Gold mining is one of the very oldest human occupations. The earliest known underground gold mine, in what is now the country of Georgia, dates back at least 5,000 years, when people were just starting to develop written language.
Over the centuries, a number of innovations have emerged that disrupted and forever changed how we explore and mine for gold and other metals. Think dynamite, or the steam engine.
Lately, however, innovation has slowed. Mining companies are in cost-cutting mode, and many producers have favored generating short-term cash flow, often to the detriment of longer-term value. In last year’s “Tracking the Trends” report, Deloitte analysts observed that “miners from 50 years ago would find little has changed if they entered today’s mines, a situation that certainly doesn’t hold true in other industries.”
Consider the earth-shattering change that’s taken place in oil and gas over the past two decades. Fracking and horizontal drilling have completely revolutionized how we extract resources from the ground, making hard-to-reach oil and natural gas accessible for the first time.
No equivalent technology exists in precious metals. Some companies are now using cutting-edge technology like blockchain to improve supply chain efficiency and transparency, but to date there’s no “gold fracking” method. As a result, metal ore grades are decreasing, and large-scale gold discoveries are becoming fewer and farther between.
One company thinks it has the formula to reverse this trend. I think it could be sitting on a gold mine, pun fully intended.
Meet Goldspot Discoveries
“Some people call it ‘peak gold,’ but I tend to think of it more as ‘peak discovery,’” says Denis Laviolette, the brains behind Goldspot Discoveries, a first-of-its-kind quant shop that aims to use artificial intelligence (AI) and machine learning to revolutionize the mineral exploration business.
A geologist by trade, Denis conceived of Goldspot while serving as a mining analyst with investment banking firm Pinetree Capital. His vision, as he described it to me last week, was to disrupt mineral exploration as profoundly as Amazon disrupted retail and Uber the taxi business.
“We have more data at our fingertips than ever before, yet new discoveries have been on the decline despite ever increasing exploration spending on data collection,” Denis continues. “We believe Goldpsot can change that. Harnessing a mountain’s worth of historic and current global mining data, AI can identify patterns necessary to fingerprint geophysical, geochemical, lithological and structural traits that correlate to mineralization. Advances in AI, cloud computing, open source algorithms, machine learning and other technologies have made it possible for us to aggregate all this data and accurately target where the best spots to explore are.”
Hence the name Goldspot—though I should point out that Denis considers the Montreal-based company “commodity agnostic,” meaning it collects and aggregates data for all metals, including base metals, not just gold.
But Wait, There’s More…
The company, not yet three years old, does more than assist in exploration. It also invests in and acquires royalties from exploration companies, similar to the business model practiced by successful firms such as Franco-Nevada, Wheaton Precious Minerals, Royal Gold and others.>
The difference, though, is that Goldspot has developed an AI-powered screening platform to identify the very best and potentially most profitable investment opportunities.
For this, Goldspot has also received accolades. It was one of only five finalists in Goldcorp’s 2017 #DisruptMining challenge, for “revolutionizing the investment decision model by using the Goldspot Algorithm to stake acreage, acquire projects and royalties, and invest in public vehicles to create a portfolio of assets with the greatest reward to risk ratio.”
I’ll certainly have more to say about Goldspot in the coming weeks. For now, I’m excited to share with you that the company is scheduled to begin trading on the TSX Venture Exchange early this week. The future belongs to those that can mine data and harness the power of AI, and I’m convinced that what Denis and his partners have created fits that bill.
