This is the third time I have presented at this bi-annual Conference. It contains some useful tables which, when you compare with previous papers, allows you to get a sense of how quickly new discoveries get reported and how they grow in size over time.
The key messages in the latest paper /presentation is that:
- The industry is extremely cyclical. As at 2014, global spending on gold is down 55% from its peak in 2012.
- In terms of discoveries, Over the last decade Canada did well (at the expense of Latin America)
- By number, 11% of the discoveries were in Canada, 11% in Australia and 30% in Africa
- In terms of contained gold, 27% was found in Canada, 6% in Australia and 18% in Africa
- The average size of discovery is falling (3.4 Moz in last decade versus ~5 Moz in 1980s and 1990s)
- The depth of discoveries is gradually increasing over time.
- Over the last decade the average depth of cover was 64 metres … but half of the deposits found were outcropping (and most of these were in Africa). This suggests that the depth of cover issue is mainly a problem for mature countries (such as Canada, Australia and USA)
- Unit discovery costs have progressively risen over time - from $14/oz Au-eq in the 1980s to $20/oz in the 1990s and $25/oz in 2000s. It is currently running at ~$60/oz
- Discovery costs vary widely by Region – the lowest was Canada ($31/oz) & Africa ($38/oz), and the highest was US ($71/oz) & Pacific SE Asia (>$300/oz)
- In terms of Value/Cost (i.e. "Bang-per Buck") over the last decade the industry created $0.68 worth of value per each Dollar spent on Exploration. Hopefully this will improve over time – as costs4 (between 2012 and 2014) is down deposits grow over time On this basis, the industry is currently struggling to sustain itself.
- Over the last decade 51% of the total exploration expenditures were in High-Risk and Very-High Risk countries. These accounted for 49% of the discoveries by number, 37% of the ounces but only 33% of the value. This is a surprising result – as one would expect a higher return to compensate for the higher business risk associated with exploring there
Given the above the industry is currently struggling to sustain itself. As a consequence the gold price has to rise (to stimulate more exploration and make more projects economic) or we have to either to be smarter/more efficient at exploration