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Gold, zinc explorers spearhead reversal of five-year global exploration downturn

Boosted by increased exploration efforts in the gold and zinc sectors, the global nonferrous exploration budget is up in 2017 – for the first time since 2012 – by more than 14%, year-on-year, to $7.95-billion, according to new analysis by S&P Global Market Intelligence.

The twenty-eighth edition of the firm’s 'Corporate Exploration Strategies' (CES) report reveals that global gold budgets are up 22% year-on-year, while zinc-focused producers and junior explorers have boosted the zinc budget by 29% year-on-year to $489-million, based on improved zinc prices since early 2016.

“We know that the juniors have endured the worst of the downturn since 2012, accounting for most of the 40% drop in the number of active explorers over the past five years. However, the new CES budget data indicate that, among all company types, the surviving juniors are making a strong comeback in 2017,” says S&P Global Market Intelligence metals and mining research associate director Mark Ferguson.

He adds that junior explorers have increased their aggregate exploration budget by 23% year-on-year, including a 41% increase in gold-only allocations.

The CES report further highlights that major producing companies also increased their budgets in 2017, allocating 17% more for exploration than a year ago. As a group, the majors still dominate the exploration sector's efforts with almost 54% of the global budget, despite a faster rate of growth among the pure junior explorers.

“We expect both of these groups, which collectively account for more than 80% of global exploration budgets, to continue increasing their exploration efforts well into 2018,” says Ferguson, adding that sustained market interest will probably benefit juniors the most, as it will allow for their aggregate budget to grow at a faster pace than the producers' budget.

“As the industry rebound gains traction, we expect a similar pace of increases in 2018 budgets,” he notes.

EXPLORATION STRENGTH IN LATIN AMERICA

Continuing to capitalise on its geological wealth, Latin America remains the biggest draw for exploration efforts, with the region's aggregate budget increasing 20% year-on-year to almost $2.4-billion in 2017.

Europe and most of mainland Asia remains the second most attractive region for exploration efforts, drawing in 9% more allocations than in 2016, followed by Canada, Africa, Australia, the US and South-East Asia.

Perennial mining centres Canada, Australia and the US remain the top exploration countries in 2017, with Canada recording a 12% year-on-year increase in budgets, and Australia and the US both increasing their exploration budgets by 19%.

Still, Latin American countries dominate regionally, featuring half of the top ten most popular exploration destinations, namely Chile, Peru, Mexico and Argentina, shifting the Democratic Republic of the Congo into tenth place.

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MARKET SUMMARY

INDICES

Name Last Change
DOW 24826.80 0.71%
S&P 500 2692.20 0.61%
NASDAQ 6992.12 0.79%
TSX 16185.27 0.89%
TSX-V 802.50 0.00%

Resource Commodities

Name Last Change
Gold 1263.67 0.67%
Silver 16.16 0.68%
Copper 3.11 1.98%
Platinum 906.50 1.12%
Oil 57.30 0.45%
Natural Gas 2.61 2.76%
Uranium 24.25 N/A
Zinc 1.44 0.00%

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