Post on 15-Jul-2020
Where, what, when and who?
Highlighting key global exploration opportunities, trends anda perspective on the cycle of mineral exploration
Richard SchoddeManaging Director, MinEx Consulting
International Mining and Resource Conference (IMARC)31st October 2018, Melbourne
Overview
1. Location of recent discoveries
2. Trends in the number, size and quality of discoveries
3. Who made the discoveries ?
4. Trends in the discovery methods used
5. How much is being spent on exploration, and what’s the likelyoutlook ?
6. What’s happening in the Junior Sector?
7. When is the best time in the business cycle to be an explorer?
8. Summary / Conclusions
2
1. LOCATION OF RECENTDISCOVERIES
Over the last decade more than 1100 significant discoveries weremade in the World
3
Significant discoveries in the world by Size: 2008-2017
Source: MinEx Consulting © October 2018
Note: Bubble Size refers to Moderate / Major / Giant deposits
N = 882
GOLD
PRECIOUS (PGE+Ag+Diamonds)
BASE METAL (Cu+Ni+Zn+Pb)
URANIUM
MINERAL SANDS
BULK (Bauxite+Coal+Iron Ore+P2O5+K2O)
OTHER
Note: “Moderate” >100koz Au, >10kt Ni, >100Kt Cu, 250kt Zn+Pb, >5kt U3O8, >20 Mt Fe, >20 Mt Thermal Coal“Major” >1Moz Au, >100kt Ni, >1Mt Cu, 2.5Mt Zn+Pb, >25kt U3O8 , >200 Mt Fe, >200 Mt Thermal Coal“Giant” >6Moz Au, >1Mt Ni, >5Mt Cu, 12Mt Zn+Pb, >125kt U3O8 , >1000 Mt Fe, >1000 Mt Thermal Coal
882 known deposits, plus ~240(as yet) unreported discoveries882 known deposits, plus ~240(as yet) unreported discoveries
Significant discoveries in the World by Quality: 2008-2017
Source: MinEx Consulting © October 2018
Note: Bubble Size refers to Tier 1 / Tier 2 / Tier 3
N Tier1 = 15N Tier2 = 69N Tier3 = 314
398 Tier-1, -2 and -3deposits found in the
last decade
398 Tier-1, -2 and -3deposits found in the
last decade
GOLD
PRECIOUS (PGE+Ag+Diamonds)
BASE METAL (Cu+Ni+Zn+Pb)
URANIUM
MINERAL SANDS
BULK (Bauxite+Coal+Iron Ore+P2O5+K2O)
OTHER
“Tier 1” deposits are company-making mines and are large, long life and low cost with NPVat the Decision-to-Build stage of >$1000m (in 2013 US Dollars)
“Tier 2” deposits are “significant” and have some of the elements of a Tier 1 but have an NPV of $200 to $1000m“Tier 3” deposits are modest or marginal deposits, with an NPV of $0 to $200m
Tier 1 discoveries in the World : 2008-2017
Source: MinEx Consulting © October 2018
No Tier-1 discoveriesin Latin America
or Australia
No Tier-1 discoveriesin Latin America
or Australia
GOLD
PRECIOUS (PGE+Ag+Diamonds)
BASE METAL (Cu+Ni+Zn+Pb)
URANIUM
MINERAL SANDS
BULK (Bauxite+Coal+Iron Ore+P2O5+K2O)
OTHER
Golpu[2009: Copper]
Kamoa[2008: Copper]
Kakula[2014: Copper]
Luaxe[2013: Diamonds]
Red Hill/ Goldrush[2008: Gold]
Cote[2010: Gold]
Brucejack[2008: Gold]
Xiling[2016: Gold]
Haiyu[2011: Gold]
Balama[2011: Graphite]
KP405[2013: Potash]
Zhuxi[2013:Tungsten]
Arrow[2014: Uranium]
Huoshaoyun[2012: Zinc]
Taylor[2012: Zinc]
15 of these are Tier-115 of these are Tier-1
4 in China, 4 in Canada,2 in USA and 2 in DRC
4 in China, 4 in Canada,2 in USA and 2 in DRC This could change .. There are a number
of potential T1 projects in both places
2. LONG TERM TRENDS IN THE NUMBER,SIZE & QUALITY OF DISCOVERIES
The number of discoveries made has steadily risen over time
7
Number of discoveriesSignificant mineral discoveries in the World: 1900-2017
0
50
100
150
200
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Est Unreported
Total
Number
7345
7108
237
Note: Based on deposits >=“Moderate” in-size. i.e. >100koz Au, >10kt Ni, >100Kt Cu, 250kt Zn+Pb, >5kt U3O8
>5 Mt Heavy Minerals, >20 Mt Fe, >20 Mt Thermal Coal >10 Mt Met Coal, >3 Mt P2O5 and >3 Mt K2O
8
Source: MinEx Consulting © October 2018
The number of discoveriesmade each year has been
slowly rising over time
The number of discoveriesmade each year has been
slowly rising over time
Includes anadjustment for
unreporteddiscoveries
Includes anadjustment for
unreporteddiscoveries
Its too early to tell whether the recent dropin the discovery rate is “real” or “apparent”
Number of discoveries by commodity typeSignificant mineral discoveries in the World: 1900-2017
0
50
100
150
200
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Est Unreported
Other
Coal
Iron Ore
Uranium
Base Metal
Gold
Number
368
7345
601
1244
237
1951
2628
316
Note: Based on deposits >=“Moderate” in-size. i.e. >100koz Au, >10kt Ni, >100Kt Cu, 250kt Zn+Pb, >5kt U3O8
>5 Mt Heavy Minerals, >20 Mt Fe, >20 Mt Thermal Coal >10 Mt Met Coal, >3 Mt P2O5 and >3 Mt K2O
9
Source: MinEx Consulting © October 2018
Number of discoveries by commodity typeSignificant mineral discoveries in the World: 1900-2017
0%
20%
40%
60%
80%
100%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Other
Coal
Iron Ore
Uranium
Base Metal
Gold
Note: Based on deposits >=“Moderate” in-size. i.e. >100koz Au, >10kt Ni, >100Kt Cu, 250kt Zn+Pb, >5kt U3O8
>5 Mt Heavy Minerals, >20 Mt Fe, >20 Mt Thermal Coal >10 Mt Met Coal, >3 Mt P2O5 and >3 Mt K2O
10
Source: MinEx Consulting © October 2018
Percentage of Total
Gold remains themain target of
interest
Gold remains themain target of
interest
Number of discoveries by regionSignificant mineral discoveries in the World: 1900-2017
0
50
100
150
200
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Est Unreported
Rest of World
China
FSU + E Europe
Western Europe
Africa
Pac / SE Asia
Latin America
United States
Canada
Australia
686
7345
254
237
266
1114
717
1060
641
870
396
1104
11
Note: Based on deposits >=“Moderate” in-size. i.e. >100koz Au, >10kt Ni, >100Kt Cu, 250kt Zn+Pb, >5kt U3O8
>5 Mt Heavy Minerals, >20 Mt Fe, >20 Mt Thermal Coal >10 Mt Met Coal, >3 Mt P2O5 and >3 Mt K2OSource: MinEx Consulting © October 2018
Number
Number of discoveries by regionSignificant mineral discoveries in the World: 1900-2017
0%
20%
40%
60%
80%
100%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040
Rest of World
China
FSU + E Europe
Western Europe
Africa
Pac / SE Asia
Latin America
United States
Canada
Australia
Percentage of TotalRise of China and
the return of AfricaRise of China and
the return of Africa
Australia has grown … but many ofthese discoveries are small in sizeAustralia has grown … but many ofthese discoveries are small in size
The relative importance ofeach Region changes over time
The relative importance ofeach Region changes over time
In the early 1900’s USAwas dominant …
In the early 1900’s USAwas dominant …
… followedby Canada… followedby Canada
Russia dropped out following thecollapse of the Soviet Union in 1991
Russia dropped out following thecollapse of the Soviet Union in 1991
… is driven by geological maturity, technology,infrastructure and Country Risk
12
Source: MinEx Consulting © October 2018
Number of discoveries by sizeSignificant mineral discoveries in the World: 1900-2017
0%
25%
50%
75%
100%
0
50
100
150
200
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Est Unreported
Moderate
Major
Giant
% Moderate
Number
7345
1064
3649
237
2395
13
Source: MinEx Consulting © October 2018
Note: “Moderate” >100koz Au, >10kt Ni, >100Kt Cu, 250kt Zn+Pb, >5kt U3O8, >20 Mt Fe, >20 Mt Thermal Coal“Major” >1Moz Au, >100kt Ni, >1Mt Cu, 2.5Mt Zn+Pb, >25kt U3O8 , >200 Mt Fe, >200 Mt Thermal Coal“Giant” >6Moz Au, >1Mt Ni, >5Mt Cu, 12Mt Zn+Pb, >125kt U3O8 , >1000 Mt Fe, >1000 Mt Thermal Coal
58%
In recent years, an increasingproportion of discoveries are
“Moderate” in size
In recent years, an increasingproportion of discoveries are
“Moderate” in size
% Moderate-size[5-year rolling average]
45%
… though this may simply be anartefact of the time required toproperly drill-out a discovery
Number of discoveries by qualityTier 1, 2 & 3 mineral discoveries in the World: 1900-2017
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%0
50
100
150
200
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Est UnreportedUnclassifiedTier 3Tier 2Tier 1% Tier 1
Number
7345
676
262
237
2564
14
Source: MinEx Consulting © October 2018
Note: “Tier 1” deposits are company-making mines and are large, long life and low cost with NPV at Decision-to-Build of >$1000m (in 2013 US Dollars)“Tier 2” deposits are “significant” and have some of the elements of a Tier 1 but have an NPV of $200 to $1000m“Tier 3” deposits are modest or marginal deposits, with an NPV of $0 to $200m“Unclassified” deposits are small deposits with an Expected Value of ~$10m
2%
Over time, Tier 1 discoverieshave become less frequent
Over time, Tier 1 discoverieshave become less frequent
% Tier-1[5-year rolling average]
3606
4%
8%
12%
3. LONG TERM TRENDS IN WHOMADE THE DISCOVERIES
15
Junior explorers are now finding most of the deposits
Number of discoveries by company typeSignificant mineral discoveries in the Western World: 1900-2017
0%
20%
40%
60%
80%
100%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Other
Government
Prospector
Junior Explorer
Small Producer
Moderate Producer
Major Producer
16
Source: MinEx Consulting © October 2018
Percentage of Total
Between 1950-2000 MajorProducers accounted for
32% of all discoveries made
Between 1950-2000 MajorProducers accounted for
32% of all discoveries made
In the last decade 65% of alldiscoveries in the WW weremade by Junior Explorers
In the last decade 65% of alldiscoveries in the WW weremade by Junior Explorers
Prior to 1930Prospectors
accounted for 69% ofall discoveries made
Prior to 1930Prospectors
accounted for 69% ofall discoveries made
Note: “Junior Explorer” has no income“Small Producer” has a single small mine and <$50m pa sales revenue (in 2013 US Dollars)“Moderate Producer” has 1-3 mines and $50-500m pa sales revenue“Major Producer” has several large mines and >$500m pa revenue“Other” includes industrial companies, major oil companies and private/unlisted companies
4. LONG TERM TRENDS INEXPLORATION METHODS
17
There have been several innovations in the exploration tools usedto make discoveries
Trends in exploration methods
Continental-Scale
Province-Scale
District-Scale
Project-Scale
Prospect-ScaleMinEx has carried out a detailedanalysis of the discovery history of3799 deposits at these two scales
MinEx has carried out a detailedanalysis of the discovery history of3799 deposits at these two scales
The preferred search method used varies by commodity type,
depth of cover and “scale”
Primary search method used at the project-scaleALL discoveries in the World: 1900-2017
0%
20%
40%
60%
80%
100%
Serendipity
Other
Prospector
Visual
Conceptual/Geological
Geological Mapping
Extrapolated fromKnown MineralisationGeochem
Geophysics + Geochem
Geophysics
Percentage of total discoveries
ie What method wasused to decide where
to peg the leases
ie What method wasused to decide where
to peg the leases
Note: Analysis based on detailed analysis of 3799 projects (out of 7108 known discoveries) Source: MinEx Consulting © October 2018
The most popular area selection method is towork in areas of known mineralisation
The most popular area selection method is towork in areas of known mineralisation
0%
20%
40%
60%
80%
100%
Serendipity
Prospector
Other
Drilling (Sole Method)
Visual
Conceptual/Geological
Geological Mapping
Extrapolated from KnownMineralisationGeochem
Geophysics + Geochem
Geophysics
Primary search method used at the prospect-scaleALL discoveries in the World: 1900-2017
ie What method wasused to decide whereto drill the first hole
ie What method wasused to decide whereto drill the first hole
Note: Analysis based on detailed analysis of 3799 projects (out of 7108 known discoveries) Source: MinEx Consulting © October 2018
(Depending on the commodity & location) Geophysics andGeochemistry are the two main techniques used to site the drill rig
(Depending on the commodity & location) Geophysics andGeochemistry are the two main techniques used to site the drill rig
5. HOW MUCH IS SPENT ON EXPLORATION,AND WHAT’S THE OUTLOOK?
MinEx forecasts a sustained recovery in explorationover the next decade
21
A Multi-Factor modelwas built to predict thelikely exploration spend
A Multi-Factor modelwas built to predict thelikely exploration spend
R2 = 0.91
Exploration spend varies with the commodity price : GoldGold price and exploration expenditures - World : 1975-2017
$0
$2
$4
$6
$8
$10
$12
$14
$0
$500
$1,000
$1,500
$2,000
1975 1985 1995 2005 2015
2018 US$/oz 2018 US$ Billion
$0
$2
$4
$6
$8
$10
$12
$14
$0 $500 $1,000 $1,500 $2,000
2017 US$ Billion
2017 US$/oz AuYear
2017
Gold Price
ExplorationSpend
1985-2016
Source: MinEx Consulting © October 2018
See similarcorrelations for
other commodities
See similarcorrelations for
other commodities
1985
TrendlineR2 = 0.81
22
Historical and forecast exploration expenditures by CommodityMineral exploration – World : 1975-2025
$0
$5
$10
$15
$20
$25
$30
$35
1975 1985 1995 2005 2015 2025
Other
Coal
Iron Ore
Uranium
Base Metals
Gold
2018 US$ Billion
Forecast ->>
$15.6 bin 2025
$10.5 bin 2016
$31.0 bin 2012
Between 2018 and2025 expenditures
are set to rise by 32%
Between 2018 and2025 expenditures
are set to rise by 32%
$11.8 bin 2018
$3.1 bin 2002
Note: Includes expenditures on non-bulk and bulk mineral (i.e. bauxite, coal, and iron ore) exploration
Forecast is based on a long-run price (in constant 2018 US Dollars) of $1200/oz Au, $3.00/lb Cu,$7.50/lb Ni, $1.00/lb Zn, $0.80/lb Pb, $50/lb U3O8 $60/t iron ore fines and $75 & $150/t for thermal & met coal
23
Source: MinEx Consulting © October 2018
$22.5 bin 2008
Between 2012 and2016 expenditures
fell by 70%
Between 2012 and2016 expenditures
fell by 70%
Strongest growth willbe in base metals and“Other”
Exploration is very mucha “boom-or-bust”
business
Exploration is very mucha “boom-or-bust”
business
Historical and forecast exploration expenditures by RegionMineral exploration – World : 1975-2025
$0
$5
$10
$15
$20
$25
$30
$35
1975 1985 1995 2005 2015 2025
Rest of World
FSU + E Europe
China
Western Europe
Africa
Pacific / SE Asia
Latin America
USA
Canada
Australia
2018 US$ Billion
Forecast ->>
Source: MinEx Consulting © October 2018
24
$15.6 bin 2025
$10.5 bin 2016
$31.0 bin 2012
$3.1 bin 2002
$22.5 bin 2008
The strongest growingregions will be LatinAmerica and Africa
The strongest growingregions will be LatinAmerica and Africa
Note: Includes expenditures on non-bulk and bulk mineral (i.e. bauxite, coal, and iron ore) exploration
Forecast is based on a long-run price (in constant 2018 US Dollars) of $1200/oz Au, $3.00/lb Cu,$7.50/lb Ni, $1.00/lb Zn, $0.80/lb Pb, $50/lb U3O8 $60/t iron ore fines and $75 & $150/t for thermal & met coal
Exploration is very mucha “boom-or-bust”
business
Exploration is very mucha “boom-or-bust”
business
6. WHAT’S HAPPENING IN THEJUNIOR SECTOR ?
The junior sector has gone through some tough times – and is nowon way back up
25
Cash Reserves and Expenditures for the MEDIANAustralian Junior Exploration Company : 1998-March 2017
-$1
$0
$1
$2
$3
$4
$5
Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Dec-12 Dec-14 Dec-16
2016 A$ Million pa
Note: Survey based on a sample of 320 junior exploration companies listed on the ASX between 1998-2017“Net Other” includes production and other costs less interest income, mine revenue,Government Assistance and R&D tax credits
Quarterly spend data has been multiplied by 4x to produce an annualised spend rate
Cash Reserves
Exploration& Development
Administration
Net Other
Source: MinEx Consulting © June 2017based on Quarterly Reports to the ASX
During a downturn,“in-field” exploration &
development expendituresare cut the most
During a downturn,“in-field” exploration &
development expendituresare cut the most
Admincosts tend
to be“fixed”
Admincosts tend
to be“fixed”
CashReserves
are buildingoff an all-time low
CashReserves
are buildingoff an all-time low
26
Huge impact onservice providers
7. WHEN IS THE BEST TIME IN THEBUSINESS CYCLE TO BE AN EXPLORER ?
Discovery performance varies greatly over time
27
Exploration Expenditures and amount of Primary Metal discoveredPrimary Gold World: 1975-2016
$0
$2
$4
$6
$8
$10
$12
$14
0
50
100
150
200
250
1975 1985 1995 2005 2015 2025
Moz Au 2017 US$b
28
Source: MinEx Consulting © October 2018
ExpendituresDiscoveries
Est unreporteddiscoveries
Exploration Expenditures and amount of Primary Metal discoveredPrimary Gold World: 1975-2016
$0
$2
$4
$6
$8
$10
$12
$14
0
50
100
150
200
250
1975 1985 1995 2005 2015 2025
Moz Au 2017 US$b
29
Source: MinEx Consulting © October 2018
ExpendituresDiscoveries
Est unreporteddiscoveries
D
DD
$ $
$
D??
The peaks indiscoveries precedesthe peaks in spend !
The peaks indiscoveries precedesthe peaks in spend !
The best time to get in, is when explorationspend bottoms out and starts rising …
30
…. which is NOW !
8. SUMMARY / CONCLUSIONS
31
Summary / Conclusions [1/2]
1. Location of recent discoveries – over 1100 discoveries have been made inthe last decade … but only 15 of these were Tier 1 (or World Class). 4 each werefound in Canada and China, 2 each in USA and DRC and zero in Australia.
2. Trends in the number, size and quality of discoveries – Gold stillremains the main focus. Appears to be a drop in the size and quality of recentdiscoveries. Its getting harder to find a Tier 1 deposit. The number of discoveriesmade each year has been slowly rising over time.
3. Who made the discoveries ? – Used to be driven by the Majors. Juniorexplorers now account for 65% of all discoveries (by number). Chinese SOE’s areimportant within China.
4. Trends in the discovery methods used – Area selection is mainlydriven by presence of known mineralisation. Geophysics andGeochemistry are the two main techniques used to site the drill rig
32
Summary / Conclusions [2/2]5. How much is being spent on exploration, and what’s the likely
outlook ? – Exploration is very much a “boom-or-bust” business. The 2 key drivers are
commodity prices and market sentiment (which affects Junior Company’s ability to raisecapital). Exploration expenditures are set to rise by 32% over the next 7 years. Strongestgrowth will be in base metals and “Other”. Strongest regions will be Latin America andAfrica.
6. What’s happening in the Junior Sector? – Junior companies are now raising
cash – and are coming out of hibernation / more active in the field.
7. When is the best time in the business cycle to be an explorer?– Peak performance precedes peak spending ! Based on the last 3 business cycles,
exploration performance is maximised in the first couple years after coming out of thebottom of the business cycle
33
… That time is now ! !
My call is that the industry will deliver a number ofgame-changing discoveries over the next 2 years
Contact details
Richard SchoddeManaging DirectorMinEx ConsultingMelbourne, Australia
Email: Richard@MinExConsulting.comWebsite: MinExConsulting.com
Copies of this and other similarpresentations can be downloaded
from my website
Copies of this and other similarpresentations can be downloaded
from my website
SPARE SLIDES
X. BUSINESS CASE FOR EXPLORATION
Its simple – for the industry to be sustainable it need to find (good)new deposits to replace what it mines.
36
World’s demand for metals doubles every 20-30 yearsPrimary copper production for World: 1900-2050
0
5
10
15
20
25
30
35
40
45
1900 1920 1940 1960 1980 2000 2020 2040
Cumulative copperproduction for all history
(1000 BC to 2018 AD)= 730 Mt Cu
Cumulative copperproduction for all history
(1000 BC to 2018 AD)= 730 Mt Cu
Forecast cumulativedemand over next 26 years
(2019-2044)= 746 Mt Cu
Forecast cumulativedemand over next 26 years
(2019-2044)= 746 Mt Cu
Forecast DemandBased on 1.8% pagrowth
Historic DemandAverage growth rate of3.3% pa over last 25 years
Sources: Historical data from USGS andOffice of the Chief Economist Sept 2018
Mt pa Cu
21.2 Mt pain 2018
35.6 Mt pain 2044
9.5 Mt pain 1993
5.0 Mt pain 1968
2.6 Mt pain 19430.5 Mt pa
in 1900
Over the next 26 years the world is going to minemore copper than what has been mined in all history
Over the next 26 years the world is going to minemore copper than what has been mined in all history
37