Modern Mining September 2016

EXPLORATION AND GEOSCIENCE

Top gold miners foregoing early-stage exploration

mine-site exploration’s lead over grassroots ex- ploration jumped from a mere US$36 million in 2006 to US$470 million in 2015. Since the total gold exploration budget of top gold producers reached a high of US$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 produc- ers spending more at and near their mines to replace or increase reserves depleted by min- ing and to develop new reserves more quickly at lower costs by using existing infrastructure. Gold Fields Ltd is a vivid example of this trend, and has even admitted its lack of success in greenfields exploration and in taking proj- ects from initial discovery through construction and into production. Despite having spent roughly US$600 million on early-stage explo- ration since the founding of the modern Gold Fields in 1998, and despite the discovery of two multimillion-ounce deposits, Gold Fields has not taken a single project from discovery to pro- duction, demonstrating how elusive greenfields exploration success can be. As a result, the company has made a strategic shift from capi- tal- and time-intensive exploration-led growth to a programme of brownfields exploration and opportunistic, value-accretive acquisitions. In late 2013, Gold Fields eliminated its Growth and International Projects division and announced a drastic cutback of its greenfields exploration projects portfolio. Responsibility for exploration was devolved to the group’s

An analysis of the data compiled in SNL Metals & Mining’s recently released profiles of the world’s top 20 gold producers reveals that the major gold miners have significantly shifted their exploration focus over the past decade. The profiles form part of the Strategies for Gold Reserves Replacement study series of reports.

A s illustrated in the chart below, the top gold producers have shown a trend toward increased mine-site exploration at the ex- pense of grassroots exploration over the past 10 years. From 2006 to 2015, the share of total gold exploration budgets devoted to near-minework rose from44%to 54%, while the share allocated to greenfields programmes decreased from 40 % to 22 %. In dollar terms,

Exploration budgets by stage for top 20 gold producers (US$M).

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42  MODERN MINING  September 2016