Online presentation at The Mining Investment Event of the North Conference, Quebec City, Canada, June 2022
This presentation is an update of a earlier presentation given 9 years ago at the QMEA Conference in Quebec City
It discusses the general; trends in exploration expenditures and discovery performance for Canada for years 1975-2021, with special attention given to whether Majors or Juniors did a better job at finding new deposits.
The key findings are:
- Over the last decade (2011-2020) Junior Companies accounted for 44% of the total exploration spend in Canada.
- The main commodity of interest was gold – which now accounts for 65% of total expenditures
- On average the industry finds 10 to 15 significant new deposits each year. After adjusting for unreported discoveries (it takes time to drill-out and report a new discovery) the discovery rate remains strong
- Of concern is that only one Tier-1 discovery has been made in Canada in the last decade. This is the Arrow uranium deposit in Saskatchewan in 2014
- Over the last decade industry spent a total of US$27.0 billion (in constant June 2022 Dollars) on exploration in Canada. The value of the 90 discoveries made is estimated to be $17.8 billion – giving a Value/Cost Ratio (or “Bang-per-Buck”) of 0.66. This implies that the overall industry destroyed-value in the last decade
- As shown in the following Chart over the last decade Junior Companies accounted for 84% of all significant discoveries in Canada. These contained ~82% of the total value. As a result the “Bang-per-Buck” for Junior Companies was 1.23 versus just 0.21 for Senior Companies
FIGURE 1 : Trend in Exploration Spend and Value-Add Over Time in Canada: 1975-2021
In summary, in Canada, the Junior Companies have been creating-value, whereas the Majors have been destroying value. this is not sustainable in the longer term,