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Schodde RC, "A review of Australia's discovery performance over the last 40 years", Keynote presentation at the Value Creation via Exploration Seminar organised by Australian Institute of Geoscientists, July 2015.


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The presentation summarises the general trends in exploration expenditures and the number and location of significant non-bulk mineral discoveries in Australia over the period 1975-2014. It also discusses the quality and value of these discoveries and identifies which commodity were the most profitable to explore for.

Key observations were:

  • Australia's total exploration spend peaked in 2012 at A$4.53 billion (in constant 2015 Dollars)
  • Over half of this was associated with iron ore and coal expenditures
  • On average over the last four decades, industry found 10-15 significant mineral discoveries each year. Half of these were gold
  • The rate of discovery moves in-line with expenditures and drilling activity
  • It now takes (on average) 600,000 metres of drilling to make a significant discovery up from 400,000 metres back in 1980
  • Unit discovery costs are volatile and are driven by whether or not a giant deposit was found in a given year. Surprisingly, most commodities do not (in Australian Dollar terms) show a trend in rising costs. The main exception is gold which currently costs A$65/oz to find, with discovery costs rising by A$10/oz per decade. Unit discovery costs for other metals are estimated to be around A$130/tonne (A 5.9 cents/lb Cu), lead/zinc at A$75/tonne of Zn+Pb, nickel is A$50 or $500/t (depending on whether it is nickel laterite or nickel sulphide respectively) and A$4/lb for U3O8
  • It terms of value proposition for exploration, around 2/3rds of the value created comes from the discovery of Tier1 + 2 deposits
  • As measured in terms of the value/cost ratio (or "bang-per-buck") Australia's performance has declined in recent years; in the period 1985-94, industry generated $3.07 of value for every Dollar spent on exploration. This dropped to $1.51 in the period 1995-2004 and just $0.84 in the period 2005-2014. It should be noted though that it does take time for discoveries to be reported and fully drilled out. Consequently the reported value/cost ratio is certain to improve
  • Different commodities gave a different return on investment. Over the last 20 years the national average was a value/cost ratio of $1.07. During this time, gold was $0.94 and Copper $0.81 suggesting that (on average) it was a break-even proposition exploring for them. Exploring for uranium ($0.63) and zinc/lead ($0.04) destroyed value. In contrast, exploring for nickel sulphides (with $1.47) and mineral sands ($7.39) created significant value

Given the above, it is argued that exploration does create value for the industry. The challenge, as always, is knowing which commodities, targets, locations and organisational structure are most likely to give the best return.

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