Student: Benjamin Bell

Thesis: Quantifying the controls on value creation of Australia’s gold exploration companies

Summary

The aim of this research is to understand how the various stages of an exploration strategy impacts on the market’s valuation of a gold company and to quantify the amount of value creation/destruction associated with success or failure of an exploration program.

Why my research is important

Have you ever had an Exploration Manager or consultant present you with a number of potential exploration programs for testing your company’s targets? Did you look at the cost of these programs and realise that they would require a large chuck of your company’s available cash at a time when raising additional funding is challenging?

Did you find yourself asking which of these programs will return the maximum value to the company and, in turn, boost your company’s share price? And what if a program fails? How will this adversely affect your company’s on-going viability and share price?

We all understand the relationship between risk and return; that is, the higher the risk the greater the expected return (and visa versa). Unfortunately, little is known about levels of return to a company in pursuing any given exploration strategy. Therefore, it is currently impossible for you to know if the potential return of undertaking a program is appropriate for the program’s risk. Thus, there are no reliable tools available for company executives to assess the programs proposed by an Exploration Manager or consultant in terms of their risk:reward profile.

This is why my research is so important to the exploration sector. By providing exploration executives with a method for progressively assessing the risk profile and potential value creation (or destruction) of particular exploration program before its implementation, companies can confidently design exploration strategies that best suits the company’s exploration objectives and financial position.

Contact details

Phone: (+61 8) 9291 8855

Supervisors: A/Prof Pietro Guj and Dr Oliver Kreuzer

Funding: Centre for Exploration Targeting; Rocworth Consulting

Start date: Dec 2007                 

Submission date: Nov 2011