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Worldwide Exploration Trends 2013

London, 3 March 2013

SNL Metals Economics Group’s (SNL MEG) 23rd edition of Corporate Exploration Strategies (CES) calculated that the industry’s estimated total budget for nonferrous metals exploration increased to $21.5 billion in 2012. Despite ongoing uncertainty in Europe and the United States, and concerns about waning demand in China, most metals prices remained well above their long-term averages in 2012, giving varying levels of support to the industry. Led by higher budgets among the major producers, exploration budgets documented in the study increased by $3.3 billion (19%) to $20.53 billion to set a new all-time high.

Each year, SNL Metals Economics Group (SNL MEG) releases a special report for the PDAC International Convention. The 2013 report includes exclusive data and analysis from SNL Metals Economics Group’s 23rd edition of Corporate Exploration Strategies (CES). which calculated that the industry’s estimated total budget for nonferrous metals exploration increased to $21.5 billion in 2012.

Exploration expenditures rise in all regions

Exploration allocations for all regions increased to record highs in 2012, led by the largest dollar increases in Latin America and Africa. Latin America remained the most popular exploration destination, attracting 25% of global spending in 2012; six countries — Mexico, Chile, Peru, Brazil, Argentina, and Colombia — accounted for the lion’s share of the region’s total. Gold remained the top Latin American exploration target for the third consecutive year, while base metals remained at its smallest share since the late 1990s.

Africa experienced the second-largest increase in both percentage and dollar terms. With its share of worldwide exploration budgets rising to 17%, it jumped from third to second place regionally in 2012. For the second time in the past three years, the Democratic Republic of Congo held top place for exploration spending in Africa. An increased focus on West Africa translated into gold receiving the largest dollar increase in 2012, although gold’s share of overall African budgets fell to 51% from 53% in 2011. Planned expenditures for other targets more than doubled, raising their share of overall budgets to 11% from 6%. Conversely, the percentage of total allocations devoted to diamonds fell for the sixth consecutive year to a record low of 6% in 2012.

After sitting in second place for exploration spending for more than a decade, Canada dropped to third place in 2012 after being overtaken by Africa. Allocations were up just 4% from 2011 — the smallest percentage and dollar increase of any region — and accounted for 16% of the worldwide total budget. However, more companies had budgets for Canada in 2012 than for any other region, and 91% of the companies covered are headquartered in Canada. Ontario accounted for more than a quarter of allocations to Canada, while British Columbia replaced Quebec in second place. Gold allocations dropped for the first time since 2009, lowering its share of Canada’s total to 49% from 55% in 2011, while the percentage devoted to other targets, with an emphasis on potash, rose to 19% from 12%.

Eurasian countries made up the region with the fourth-largest budget, led by allocations for China and Russia, and by four other countries — Mongolia, Kazakhstan, Finland, and Turkey — that each attracted more than $100 million in exploration budgets in 2012.

Base metals replaced gold as the region’s top target, led by major allocations for copper and nickel in China, Mongolia, Russia, and Kazakhstan. Allocations to Australia rose just 11% in 2012—less than the 19% worldwide average increase — and lowered the country’s share of overall budgets to 12% from 13% in 2011. Mining reforms at the national and state levels dominated the Australian minerals industry over the past several years, most of which industry watchers say will reduce investment and make the country’s resource sector less competitive. Allocations to Western Australia accounted for more than half the country’s 2012 nonferrous exploration total, while South Australia edged Queensland for second place. Gold and base metals accounted for the bulk of Australia’s 2012 exploration budget total, with allocations for all other commodities trailing by wide margins.

Gold and copper exploration in the United States kept it in sixth place regionally, ahead of the Pacific Islands. Nevada had the largest share (43%) of the country’s 2012 exploration total, and three states — Nevada, Arizona, and Alaska — together accounted for about 70% of the total. Gold continued to attract more than half (54%) of all spending in the United States, followed by base metals with 31%.

Among the Pacific Islands, exploration allocations for Indonesia, Papua New Guinea, and the Philippines accounted for the bulk of the region’s 7% of the world total, with budgets split mainly between gold (56%) and base metals (41%). The Pacific/Southeast Asia region experienced the largest percentage increase (35%) and the fourth-largest dollar increase ($353 million) of all regions in 2012, closing the gap between it and the United States. Despite high prospectivity, investors continued to be wary of the region; as a result, there have been few new entrants into these countries in recent years

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Download the full report HERE