Exploration |
AIMR 2008 |
Overview
Australian mineral exploration spending in 2006-07 rose by 38.2% to a record $1714.6 million of which 35.6% was spent on the search for new deposits. Western Australia dominated with 48.9% of Australian mineral exploration spending while South Australia, New South Wales, Victoria and Queensland had record expenditure. Gold remained the main single element target with a share of 26.6% but the base metals, (copper, zinc, lead, nickel, cobalt) formed the largest single exploration target with 32.4% of total spending in 2006-07.
Figure 2. Australian mineral exploration expenditures by commodity in constant 2006-07 dollars (Based on ABS data deflated by Consumer Price Index series).
Figure 3. Australian mineral exploration expenditures, excluding gold and base metals, in constant 2006-07 dollars (Based on ABS data deflated by Consumer Price Index series).
Review
Exploration resulted in significant increases in resources at known deposits and a substantial number of drill intersections of economic interest. The base metals group (nickel-cobalt, copper, zinc-leadsilver) overtook gold as the main target as gold's share fell to 26.6% of total spending. Strong growth was again recorded in spending for iron ore, coal and uranium exploration.
Australian mineral exploration expenditure rose by 38.2% to $1714.6 million in 2006-07 according to the Australian Bureau of Statistics (ABS). This was a record for annual current dollar expenditure for Australia. In 2006-07 constant dollars, expenditure was also a record after rising by 34.3% (Figs. 2 and 3).
The base metals group (nickel-cobalt, copper, zinc-lead-silver) overtook gold as the main exploration target in 2006-07 (Fig. 4). Base metal exploration spending rose by 55.6% to $555.0 million with expenditure on copper exploration being the principal driver. Copper exploration rose by 68.1% to $234.5 million and zinc-lead-silver spending increased by 96.1% to $139.4 million. Exploration for nickel recovered from a fall in 2005-06 to rise by a more modest 24.1% to $181.1 million. Gold exploration rose by 14.0% to $455.8 million which was 26.6% of total exploration compared to 32% in 2005-06. Continued strong international demand and high prices for coal, iron ore and uranium resulted in significant growth in exploration spending for those commodities. Coal exploration spending rose by 16.2% to $193.3 million, iron ore rose by 77% to $285.3 million and uranium by 103.4% to $114.1 million.
Figure 4. Australian mineral exploration spending by commodity (Source: ABS).
Spending increased in all jurisdictions in 2006-07 (Fig. 5). Western Australia was still dominant attracting $839.1 million. Record spending was reported in: Queensland, up 24.5% to $272.3 million; South Australia up 78.0% to $260.7 million; New South Wales up 26.4% to $144.1 million and Victoria up 11.3% to $82.5 million. Spending increased by 23.4% in the Northern Territory to $92.2 million and in Tasmania it rose by 4.9% to $23.7 million.
Exploration Stage
ABS reports data on spending on exploration for new deposits and for the further delineation and/ or extension of known mineralisation that has resources delineated. Spending is classified as being for the search for new deposits until there has been a JORC resource estimate of any classification prepared. Subsequent spending on exploring that mineralisation would be classified as further delineation or extension of a deposit.
ABS survey data of spending showed that, nationally, 35.6% of spending was on exploration for new deposits, compared to 37% in 2005-06. Victoria (46.3%) had the highest proportion of its exploration directed to the search for new deposits while South Australia had the lowest at 24.4%. The national share of exploration for new deposits is lower than the Metals Economics Group (MEG) world survey of non-ferrous minerals exploration budgets for 2007 which found that 41% of exploration budgets in Australia was for grassroots exploration.
Figure 5. Australian mineral exploration spending by State (Source: ABS).
Exploration Drilling
In 2006-07, ABS reported that exploration drilling totalled 8.455 million metres, an increase of 1.618 million metres from 2005-06. Drilling in the search for new deposits and on existing deposits increased significantly in 2006-07. An increase of 0.622 million metres occurred in drilling in search of new mineralisation with 3.24 million metres drilled. Drilling on existing deposits rose by 0.996 million metres to a total of 5.215 million metres.
Over 100 initial public offerings on the Australian Stock Exchange in 2007 were fully or partially for mineral exploration in Australia. These companies aimed to raise over $520 million for Australian exploration and many were heavily oversubscribed.
Calendar Year 2007
On a calendar year basis, exploration spending in 2007 rose by 41% to $2061.1 million.
Strong growth in the calendar year resulted from substantial increases in spending in each quarter. This growth reflects strong growth in price for many commodities on the back of anticipated strong and growing demand, particularly from China.
Gold remained the predominant single element target in calendar year 2007 its share of total spending was 24.4%. Gold exploration spending totalled $502.9 million in the year, an increase of $73 million. The base metal group attracted the largest spending in 2007 with $702.4 million, an increase of 64.9% with actual spending rising by $276.3 million. The growth in base metals was driven by substantial increases in zinc-lead-silver exploration, which rose by $86.7 million to $187.4 million, copper which rose by $86.2 million to $263.7 million and a $103.3 million increase in nickel exploration to $251.2 million. Uranium exploration spending more than doubled in 2007 rising from $80.7 million to $181.4 million. Iron ore exploration rose by $129.4 million to $354.1 million and its share of total spending increased to 17% from 15% in 2006. The growth in iron ore exploration was in response to continuing strong international demand, particularly from China. In contrast, coal exploration spending fell by $6.1 million in 2007 to $192.6 million and along with diamond exploration which fell by $9.4 million to $18.4 million were the two commodities for which exploration fell in 2007. The Northern Territory and all States, except Tasmania, recorded increased exploration spending in calendar year 2007. Western Australia remained dominant with an increase of $353.5 million in 2007 to $1038.8 million. This growth allowed the State to recover some of the share of national spending that fell in 2006 to reach just over half national spending. South Australia also recorded a significant dollar increase in spending and increased its share of national spending to 16.2%.
Exploration Outcomes
The ongoing strong exploration activity saw a very large number of reported intersections of economic grade and several new discoveries. A major review of the highlights of mineral exploration in Australia in 2007 is available in the document Australian Mineral Exploration: A Review of Exploration for the Year 2007 - Extended Edition available for download from the Geoscience Australia web site.
Responding to world demand there was substantial activity in the iron ore sector with new resources and drilling results released for many smaller deposits and prospects. Similarly uranium exploration surged particularly as the large number of new companies with a focus on uranium started exploration.
The increased exploration expenditure has been partly offset by major increases in the costs of exploration. Furthermore, the rate at which significant new discoveries are being made continues to decline despite the increasing exploration expenditure, largely reflecting the challenges faced in exploration in frontier regions and at greater depths in established mineral districts.
World Exploration
The MEG survey of world non-ferrous mineral exploration budgets for 2007 reported an increase of 40% to a record estimated total budget of US$10.5 billion. MEG included uranium in the survey for the first time in 2007 and it estimated that, including uranium, world budgets for non-ferrous mineral exploration was US$11.4 billion. Of this, US$1183.2 million was directed to exploration in Australia. Australia's share of global non-ferrous mineral exploration budgets (excluding uranium) rose to 11.9% and Australia retained its position as the country with the second highest share of budgets after Canada (19%).
According to the MEG survey, 60% of the 2007 non-ferrous mineral exploration budgets for Australian-based companies was for exploration in Australia. The survey included 512 companies with non-ferrous exploration budgets of more than US$100 000 that were exploring in Australia. Budgets for Australian non-ferrous mineral exploration included: gold (US$387.5 million), base metals (US$585.9 million) and uranium (US$154.2 million).
Figure 6. Distribution of world non-ferrous mineral exploration budgets, 2007 (Source: Metals Economics Group).
Outlook For Exploration
Both world and domestic mineral exploration levels grew strongly in 2007. The continuing high metal prices, particularly for the base metals and iron ore, and the sustained higher gold price levels remain conducive to greater exploration activity in 2008. The strong growth in the Chinese economy continues to drive high levels of demand for many commodities and is expected to contribute to ongoing strong exploration spending.
Overall, the outlook for exploration is sound and further growth in exploration expenditure can be expected.
