Exploration spending to top US$7B: MEG study

Facts ‘N’ Figures

An early look at the exploration spending numbers for 2006 compiled by Halifax, N.S.-based Metals Economics Group in its 17th edition of Corporate Exploration Strategies shows that budgets in for this year have increased for a fourth consecutive year to more than US$7.1 billion — the highest level since the studies began in 1989.

The 2006 budgets also show the highest year-on-year dollar increase since 1989 — a whopping 45% increase from the amount spent on exploration in 2005. More than 1,600 companies’ exploration budgets are included in the study.

Regionally, Latin America continues to be the most popular destination for exploration dollars, followed by Canada. Nationally, Canada retains the top spot for the fifth year running, with total budgets nearly twice that of second-place Australia.

Exploration budgets have increased for all commodities covered in the study. Gold exploration budgets continue to exceed all other targets in dollars, but base metals budgets show a substantially greater percentage increase than gold in 2006. Silver exploration has also increased significantly.

The total budgets for late-stage exploration (including feasibility work) have exceeded grassroots exploration budgets for the second consecutive year. Prior to 2004, grassroots budgets were on average about 50% higher than late-stage budgets. However, in the current exploration cycle, with metals prices at record highs, late-stage exploration has become increasingly important, as companies push to bring projects to a production decision.

Corporate Exploration Strategies, to be published later this month, examines the nonferrous exploration activities of mining companies worldwide. The first volume provides a 10-year summary of trends in exploration spending and an industry-wide analysis of allocations by location, target, stage of development, and more. The second volume reports each company’s exploration budget by country, target, and stage of development. The study also includes a list of companies that do not have exploration budgets but do have significant exploration projects for which they are seeking financing or joint ventures in 2006.