spectacular folded form of Telfer’s dome structures, and appreciated the potential influence of such geological architecture on the concentration of ore minerals. He sampled the gossans – weathered remnants of mineralised veins – that ringed the amphitheatre of the main dome – including the spectacular 10m thick horizon that later became the economic heart of the Telfer mine – and then he took his observations (and his samples) to the major mining companies acting in Australia at the time, a couple of whom – Western Mining Corporation and Anglo American – were interested enough to come up into the remote country, inland from Port Hedland in the far north of Western Australia, with the field-hardened Frenchman and look over the ground for themselves.

But they all passed on the opportunity. They literally walked the ground over one of the largest gold deposits ever discovered in this country – a deposit already broken open by erosion and exposed at the surface like an earthworm popping up at a convention of hungry sparrows. They sampled the major ore-bearing horizons, had them assayed for their mineral content…and then walked away saying “not for me thanks Jean-Paul”. Why?

Because they forgot about the possibility of the wildebeest in the rhubarb.

Neither Turcaud nor – perhaps more indictably – the corporate geologists he took to the prospect, checked their samples for gold. Seriously.

Turcaud viewed the rich potential of the ground at Telfer with blinkers on, intellectually weighed down by a restrictive exploration model focused around base metals – copper, nickel, zinc, lead – the mineral darlings of the age, driving an exploration boom in Australia in the early 1970s. He was assuredly an excellent prospector – rugged, driven, and with enough understanding to appreciate the potential of good ground when he saw it. But he wasn’t a scientist, and lacked the curiosity and depth of knowledge that might have allowed him to make a leap of insight and realise that he was, quite literally, standing on a gold mine.

To be charitable, this might not be such an obvious failure as it seems at first viewing. Although there is significant coarse gold in the oxidised surface layers of the deposit, most of the gold at Telfer is so fine grained as to be invisible to the naked eye, and locked up inside sulphide minerals – principally pyrite. A real trick for young players then – the gold is IN the fools gold.

Never the less, it does represent an epic failure of imagination – pretty much the geological equivalent of checking your boots for scorpions and then being bitten on the toe by a red back spider. Any exploration geologist worth their salt could have picked up the presence of the coarse gold in 10 minutes by panning the streams dissecting the dome. And should have done if they had even contemplated the possibility.

So just how much gold was there?

Well, the question isn’t quite as simple as that – it’s not just a case arriving in the Great Sandy Desert with an armoured car and loading it up with bullion. Mining is an industrial process – in both its scale and its essential form. First and foremost, you need the capability of moving massive quantities of rock. Even at the appreciable grades touching 10g of gold per tonne they were taking off at Telfer in the first year of operations, you’re still talking about almost 3 tonnes of rock for every ounce of gold – and that’s just the ore. On top of that there’s all the overburden you need to strip off to get to that paydirt. So you’re talking about putting in serious infrastructure – roads or rail lines to move material and people in and out, accommodation for a workforce, water – and waste water treatment facilities – crushing plants and treatment mills to extract the minerals, and tailings dams to hold the processing waste.

When the money men who make such decisions green-light the massive investment spend on this kind of a project, it’s usually based on some serious forward planning around recovering costs and moving into nett profitability over the course of many years to decades. Once they broke ground at Telfer, Newmont Australia made back their capital costs within 10 months…at a gold price averaging around $US90 per ounce. Yes, there’s not a zero missing there. Looking from the perspective of gold currently fetching somewhere north of $US1600 an ounce, you get an idea of just what a rich prize this deposit was.

We’re not done yet though – the true beauty of Telfer as a cautionary tale is that it also provides us with an act 2 – an example of scientific exploration done the right way.

Having located their whale, Newmont pursued the logical follow up questions with vigour – where has all this gold come from? And how do we find some more?

One of the earliest major targets they identified was a granite body just beneath the surface, a few km to the south of Telfer. Gold mineralisation is commonly associated with intrusive rocks in one way or another, so the recognition of this granite in their geophysical surveys piqued the interest of the company’s exploration team – could this be the goose that had laid Telfer’s golden egg?

Well, no, unfortunately that particular idea didn’t work out. Not only is the granite very low in contained gold – too low to produce a significant ore deposit – it is also younger than the mineralised veins at Telfer, so there is no way it could have been involved in their development.

The morally uplifting kick to the parable though is that when they came up empty on their gold model, Newmont didn’t just pack up their drill stems and go home. No – they scanned the horizon to see what other beasts could be lurking on the dessert table, assaying their samples for a broad range of elements that might be carried by granitic magma. And lo and behold, it turned out they had drilled into one of the world’s largest tungsten deposits – a deposit now looking all the more strategically attractive for being one of the few major sources of this industrially important element outside Chinese control.

Turns out that even when you’re absolutely sure there are no scorpions in your boots, it might just pay to give them an extra shake.

Statement of interest – My position at the University of Western Australia is funded by a research contract with Newcrest Mining Limited, the current owners of the Telfer deposit.

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