Insight
Exploration budgets
on the rise
Key takeaways from the report
• Global nonferrous exploration budget
increased 19% to USD10.1-billion;
An S&P Global Market Intelligence report highlights
that global nonferrous exploration budgets increased
for the second consecutive year, up 19% year-over-
year, writes Mark Ferguson.
N
ewly released 2018 global
exploration budget data from
S&P Global Market Intelligence’s
Corporate Exploration Strategies
(CES) study confirms that the industry
recovery, which began in late 2016, is
continuing at an accelerated pace. Global
nonferrous exploration budgets increased for
the second consecutive year, rising by 19%
year-over-year to USD10.1-billion from
USD8.5-billion in 2017.
Improved metals prices and margins since
2016 have encouraged producers to expand
their organic efforts the past two years. Over
the same period, equity market support for
the junior explorers has improved, leading
to an uptick in the number and size of
completed financings. This allowed the
group to increase exploration budgets by
35% in 2018.
Our data does show that, despite these
improvements, the level of equity market
support and industry-wide exploration efforts
remain far below peak levels recorded from
2010 to 2012.
The improved investment environment
has, for the first time since 2012, finally
Copper remains by
far the most attractive of
the base metals.
[48] MINING MIRROR FEBRUARY 2019
• Junior exploration companies’ budgets
increased by 35%;
• Number of active exploration
companies increased for the first time
since 2012 — up 8% to 1 651;
• Cobalt and lithium budgets continue to
rise, up 500% since 2015; and
• Canada, Australia, and the US all
record above-average increases.
resulted in more dormant companies
resuming exploration efforts and encouraged
new entrants into the industry. The 1 651
companies actively exploring in 2018 is
8% more than the 1 535 companies with
budgets in 2017. However, the 2018 total is
still about 900 companies less than in 2012,
representing a one-third culling of active
explorers over the past five years.
Global attention on raw material needs
for the electric vehicle (EV) revolution
has attracted significant interest from the
exploration sector. Exploration budgets for
cobalt and lithium, key commodities for a
variety of batteries, have collectively risen
by more than 500% since 2015, including
an 82% increase this year. However, these
allocations remain relatively small when
compared with planned exploration
allocations for traditional base- and precious
metals-focused efforts.
Although gold prices have been fairly
unremarkable since 2017, generally trading
within a USD100/oz band, gold continues to
benefit the most from the industry recovery.
Gold explorers have increased their aggregate
budget to USD4.86-billion in 2018, up from
USD4.05-billion in 2017. Although lagging
behind the gold allocation total, base metals
allocations have also made a significant
move upwards this year, increasing by more
than USD600-million to USD3.04-billion.
Copper remains by far the most attractive
of the base metals, although zinc allocations
have increased the most, rising 37% in 2018.
Budgets are up for all targets except
uranium. US budgets expand faster than
those for Canada or Australia. With a budget
of USD1.44-billion, Canada remains the
top destination for nonferrous exploration
budgets in 2018; the 31% year-over-year
increase in allocations for the country
outpaces the 23% rise in budgets for
second-place Australia, which has attracted
USD1.33-billion. In third place, the US has
recorded a 34% increase in allocations. In
each of these countries, gold’s share of the
total is more than 55%.
Of the remaining 10 most popular
exploration locations, four are found in Latin
America, including Peru, Mexico, and Chile,
which hold the fourth through to sixth
positions globally.
Nonferrous exploration refers to spending
in the search for precious and base metals,
diamonds, uranium, and some industrial
minerals; it specifically excludes exploration for
iron ore, aluminum, coal, and oil and gas.
About the author
Mark Ferguson is associate director of
metals & mining research at S&P Global
Market Intelligence. S&P Global Market
Intelligence is a division of S&P Global,
which provides essential intelligence for
individuals, companies, and governments to
make decisions with confidence.
For more information, visit
www.spglobal.com/marketintelligence.
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