Mining exploration spending reaches new height – but this doesn’t mean more mining « Mining Blog

Mining exploration spending reaches new height – but this doesn’t mean more mining

2. December 2011,

Late last month (24 November), the Canadian Metals Economics’ Group (MEG) issued its 22nd edition of its “Corporate Exploration Strategies report.

The report recorded mining exploration budgets as “having risen 50% over the past year, surging to new all-time high, with the estimated total 2011 budget for nonferrous metals exploration amounting to some U$18.2 billion, despite increased volatility in recent months”.

Said MEG: “Most countries are seeing increased exploration investment in 2011, and explorers are demonstrating a higher tolerance for risk despite additional concerns and uncertainty about security, policy, and tenure in many countries.

“Of the 120 countries for which we documented exploration spending by the industry, those commonly perceived to be high risk account for 23% of the 2011 aggregate exploration total, up from less than 16% in 2010. The potential reward often increases the industry’s appetite for risk during periods of increased exploration spending, but exploration in high-risk countries, particularly early-stage work, is usually the first to be cut when risk levels or uncertainty increases.”

But MEG says that, although “the proportion of overall exploration spending dedicated to early-stage and generative work has been fairly stable over the past three years”, it is nonetheless “at just a third of overall allocations…historically low.”

The Group also warns that “the number of large-scale assets advancing to development has not risen proportionately with [an] increased focus on late-stage projects, contributing to constraints on meaningful production increases for most metals.

“The apparent decline in grassroots efforts relative to late-stage and minesite exploration over the past cycle and the considerable time needed to advance a new discovery to production mean that the pool of viable, large-scale assets available for actual development is unlikely to grow in the near future”.

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