Keynote address to the Quebec Mineral Exploration Association Conference, Quebec City, November 2013
The paper is mainly focused on Junior Company exploration in Canada since 1960.
- Global exploration expenditures peaked at US$30 billion in 2012. At $3.9 billion, Canada made up 13% of this.
- Junior Companies currently make up nearly half of the Canadian spend and (in the last 5 years) over 80% of all discoveries.
- On average 5-10 significant discoveries are made in Canada each year. In the last 5 years 82% of these were found by Junior Companies.
- The presentation includes data on the exploration techniques used to make these discoveries. As targets are found under progressively deeper cover, geophysics becomes progressively more important. Traditional Prospecting is no longer effective.
- Data is presented on the value proposition for exploration. The author estimates that, over the period 1960-2012, around $61 billion (in constant 2012 US Dollars) worth of discoveries were made in Canada. Over the same time $61 billion was spent on exploration – giving a value/cost ratio of 1.0.
- Canadian Major and Junior Companies achieved the same value/cost ratio of 1.0. This suggests that, firstly, one group is no better than the other and secondly, exploration in Canada was (on average) a break-even proposition.
- Data was compiled on the value/cost ratios for other Regions around the World for the period 2003-2012. The best performing Region was Africa (with 1.38). Canada was 0.71. However, it should be noted that no adjustment was made for (as yet) unreported discoveries
- Although Major Companies only found 38% of the Tier 1 deposits in Canada, they ended up owning 73% of them.
- Recent discovery performance, while strong, has been impacted by rising input costs and a strong Canadian Dollar.
- The overall level of exploration activity is driven by commodity prices, availability of funds and changes in business risk and opportunity. MinEx forecasts annual expenditures in Canada to stabilize in 2020 at around $2.9 billion – a fall of 33% over the peak spend in 2011.
- The current difficulty in raising funds, industry has responded by current back on exploration and going into hibernation.
- Canada’s Reserve position for many metals is running down. The average mine life for gold deposits is 8.6 years and 6.3 years for lead & zinc deposits.
- Of strategic concern is that there is (on average) a 11.2 year delay between discovery and mine development in Canada. In other words, mining companies and Government can’t afford for the industry to go into hibernation. Hence the need for action now.