China may be investing
billions elsewhere to locate new mineral deposits, but Geologist Noel White
believes there are huge discoveries yet to be unearthed within its borders.
White, an independent geological consultant with Enargite in Brisbane,
Australia, says China's history and politics have slowed development of its
mining at home. In this exclusive interview with The Gold Report, White reveals which
companies have boots on the ground and the expertise to make the next big
strike in China and South America.
The Gold Report: Noel, you're a geologist
with about a 40-year history in mineral exploration. These days, public
companies pay you for advice on how to run their exploration programs. What
are some common mistakes junior mining companies make when it comes to
Noel White: Junior companies have
difficulty developing a clear and realistic strategy.
TGR: You try to temper their
NW: Not at all. In fact, I
try to encourage their enthusiasm. But I try to get what they do aligned with what their objectives are in a realistic way.
TGR: Do they try to drill
too quickly? Do they try to drill too much?
NW: Junior companies
commonly feel that there is an expectation to drill quickly, but they also
need to do their homework properly. If they jump into drilling before doing
the appropriate surface techniques, such as geological mapping, geochemical
sampling and geophysical surveys, they can completely waste the very expensive
drilling work. It is a serious mistake because bad drilling results have a
serious negative impact on how investors perceive a project. A company needs
the best possible intersections at the start to raise the value of their
TGR: Have you been an active
consultant on projects that have reached production and gone on to be
NW: I've worked a long time
with Asia Now Resources Corp. (NOW:TSX.V) in China. Asia Now has
produced an ore deposit in southern China. That exploration success followed
a long period of very careful exploration to find a completely hidden ore
body. Without that early work, that success would not have been achieved.
TGR: You often deal with
technologies that are new to mineral exploration. Can you talk about how
they're changing the game?
NW: The fundamentals of
mining haven't changed particularly in 40 years—we just use new
technologies to achieve the same goals. The major breakthrough in geophysical
technology of recent times was the development of airborne gravity. That was
one of the Holy Grails.
One of the most basic
tools is a magnetic survey. We can get a lot more out of magnetic surveys
today than we could in the past. Those surveys provide us with baseline
information that's really important.
Technology is producing
major breakthroughs in geochemistry. Geochemistry started off just collecting
samples of soil or stream sediments and using simple analytical techniques.
More and more sensitive analytical methods have been developed. Partial leach
techniques extract part of the geochemical sample to maximize the
sensitivity. A major recent development relies on the fact that nature has
focused particular elements that are associated with ore deposits into
particular minerals. It is now possible to actually look at the chemistry of
particular minerals to evaluate the proximity to the target based on its
TGR: What do all those
technologies mean to the investor?
NW: Smart people follow the
lead of smart people and greedy people follow the lead of greedy people. If
you follow a greedy person you might get lucky and make a lot of money in the
short term. Technically smart people who design exploration programs have a
much higher probability of being successful in delivering a discovery.
TGR: A few years ago, the
World Bank evaluated the mineral potential of China. How would you
characterize China's mineral potential?
NW: To appreciate China's
potential, you have to understand its history. In the early days of the
People's Republic of China, the country followed the Soviet Union approach
and started huge state-funded surveys over massive areas, but the Cultural
Revolution disrupted the process. Thousands of state-owned companies with
exploration teams suddenly found themselves with no funding. However, the
government wouldn't allow them to reduce staff or stop operations—a
major dilemma for management. They started mining any little thing to make
TGR: The country is
literally dotted with all kinds of artisanal mines.
NW: They were so focused on
making money that they were acting as if they were the smallest of junior
mining companies where making money was the sole focus, not doing good work.
TGR: But the potential is
NW: Oh, the potential is
staggering. A mineral occurrence map of East Asia shows multiple world-class
deposits around the borders of China. However, there are very few inside
China. Why did China miss out? It has nothing to do with geology. I has to do with the history of the country and how
exploration developed. China is fantastically endowed, but very poorly explored.
TGR: But even the Chinese
government is not compelled by its geology. Chinese state-owned companies are
spending billions to develop resources beyond its borders. Isn't it difficult
to argue for further mineral exploration and development in China when the
Chinese themselves seem unconvinced?
NW: A huge amount of money
is being channeled by the government into exploration teams in China. Some of
them are quite competent, but many of them are not. It's basically pouring
good money out after mostly bad.
Then the government
asks, "Well, why haven't we found all these deposits in China?" But
the "experts" they are asking don't know anything about the
economic geology of China. They say, "We've spent a huge amount of money
looking for these deposits and haven't found them. Therefore, they mustn't be
there." That conclusion is wrong. Most of the money is being used in
completely ineffective ways.
TGR: What is the environment
for juniors wanting to capitalize on that potential?
NW: The geological potential
of China is fantastic. But let's not pretend otherwise—it's a difficult
place to work for other reasons. When Asia Now went in 10 years ago, China
was encouraging foreign companies to come in. A lot of juniors went into
China. Some did quite well. Many of them did really badly. Subsequently,
conditions have become less and less favorable. The policies change almost on
a yearly basis. It's more challenging today than it was 10 years ago.
TGR: What's the best way to
get started in China?
NW: The best way to work in
China is to joint venture with a good state-owned company. Asia Now chose
very good projects and joint ventured with two partners. It's very much like
a joint venture in a Western company. Mining law in China is provincial.
Having a Chinese partner that can handle government and community relations
for you is a major advantage. Many foreign companies don't understand the
system, the requirements—they don't have the connections and the
relationships that can make things easier. Life is much easier when you have
a good local partner.
TGR: Oyu Tolgoi is the
mammoth copper-gold porphyry deposit being developed in Mongolia by Rio Tinto (RIO:NYSE;
RIO:ASX). You're an expert in
porphyry deposits. Do you believe further exploration of those geological
systems could yield a similar deposit in China?
NW: There are a lot of
porphyry prospects in China, but there's been very little effective
exploration on them. The situation is changing because more Chinese have
familiarity with porphyry deposits. However, in most cases, if they even
recognize a porphyry, they will drill a couple of
holes and walk away because they didn't get what they wanted. Porphyry
deposits are very big, but that doesn't mean they're easy to find. They can't
just drill a couple of holes and say, "Oh well, we've done it." In
fact, Asia Now is exploring a porphyry system that had never been recognized
in southeastern China, down toward the Vietnam border.
TGR: Is that Habo?
NW: Yes. Asia Now has
drilled about 20 holes, but certainly hasn't finished exploring. The
potential remains in that area. But why wasn't it found before? There were
about 10 centimeters of forest soil and dead leaves hiding it. Until the
surface was scraped away, it couldn't be seen. It's not that geologists
hadn't looked in that area, they just hadn't seen it. That's true all around
the world. It takes very little to hide something.
China has great
potential for more porphyry systems. In fact, there have
been a lot of porphyry systems found in Tibet because it's a well-exposed
area and a well-defined belt. There is a need for people to get back into
eastern China where there are numerous known porphyry systems that have never
been explored properly.
TGR: Do you think that Habo
will ever get to the point where it is a major porphyry system that is mined
and is economic?
NW: It's at an important
stage now. The work that is being done right now will make or break Habo. So
far, no sufficiently wide zones of high-grade mineralization have been found.
Many narrow zones have been found, but that doesn't make a porphyry deposit
because large volumes are needed to bulk mine.
It's still an open
question. We still don't know the answer. We're drilling targets that have the
potential to be an economic ore body. Time will tell.
TGR: Is the work being done
on Habo changing the way Chinese geologists think about geology in China?
NW: The Chinese system is
very stratified. The people in the field often don't know what's happening
just down the road, let alone in another province. That knowledge would not
TGR: You've also acted as a
consultant on the Beiya project, which is in northern Yunnan Province. What's
exciting about that project?
NW: We discovered an ore
body at Beiya. It's taken quite a period to achieve that success largely
because of the character of the geology. The potential was very clear from
the earlier stages. There was a known deposit, which has grown and grown to
be the biggest gold mine in Yunnan. Production at the moment is about 200,000
ounces per year from an open pit, but it was a very small underground
mine when we started.
The mine was controlled
by a state-owned company, now partly privatized, but at the start Asia Now
tied up all the surrounding ground because it recognized the potential there.
The state-owned company was so focused on drilling and testing that deposit
that it wasn't interested in the surrounding ground. A fantastic ground
position was secured by Asia Now through joint ventures that ultimately give
it more than 70% equity.
TGR: That doesn't happen
very often in the West, that's for sure.
NW: It was a fantastic
opportunity. It was very insightful to grab it. I'm sure the owners of the
Beiya gold mine wish that it had never happened. Now, of course, they're
looking and saying, "Where can we expand to?" They're basically
TGR: You wrote an
interesting research paper on Minera IRL
Ltd. (IRL:TSX; MIRL:LSE; MIRL:BVL) called "Minera IRL:
Projects, Personnel and Potential." Is it common for you to pen pieces
like that? I worked at the Northern Miner for 10 years and I've never
seen something like that.
NW: It was an internal
report. The background to that was Minera was having a staff conference at
one of its exploration sites. I was asked to speak at that staff conference
and give an overview. I sat in on all its project reviews and was on the
ground on several of the projects. It is apparent from that document that I
was very impressed.
TGR: Indeed, you were. You
talk about the mineral potential of Ollachea in Peru and Don Nicolas in
Argentina as being significantly greater than what's being looked at currently.
What supports that view?
NW: Ollachea has
mineralization exposed in a belt of small workings. The deposit has a fairly
shallow dip of about 30 degrees in very dissected
country. Very often those sorts of deposits are steeply dipping, which limits
the depth at which you can explore them. Here, the host structure extends a
long way away from where it's currently being drilled. Minera knows that
there is gold at other points along that structure and that that structure is
The amount of blue sky
attached to that deposit is startling. There's plenty more potential. It's
the tip of the iceberg. Nobody knows how much more there is, but definitely
one of the things you want with any project, apart from having a good
resource, is the potential to grow. There's extraordinarily good potential to
TGR: Is there significant
potential in the Don Nicolas deposit as well?
NW: I didn't review Don
Nicolas itself. I was supposed to look a lot more closely at that on my last
visit, but a little heart attack got in the way.
TGR: Oh, my goodness!
NW: That cut the visit
short. However, Don Nicolas is one of many exploration targets within that
region. I was startled, to be honest. It's quite an amazing region. There's a
whole series of other deposits that are known. Minera has tied up a very
large land holding in an extraordinarily mineralized region. For a geologist
in exploration, it's the sort of thing that makes your heart beat faster.
TGR: You spoke earlier about
how mining rules vary among Chinese provinces. It's much the same in the
different provinces of Argentina. Are the particular provinces where Minera
is operating considered mining-friendly jurisdictions?
NW: Yes, very much so. It's
the best in Argentina. To be honest, there's not a lot more going for this
province apart from mining. It's mostly flat. It's arid. It's quite a
difficult environment for any other sources of income. The people there
recognize that the best opportunity they have to develop is through the
mining industry. Consequently, they're very positive about it. They want to
see the mining industry grow.
TGR: There is an economic
malaise in this particular sector, but projects are still being found and
developed despite lagging share prices. Some of them even look robust. Is
that enough to keep investors hopeful about this sector?
NW: Investors are holding
onto their money and not investing in anything that's perceived to have risk.
But there still are investors who have a taste for something with big upside
potential. Now is the time to be investing in the very good exploration
companies—the ones that have very good projects and very good
management. Investors get in cheaply and the upside is fantastic. There's
every reason to be optimistic about the mining industry and exploration.
Exploration is the future of mining and mining is essential to civilization.
TGR: Do you have any other
thoughts you want to share with us?
NW: There will be
discoveries that generate interest. In exploration, we benefit greatly from
the power of greed because the discovery that excites the market generates a
lot more exploration activity. I remember during my BHP Minerals days the
young geologists would say, "Isn't it a pity that we didn't find that
deposit?" I'd say, "Don't knock it because we benefit from the fact
someone else found a deposit that's got the market excited." It benefits
Dr. Noel White is a geologist with
more than 40 years of experience in mineral exploration, operations and
project generation worldwide. He was the chief geologist for former BHP
Minerals and has visited over 350 ore deposits/mines in 50 countries,
including China, where the first foreign joint venture in its mining industry
was built up by BHP. White was a consultant to the World Bank Group on its
evaluation of Asian mineral potential. He has a strong involvement with
professional societies and universities worldwide, such as serving as
international exchange lecturer in 1999 and Thayer Lindsley Lecturer in 2008
for the Society of Economic Geologists and served as the vice president of
regional affairs for the Society of Economic Geologists. He has authored and
co-authored various publications since 1972. White received a Bachelor of
Science degree from the University of Newcastle and a Ph.D. from the
University of Tasmania.
Want to read more
exclusive Gold Report interviews like this? Sign up for our free
e-newsletter, and you'll learn when new articles have been published. To see
a list of recent interviews with industry analysts and commentators, visit
1) Brian Sylvester of The Gold Report conducted this interview. He
personally and/or his family own shares of the following companies mentioned
in this interview: None.
2) The following companies mentioned in the interview are sponsors of The
Gold Report: Minera IRL Ltd. Streetwise Reports does not accept stock in
exchange for services. This interview was edited for clarity.
3) Noel White: I personally and/or my family own shares of the following
companies mentioned in this interview: Asia Now Resources Corp. I personally
and/or my family am paid by the following companies mentioned in this
interview: I am not currently being paid, but in the past I have done paid
consulting for both Asia Now Resources Corp. and Minera IRL Ltd. I was not
paid by Streetwise Reports for participating in this interview.