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7/7/2015 by mdc
http://www.miningweekly.com/article/global-mining-exploration-in-crisis-but-n...
Megan Van Wyngaardt reports that the global mineral exploration is in crisis, but mining companies can turn their exploration performance around. Finding orebodies is not all about luck and success is not unpredictable. And while some companies struggle to replace depleted reserves, those that act in a counter cyclical way that build world-class exploration capabilities will be rewarded with disproportionate returns, said The Boston Consulting Group (BCG) partner Alexander Koch, coauthor of a new report by the management consulting firm, titled Tackling the Crisis in Mineral Exploration.

The report, which was released recently, noted that from 2010 to 2013, the yearly number of discoveries, excluding bulk commodities, declined by more than half, even after adjusting for discoveries yet to be drilled out. The report highlighted that the sharp decline in discoveries occurred despite a period of significant increases in exploration spending, with giant discoveries dropping to only one or two a year. At the height of the recent resources boom, average yearly exploration expenditure grew by almost 40% to record levels. Koch noted that the crisis in mineral exploration had flown under the radar for much of the mining industry.

Since the end of the resources boom, most mining companies have now shifted their focus to productivity and cut back sharply on exploration spending, which has exacerbated the depletion of resources and reserves. Cyclical increases in drilling costs and the depletion of easy pickings only partly explained the discovery drought.

Mineral discovery, according to Koch, was a key factor in superior value creation for shareholders. The downturn in prices has highlighted the importance of mineral discovery - especially in greenfield settings - as a source of high-value deposits that can pay their way through almost all parts of the commodity cycle, Koch said. To optimise exploration, address the productivity challenge and improve the long-term.

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Open Resource  |  2015/07/07  |  257 Report Broken   Tell Friend

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