Rio Tinto on the lookout for BC porphyry deposit

British Columbia is known for its coal and copper-gold deposits, with a storied history of mining all three commodities. Now the second largest mining company in the world is hoping to add a BC copper porphyry deposit to its portfolio of development properties.

Rio Tinto’s (ASX, LON:RIO) Chris Welton said the London and New York-listed mega-miner is scoping out British Columbia, Canada for a copper play.

“We would like to be exploring in BC but we just need to find the right project. My exploration manager reminds me that to balance our portfolio in Canada, he wants a BC porphyry,” said Welton, Rio’s exploration director, the Americas region, responsible for “delivery of growth options through early stage greenfields exploration, brownfields exploration, advanced project execution and support for project acquisition throughout North and South America,” states his bio.

Welton was speaking at the opening ceremony of AMEBC’s 2019 Roundup, running Monday to Thursday at the Pan Pacific Hotel in Vancouver.

Porphyry deposits are sought after because they are usually low grade and large-scale, allowing for bulk mining and economies of scale. Copper porphyries typically contain 100 million to 5 billion tonnes of ore with grades between 0.2% and 1% copper. Rio Tinto’s Bingham Canyon Mine in Utah produces an annual 300,000 tons of copper.

They are formed where one tectonic plate slips under another, pushing up magma. Metals precipitate out as the magma cools. Gold, copper, molybdenum, silver and lead are among the metals found in porphyries.

Some of BC’s largest copper and gold deposits are porphyries, including the Highland Valley Copper Mine, KSM, Prosperity and New Afton.

As part of his presentation, Welton gave some interesting advice to exploration companies hoping to attract the interest of a major mining company like Rio Tinto.

The company’s exploration arm, known as RTX, dedicates about half of its global exploration budget to copper, with the rest focused on eight commodities in 16 countries.

The 24-year Rio veteran said that contrary to popular belief, despite being a large company, Rio Tinto has a limited exploration budget.

“If we keep the budget tight, keep the teams lean, and focus those now-scarce resources, and valued resources, on only the very best opportunities, this will make sure that as much of the budget as possible goes in the ground, and it will force the geologists or the exploration manager to only test those targets they believe will deliver results. Only then can we improve discovery rates,” he said.

Another important point: Juniors need to be thinking ahead. Way ahead. Welton noted that a greenfield program typically will take 15 years to make a discovery, and another 10 to 15 years to progress the discovery into a mine.

“Our portfolio today will be delivering metals and minerals to the market in 15 to 25 years time. As explorationists can we predict what the world will want in 15 years?” He gave the example of Rio’s Jadar lithium borate project in Serbia. Preliminary exploration took place in 1998, it wasn’t until 2004 that a discovery hole was drilled, and it took another four years until a JORC-compliant resource estimate was published.

“So we’re 14 years and counting since the discovery. Who could predict the hype around EVs (electric vehicles) and therefore the lithium sector eight years ago?”

To conclude, Welton addressed the question everyone in the audience wanted the answer to: What does a major mining company like Rio Tinto look for in a junior resource firm?

“Our focus is on optionality and upside,” Welton said, adding the company is “not interested in kicking tires or using project reviews to acquire data. We’re reviewing the project because we want to understand if we can add value to progress it.”

He also dismissed a common perception that a major wants to “squeeze the discover out of the project,” noting Rio is generally more interested in projects than companies.

“We rarely want to make placement in companies as you end up with two different parties with different priorities and that makes for conflict in the relationship,” he said. “Initially we seek to put as much money in the ground as possible.”