Major gold miners have significantly shifted their exploration focus over the past decade, favoring increased mine-site exploration at the expense of grassroots exploration, SNL Metals & Mining said Monday.
SNL's recently released profiles of the world's top 20 gold producers show that from 2006 to 2015, the share of the group's total gold exploration budgets devoted to near-mine work rose from 44% to 54%, while the share allocated to greenfields programs decreased from 40% to 22%.
"In dollar terms, mine-site exploration's lead over grassroots exploration jumped from a mere $36 million in 2006 to $470 million in 2015," SNL said.
SNL, like Platts, is a unit of S&P Global.
Since the total gold exploration budget of top gold producers reached a high of $3.01 billion in 2012, both grassroots and late-stage budgets have fallen sharply, while the decline in mine-site allocations has been much less steep.
"The increased focus on mine-site work in recent years has been due to the major producers spending more at and near their mines to replace or increase reserves depleted by mining and to develop new reserves more quickly at lower costs by using existing infrastructure," SNL said.
As the shrinking grassroots spending suggests, over the past six years the number of new discoveries has fallen drastically compared with the first decade of the 2000s, it added.
"While some of the decline can be ascribed to recent discoveries still being too small to be considered 'significant,' the two-thirds drop in exploration budgets since 2012's peak makes it extremely challenging for explorers to define new resources at their targets," SNL said.
With gold prices continuing to rise through late August, SNL said it anticipates that "while companies will maintain their focus on existing operations, most will begin to reactivate modest early-stage efforts as part of their strategy to address the lack of new discoveries and offset looming supply shortages."
