Trends in Gold Exploration … with a special focus on quantifying discovery performance

Presentation to the PDAC 2021 Post Convention Programming session on Exploration Success and Strategy


The following presentation looks at the global trends in exploration for gold.  It also introduces a number of new metrics (associated with drilling and the number of companies) for assessing exploration performance.

Key observations were:

  • Exploration expenditures are extremely volatile – with boom/busts of +/-70% not uncommon. 
  • The overall level of exploration spend is mainly driven by changes in the gold price.
  • The impact of COVID-19 on the level of exploration activity is complex and dynamic.  On the negative- side, office closures and travel-restrictions and have made it difficult for geologists and drillers to work on projects in remote areas.  On the positive-side, market uncertainties, coupled with low interest rates has caused the price of gold to go up (from US$1420 in 2019 to $1771/oz in 2020) – thereby encouraging to be more active in the field.  The net effect was a modest increase in the World’s overall spending on gold exploration … up from $4639m in 2019 to $4830m in 2020.
  • It is worth noting that the level of activity varied by Region – with expenditures in 2020 up in Canada (by 4%) and Australia (by 15%) and down in Africa (by -6%) and Latin America (by -15%). 
  • On average around 40-50 significant gold deposits are found in the World each year. 
  • Over the last decade (2010-19) Canada accounted for 12% of all gold discoveries and Australia 15% by number.
  • In terms of ounces over the last decade a total of 628 Moz of gold was found in the World. Ten of these contained more than 10 Moz each. This includes three Cu-Au deposits, where gold is a by-product.
  • After adjusting for by-product credits the “average cost per ounce found” rose from $15 in 1980s to $61 in the last decade (all in constant 2020 US Dollars).  Part of the reason for the increase was cyclical (associated with higher labour and drilling costs – which have now come back down) and structural (namely the extra cost of exploring under deeper cover and/or in more remote locations).
  • In terms of “$ spent per discovery”, unit costs unit costs have risen from $41m in the 1980s to $142m in the last decade.
  • In terms of “metres drilled per discovery” the amount of drilling required rose from 336,000 metres in the 1990s to 551,000 metres in the last decade.
  • In terms of the “number of holes drilled per discovery”, the amount of drilling required has stayed relatively constant at 6700-6900 holes over the study period (1990 to 2019).  The challenge is that the average depth of the hole doubled from 41 metres to 82 metres over this period.
  • In terms of the number of “gold discoveries made per Company per year” performance in the Western World over the last two decades has declined from 1-chance-in-25 to 1-in-29. 

Given that most companies have modest exploration budgets (of ~$3 to 5 m pa) the odds of a given company finding a significant new gold deposit in a given year are very low/modest. In summary, to be a successful gold explorer you need to be much better than average.