The declining rate of new gold discoveries and grades worldwide has accelerated in the last four years, with a significant decrease in the rate of drilling. This is as a result of explorers suffering from a severe shortage of financing, says business intelligence supplier IntierraRMG western hemisphere director Glen Jones.
This will affect junior explorers, which have been the most successful in discovering new resources. This, in turn, could ultimately lead to fewer discoveries. Exploration in Africa is also likely to decrease, as junior explorers from countries such as Australia and Canada move to explore closer to home, resulting in fewer gold resources.
Jones says the exploration sector will have to seek out new sources of finance, either from banks or joint venture (JV) partners, which are likely to be companies that already have cash flow from production activities.
“This could lead to increased merger and acquisition activity, as existing deposits are likely to look more attractive. Alternatively, the larger companies need to revert to doing more of their own exploration, as they did in the 1970s,” he posits.
Meanwhile, Jones says the gold outlook remains tight for the immediate future, but can be expected to recover in 2014. He adds, however, that the drop in the gold price in recent weeks will not yet have affected the rate of gold discoveries.
Nor has the waning global drilling activity for gold affected the slump in the gold price, as about 100 000 t of gold has been processed during the lifetime of the industry.
Therefore, the amount of available gold in the market is high, compared with new metal mined yearly, with gold mining companies constantly adding to the stockpile at a rate of 2 500 t/y. “Even significant yearly market changes will not impact on the overall supply of gold to the market,” he explains.
However, with regard to the decrease in global drilling activity, IntierraRMG forecasts that the trend of fewer new gold discoveries will continue.
Data and analysis from the business intelligence provider show that 2003 to 2004 was the most productive period in a study range focusing on the last decade, with more than 400-million ounces of new gold discovered during that two-year period.
This includes inferred, indicated and measured ounces, with an average grade of 1.65 g/t, compared with 2005 to 2006, during which the lowest number of new-found gold resources was found, with just more than 150-million new gold ounces discovered, albeit with a similar grade.
Discoveries increased significantly during 2007 and 2008, with more than 390-million ounces of new-found gold. The average grade also increased significantly to 2.65 g/t – the highest in the ten-year period.
Over the next two years, just more than 250-million ounces were discovered, with a declining grade of 1.25 g/t. This deterioration continued in 2011 and 2012, as the amount of new gold ounces discovered dipped below 225-million ounces, with a reduced average grade of 1.17 g/t.
In this ten-year study, Africa led the way with 479-million ounces of new gold dis- coveries, with an average grade of 2.8 g/t, followed by North America, although with significantly fewer new ounces of 290-million and with a much lower grade of 1.3 g/t.
Europe recorded new discoveries amounting to 240-million ounces, but with a higher grade than North America of 2.0 g/t. South America recorded 188-million ounces, while Australasia recorded 74-million ounces of new discoveries, with an average grade of 1.4 g/t.