The business drivers of exploration include the nature of uranium supply and demand that is linked to investment attitudes and return on investment, including share prices. The technical drivers of exploration for the discovery of economic uranium deposits include the selection of
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geographical areas for exploration based upon an assessment of prospectivity and explorability.
Additional strategic risk factors impacting investment decisions by uranium exploration companies include sovereign risk, risks at the mining stage, as well social and environmental risks. Operational risk factors include the availability of talent, and the capacity of the exploration team members to innovate and conduct exploration in a safe manner (Fig. 29).
A definition of some of these risk factors follows along with some examples is presented below.
Exploration companies have different risk appetites and consider these risk factors, to varying degrees, when making investment decisions.
PROSPECTIVITY: This refers to the likelihood that economic mineral deposits will be found (by prospecting) in a project area. Things to consider when assessing prospectivity include the economic mineral potential of the project area. The term mineral prospectivity is synonymous with mineral potential, which refers to the likelihood that economic mineral deposits are contained in a project area. Associated factors of mineral prospectivity or mineral potential include available deposit models and the expected value of discovery, the history of exploration and discovery, mineral resource depletion, the stage of exploration and estimated discovery costs, and the availability of prospective lands. An assessment of mineral prospectivity can be made, in part, through the ranking of geoscientific factors in an exploration project area that are indicative of favorable ore-forming processes as defined by descriptive or genetic deposit models. Estimates of mineral potential can also be made through more quantitative assessments.
FIG. 29. Uranium exploration risk factors.
General examples of risk: Exploring in high-risk frontier terrains with a poor technical knowledge base. Deploying the wrong deposit model. Working in mature exploration environments facing economic mineral resource depletion.
EXPLORABILTY: This refers to the likelihood that a project area can be explored in an economical and efficient fashion using existing exploration technology, or technology under
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development. Technology includes both the ‘hardware’ and ‘software’ of exploration.
Exploration methods include geology, geochemistry, geophysics, and drilling tools—the
‘hardware.’ The ‘software’ refers to innovative thinking to support better exploration decision-making.
Examples of risk: Exploring for blind deep deposits and exploring in jungles and deserts, where access is difficult and where standard geochemical and geophysical approaches may not work.
MINING RISK: This refers to changes in the business environment that can impact the likelihood that the mineral deposit will be developed considering economic, geopolitical, and geo-environmental factors (Fig. 11) [30]. These changes can adversely affect operating profits as well as the value of assets. The social impact on the business environment of working in countries where AIDS/HIV is endemic is included in this risk category. Sovereign risk is also included in this category.
COUNTRY RISK: This refers to changes in the business (political, economic, and financial) environment that could increase the cost of doing exploration in a country or prohibit exploration [32]. Special planning is required when there is the potential for political instability and violence that could affect the exploration team and operations [33]. Countries may have particular stances on the exploration and mining of uranium. This risk is included in this category. Risks associated with the security of mineral and land tenure are also included in this category.
Examples of risk: Changes in government stability, socioeconomic conditions, internal conflict, external conflict, corruption, military-in-politics, religion-in-politics, inflation, exchange rate stability, and terrorism [34].
ENVIRONMENTAL RISK: This refers to environmental issues that could lead to changes in the business environment that will increase the cost of doing exploration in a country or prohibit exploration. These risks include those associated with legislation, working in environmentally sensitive lands, and working near parks or reserves. Interventions by governments, national or international organizations, agencies or parties, and interventions by first nations or other indigenous people are also included in this category. Uranium politics are entwined with environmental issues
Examples of risk: Declaration or expansion of parks, reserves and heritage sites. Increased monitoring, regulatory and relationship burden.
SOCIAL RISK: This refers to the likelihood that changes in the political environment will occur and will lead to increases in the cost of exploration or the prohibition of exploration. This can include issues related to land rights or uranium project development. Industry can “manage the business processes to produce an overall positive impact on society [through a] continuing commitment by businesses to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large” [35].
Examples of risk: Fluid (and often intergenerational) uranium exploration and development stances by Traditional Aboriginal Owners. Increased regulatory and relationship burdens.
REPUTATIONAL RISK: This refers to the likelihood that exploration and mining activities will reflect poorly on the organization.
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Examples of risk: Working in countries known for corrupt business practices. Working in environmentally or ecologically sensitive areas. Working in countries governed by dictatorial regimes.