JOHANNESBURG (miningweekly.com) – Although gold exploration budgets have fallen from a ten-year peak in 2012, spending on finding new gold ounces remains at historically high levels, a report from S&P shows.
It points out that $54.3-billion has been allocated to gold exploration over the past decade, almost 60% higher than the $32.2-billion spent over the preceding 18-year period.
However, the increase in dollars spent has not yet resulted in more new discoveries or discovered ounces compared with the previous period. Only 215.5-million ounces of gold has been defined in 41 discoveries over the most recent ten years, compared with 1.73-billion ounces in 222 discoveries in the preceding 18 years, the report notes.
“Even after adjusting for more recently identified deposits that might eventually surpass our threshold for a major discovery, and for major discoveries with potential to expand, we forecast that the gold in major discoveries might only increase to about 363-million ounces over the next decade,” it states.
The discoveries dataset prepared by S&P Global Market Intelligence includes all deposits containing over one-million ounces of gold in reserves and past production, or two-million ounces of gold in reserves, resources and past production.
It points out that, while the amount of gold discovered yearly varies widely from year to year, it roughly follows the trend of yearly spending on gold exploration.
Of the 263 major discoveries in the past 28 years, over half were made in the 1990s and contain most of the discovered gold.
The report highlights that the industry downturn that began in 1998, and lasted into the early 2000s, had a meaningful impact on budgets and discoveries. By 2000, budgets were almost one-third of their 1997 peak, and discovery rates were declining, with only 16 new discoveries recorded from 2000 to 2002, containing 108.3-million ounces, well below the average from any period during the 1990s.
There has been a slow decline since 2006, with both the number of new discoveries and the amount of contained gold trending downwards. This trend escalated in 2010, with a precipitous drop in the amount of discovered gold, to just 18.6-million ounces from 61.5-million in 2009. Despite historically high gold budgets since 2010, discovery rates have failed to break 40-million ounces in any given year, S&P states.
“Although we believe the sharp decline is indeed reflective of the lack of new significant deposits being found, a portion of the shortfall is a natural situation in which the additional exploration required to expand the known endowment of recently found deposits beyond our major discovery threshold has not yet been conducted.
“To account for this, we estimated gold in discoveries expected to meet our criteria in the future. While this has resulted in the amount of discovered gold likely tripling in some years, the total projected gold in discoveries from the past decade remains far below the amounts discovered prior to the 2008/9 financial crisis.”
A major factor contributing to the lack of major discoveries is a shift in focus within the exploration sector.
“While there is clearly a decline in discovered deposits and ounces, this will not impact the short-term project pipeline,” the report notes.