|Schodde RC, "Discovery performance for gold and base metals in the Pacific/Southeast Asia: 2005-2014", Keynote presentation at the PACRIM Conference March 2015.|
The PACRIM Conference was organised by the AusIMM. A copy of my paper can be found in the Conference proceedings. The AusIMM has graciously given me permission to share my associated PowerPoint slides with you.
This presentation builds on my recent PDAC presentation. They both discuss the general trends in exploration spend and discovery performance over the period 1975-2014, with special emphasis on the most recent decade. The main difference between the two is that the PDAC presentation focused on Canada, whereas the PACRIM presentation focused on Pacific/South East Asia (Pac/SEA).
The key observations in the PACRIM Presentation are:
In the final section of my presentation I looked at the impact of changes in geological and business risk issues on the level of exploration spend in the World. A good measure of risk is the Mineral Potential Index (MPI) and the Policy Perception Index (PPI) as published annually by the Fraser institute. Intuitively, countries with better scores should attract more exploration dollars. In practice, the results vary widely between countries – in part because of inherent differences in land area, exploration maturity and overall industry expenditures (which can vary by +/-30% in a given year). After making adjustments for these factors (by looking at the spend per km2, and looking at changes in relative market share rather than total spend) I found that, in a given country a 1%-point increase in the MPI score increases the underlying exploration spend by ~0.8%. However with regard to the PPI, the results were so noisy that it was impossible to come up with any meaningful correlation. At face value this (counter-intuitively) suggests that changes in the PPI have no significant effect on exploration spend.
In short, it appears that the main driver for exploration spend is the mineral potential of the country. Companies go where the "the rocks are good" and are not unduly scared off by Country Risk. Perhaps the logic is that "if the prize if good enough we will sort out how to do business afterwards". This is a somewhat surprising result and requires further investigation.
As a bonus, the presentation also information on the tonnes and grades of Tier 1, 2 and 3 deposits. A Tier 1 gold or copper deposit needs to contain at least 10 Moz of gold or 10 Mt of copper at good grades.