The archive · Business Models · Strategic decision · 1999–2002
Goldcorp published its mine data and let the world find its gold
A struggling Canadian miner posted 400MB of proprietary geology online and paid $575,000 in prizes; the crowd found over $6 billion in gold deposits.
Goldcorp
What it had to solve
In 2000, Goldcorp's Red Lake mine in Ontario produced just 50,000 ounces a year and the company was struggling; its geologists believed far more gold lay deeper, but drilling to locate it was slow and costly. In mining, secrecy was sacred.
How it works
In 2000 Goldcorp, a Vancouver gold miner, was in trouble: its Red Lake mine in Ontario produced only 50,000 ounces a year, exploration had stalled, and every traditional avenue — blind drilling, more geologists, more secrecy — was expensive. Founder and CEO Rob McEwen had heard at a 1999 MIT conference how Linus Torvalds built Linux with strangers over the internet, and wondered why his industry could not do the same.
So McEwen did what no miner had dared: he put 400 megabytes of Red Lake's geological data, some of it dating back to 1948, on the company website and offered $575,000 in prizes — $105,000 for the best entry — to anyone who could pinpoint where the next gold was hiding. More than 1,400 scientists, engineers, geologists, students and even military officers from 50 countries took part.
Fractal Graphics and Taylor Wall & Associates, an Australian team, combined the public data into a 3-D model of the deposit and won. Their map surfaced 110 drill targets, half of which Goldcorp's own geologists had never considered and 80% of which held substantial gold. The new deposits were worth over $6 billion and cut two to three years off the exploration timetable.
The challenge turned a struggling mid-tier producer into the most profitable gold miner in the business. Goldcorp kept growing for nearly two decades, until January 2019, when Newmont — the world's largest gold miner — bought it for about $10 billion US.
Why it lands
- The crowd had no dogma: outsiders looked at 400MB of data with fresh eyes — mathematicians, students and soldiers — and found what the company's own geologists could not.
- Prize money bought results the payroll could not: $575,000 targeted one hard question, mobilizing 1,400+ solvers from 50 countries without any of the overhead of hiring them.
- Openness removed the fear of being wrong: submitting a hypothesis cost a solver nothing, so wild ideas were tried; the best ones were not filtered by internal politics.
- The publicity became part of the payoff: a struggling miner that admits its geologists are stuck generates attention no ad campaign could buy.
What it did
The winning map surfaced 110 drill targets, half of them previously unknown to Goldcorp and 80% holding substantial gold; deposits worth over $6 billion were identified, two to three years were shaved off exploration, and Goldcorp went from struggling to the industry's most profitable miner.
What you can take
When insiders are blind, the answer may be outside: a $575,000 prize for open data returned deposits worth over $6 billion — a ratio of ~10,000x the industry had never seen.
Since then
Red Lake was transformed: the mapped sites were drilled with an 80% hit rate, Goldcorp's production and profitability climbed to the top of the industry, and the challenge became a template for prize-based open innovation — a decade and a half later, Integra Gold ran its own $1-million CAD 'Gold Rush' contest on the same model. Goldcorp kept growing until January 2019, when Newmont — the world's largest gold miner — acquired it for about $10 billion US.
Sources
- He Struck Gold on the Net (Really)
- History of Challenges: The Goldcorp Challenge
- Newmont signs deal to buy Goldcorp for $10B US
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