The Economics of Geophysical

Applications. Frank   Fritz

P.O.Box   1177 
Fairplay   Colorado 80440
Phone   719 836-2561
 GSN 2000 Fax     719 836-2228

E-mail   [email protected]

Abstract

Geophysical methods are an integral part of any exploration program and can be related to the cost of the only way
to find new economic mineralization, the drill hole. For the same amount of dollars as one drill hole, the equivalent
cost geophysical survey can collect data over 1 to 160 sq. km., depending on the method. If a reasonable physical
property contrast can be expected for a particular target, an effective survey can be designed. Although any
interpretation is only one of an infinite series, the addition of geological data and reasonable inferences can reduce
infinite to an "optimistic" single interpretation. Attention to Survey Design, Survey Supervision, and Data
interpretation for Regional, Local, or Detailed survey areas will assist in determining the best location for
expensive drill holes.

The detailed geologic information collected in a very small volume of the exploration area must be reconciled with
the bulk geophysical measurements for effective exploration and target definition. Throughout geophysical
exploration history, a ratio of 10 has prevailed for the cost of a geophysicist, to the cost of the geophysical part of
the program, to the total exploration budget, 1:10:100%. Consideration of all the required questions, definition of the
expected target, selection of the best physical property contrast, economic survey design, qualified contractor
selection, reasonable field supervision, maintenance of high data quality, and integrated interpretations will lead to
discovery of additional economic mineral resources with currently limited budgets.

Back to Main Page

The Economics of Geophysical Applications.

Introduction
Geophysical applications are an integral part of any exploration program.  In order to be used economically and
effectively, there needs to be considerable interaction between the exploration geologist and the exploration
geophysicist. Consideration of the Target, the Area, available Methods, and Budget constraints can allow the planning
of appropriate surveys and the detection of new economic deposits.

Dollars versus Drill Holes

The only way to find a new economic deposit is by drilling. Unfortunately, drilling is expensive. All other work is
designed to find the best location for a drill hole relative to possible mineralization.  Any geophysical survey can be
related to the average cost of a drill hole. In the western US, a typical drill hole may be 300m deep and may be core
or rotary. The cost of one drill hole may be $20,000 when the costs of assays, geological supervision, geologic
logging, permitting, road building, remediation, etc. are added to the actual drilling cost. This is probably a low
estimate, but can serve as a useful number for this discussion. The Table below and Figure 1 attempt to relate the
cost of a drill hole to selected geophysical surveys and the area covered.
 Geophysical data Collected by Method
For the Cost of 1 Drill Hole, $20,000

 160 sq. km. fixed wing magnetics with radiometrics, 100m line
spacings.
 20 sq. km. fixed wing TDEM with magnetics and radiometrics, 100m line
spacings.
 20 sq. km. Helicopter Frequency EM, HEM with magnetics and
radiometrics, 100m line spacings.
 10 sq. km. of Differential GPS controlled ground magnetics, 50m lines, 1m
spacings.
 4 sq. km. detailed Gradient Array IP-Resistivity, 100m lines
50m dipoles.
 400 Gravity stations, Differential GPS controlled, better than 0.1 mgal
accuracy.
 25 line km. off loop UTEM profiles.
 10 line km. of 50 dipole 12 frequency CSMT sections.
 8 to 10 line km. of Dipole-Dipole IP-Resistivity, 50 to 100m dipoles.
60 coincident loop TDEM soundings
 2+ line km. of Detailed Shallow Seismic data.
 About 1 sq. km. E-Scan Pole-Pole IP-Resistivity, stations every 50

Basics
For any geophysical tool to be effective, there must a contrast in the appropriate physical
property. Even though a particular tool may be cheap to apply and easy to use, if the
measured host rock physical property has not been changed by the expected
mineralization and alteration, no contrast will be detected and the survey will have "failed".
"I tried geophysics once and it didn't work." Some methods have a very high capability
to detect very low contrasts. Detailed GPS controlled ground magnetic surveys in
sediments can detect changes in magnetite content as low as 0.01% and map sedimentary
units. Mineralization usually changes the physical properties of the host rocks and itself has
a different value for most physical properties.
If the contrast is large enough and is at a reasonable depth and with a reasonable
size, the contrast probably can be detected by some geophysical method.

Figure 2 attempts to show a Physical Property Contrast relationship for both a Carlin Type
mineralization and a typical massive sulfide with the considerations for depth and total volume of
each target type. This Figure is naturally vague as the specifics for any individual target must be used
as described below, but a similar figure should be considered for any exploration target.

The most difficult geophysical theory to understand is "Non Uniqueness." This theory states
that there is "an infinite number of possible solutions for any measured geophysical response."
Usually, with the addition of geological data and some common sense, infinity becomes a
number like 3 or 5. Typically, an experienced geophysicist or geologist tries for the most
optimistic interpretation for the given data and expectations. Remember that there are other
possible interpretations.
Exploration Planning, Execution, and Interpretation
Even with a reasonable exploration budget, a poorly designed, executed, or interpreted survey may not detect a
possible target. These parts are often called, Survey Design, Survey Supervision, and Data Interpretation and can be
applied to Regional, Local, or Detailed projects. The most neglected part of geophysical applications is the
description of the Target by the project geologist for the geophysicist. Important points are the economic size of the
target, how deep an economic target can be and still be viable, what is the style of mineralization, what are the
expected host rocks, and what is the expected alteration of the host rocks around the mineralization.  Without
knowing what we are looking for, the appropriate physical property contrasts cannot be selected, nor can a
reasonable survey be designed. It is very easy to design a survey that will NOT find the expected target.
Discussions between the project geologist and the geophysicist are essential for a reasonable survey design. The
desire to do an IP survey is insufficient information for survey design. Because the adjacent property owner did one
type of survey is not sufficient reason for you to do the same.

Selection of a competent contractor and negotiation of a contract acceptable to both parties is possibly the easiest
step, as there are several good contractors in most parts of the world and survey costs are reasonably competitive.
Usually, only minor supervision is necessary with a good contractor, but survey specifications may need to be
changed during the progress of the survey.

Interpretation is usually the part that has the most emphasis. However, without good data from a well-designed
survey, the interpretation can be suspect. With good data, my procedure is to attempt an understanding of the
geophysical data first then attempt to relate these data to the known and inferred geology. Once this is completed,
discussions with the project geologist can resolve the differences. Often the differences are the most interesting parts
of the survey.

One of the difficulties in the resolution of geological and geophysical data is the difference between Bulk Physical
Properties and Detailed Observations. Most geological observations are very detailed, but on a very small part of the
volume of interest. A drill hole every 25m over one sq. km. would cost over 33 million dollars, but only sample about
3ppm of the volume. However, considering the visual information and possible geochemical data, this could be one
measurement for every 400 cubic metres.

In contrast, a typical very high data density geophysical survey, such as HEM with a 50m line spacing, would cost
about $3,000, sample all of the volume under consideration, but would only have one measurement for each 8,000
cubic metres. For a low measurement density survey, like IP, the measurement per volume may only be one for
each 250,000 cubic metres. All of the geological, geochemical, and geophysical data comes from the same
place and must reflect the underlying geology.

Figure 3 attempts to relate the cost of selected geophysical surveys to the application of these tools in the three
exploration areas; Regional, Local, and Detailed. Dollars are the scarce commodity and selection of the most cost
effective tool is paramont. Unfortunately, the lowest cost method os often not useful.

Timing of all exploration applications is essential. All parts of the exploration must be integrated for effective
exploration. The quote "We tried every thing else, so I guess we will have to try some geophysics" is the inspiration
for the Fritz Geophysics motto: Geophysics should not be the 'tool of last resort."
Rule of 10
Throughout the last 40 years, world wide, the ratio of dollars spent for the total exploration budget to that spent on
geophysical surveys, has been about 10 to 1, or 10% of the budget was geophysics. For every $1,000,000 spent for
exploration about $100,000 of that was spent on geophysics.  Typically, the more successful companies, i.e. those
that find new economic deposits, have a higher ratio; more dollars for geophysics. The more traditional ?miners?
spend much less and quietly go out of business as the reserves are depleted.  The next 10% ratio is the cost of the
geophysicist. About 10% of the geophysical survey budget should be allocated to paying the geophysicist.
Consequently, if you propose a $10,000 geophysical survey the consultant should be budgeted at about $1,000.
Typically, the larger the survey cost the smaller percentage for the geophysicist.  

In Eastern Canadian exploration for massive sulfides the number became more like 20%. Recently, in Nevada Gold
exploration, in the days of the 500' long, 400 horsepower G-pick, commonly known as a drill, the number dropped to
close to zero. The Rule of 10 corollary is that a company exploration budget should be above $8,000,000 to consider
hiring a company geophysicist. If your budget is less than this, look for a good consultant.

Conclusions
Consideration of all the required questions, definition of the expected target, selection of the best physical property
contrast, economic survey design, qualified contractor selection, reasonable field supervision, maintenance of high
data quality, and integrated interpretations will lead to discovery of additional economic mineral resources with
reasonable budgets.

Geophysics should NOT be the "tool of last resort".

Geophysics should NOT be the "tool of
last resort".