Exploration and discovery of base and precious metal ...

MinEx Consulting Strategic advice on mineral economics & exploration

Exploration and discovery of base and precious metal deposits in the

Pacific Rim over the last 50 years

Richard SchoddeManaging Director, MinEx Consulting

Adjunct Professor, Centre for Exploration Targeting, UWA

PACRIM 2019Mineral Systems of the Pacific Rim Congress3-5 April 2019, Auckland


Overview

1. What’s covered by the Circum-Pacific Region?2. Trends in exploration expenditures for copper and gold3. Historic Mineral endowment of the CPR4. Size and location of copper discoveries in the CPR5. Size and location of gold discoveries in the CPR6. Trends in discovery costs for copper and gold7. Sillitoe’s 1995 analysis of the CPR

- Size of deposits- Delays in making discoveries

8. MinEx analysis of the delay in making a discovery9. Conclusions

2


1. CIRCUM-PACIFIC REGIONSpans across 1/3rd of the World’s surface in 41 jurisdictions

3


Jurisdictions within the Circum-Pacific Region

Latin America- Argentina- Chile- Peru- Ecuador- Colombia

North America- California - Idaho- Oregon - Utah- Washington - Br Columbia-Nevada - Yukon- Alaska

Central America- Panama - Belize- Costa Rica - El Salvador- Nicaragua - Caribbean Islands- Honduras - Mexico

NE Asia- Russian Far East (5 Oblasts)

- Japan- Taiwan

SE Asia- Indonesia- Philippines- Brunei

Eastern Australia- Queensland - NSW- Tasmania - Victoria

Oceania- New Zealand- New Caledonia- Solomon Island- Fiji- PNG

41 Jurisdictions covering 16.3%of the World

41 Jurisdictions covering 16.3%of the World

Note: Excludes Antarctica

4

Source: Minex Consulting © April 2019


2. TREND IN EXPLORATION EXPENDITURESThe Circum-Pacific countries account for nearly half of global spend for gold and copper

5


Exploration Expenditures on Gold and CopperPacific Rim Region: 1993-2018

$0

$2

$4

$6

$8

$10

1975 1985 1995 2005 2015

Copper

Gold

Sources: MinEx Consulting estimates based on data from SNL, ABS (for Australia),NRCan (for Canada) and the Alaskan Division of Geological & Geophysical Survey

No data for years prior to 1993

Exploration expenditures increased dramatically in

the mid-2000s

Exploration expenditures increased dramatically in

the mid-2000s

$0.74 bin 2002

$8.07 bin 2012

$3.27 bin 2018

2018 US$ Billion

6


Exploration Expenditures on Gold by RegionPacific Rim Countries: 1993-2018

$0

$1

$2

$3

$4

$5

$6

1975 1985 1995 2005 2015

Oceania

Eastern Australia

Southeast Asia

Northern Asia

North America

Central America

Latin America

2018 US$ Billion



$0.50 bin 2002

$5.18 bin 2012

$2.01 bin 2018

Over the last decade the 7 PACRIM regions

accounted for 41% of global gold expenditures


accounted for 41% of global gold expenditures

7


Exploration Expenditures on Copper by RegionPacific Rim Countries: 1993-2018

$0

$1

$2

$3

$4

$5

$6

1975 1985 1995 2005 2015

Oceania

Eastern Australia

Southeast Asia

Northern Asia

North America

Central America

Latin America



$0.25 bin 2002

$2.92 bin 2012

$1.26 bin 2018


accounted for 49% of global copper expenditures


accounted for 49% of global copper expenditures

2018 US$ Billion

8


3. HISTORIC KNOWN ENDOWMENT50% of the World’s copper resides within the circum-pacific region

9


Mineral Deposits in the Circum-Pacific RegionAll Years : All Commodities

Gold

Precious (PGE,Ag,Dia, Gems)

Base Metal (Cu,Ni,Zn,Pb)

Mineral Sands

Uranium

Other

Note: Analysis excludes bulk mineral deposits (Coal, Fe, Al, K2O and P2O5) Bubble size refers to whether it is a Moderate-, Major- or a Giant-deposit

Au Cu Ni Zn/Pb Other TOTAL

No. 1589 612 133 143 53 2973

Metal 4447Moz

2409 Mt

148Mt

601 Mt

xx

33% of all known deposits in the World

33% of all known deposits in the World

34% 50% 39% 32%

Share of World Pre-mined Resource

10



4. SIZE AND LOCATION OF COPPER DISCOVERIES

Since 1970 a total of 1303 Mt Cu has been found in 302 copper deposits in the circum-pacific region

11


Number of copper discoveries by sizeMineral discoveries in Circum-Pacific Region: 1950-2018

0

5

10

15

20

1950 1960 1970 1980 1990 2000 2010 2020

Est Unreported

Moderate

Major

Giant

Number

27

includes MinEx’sestimate of unreported discoveries


Note: Based on Moderate-, Major- and Giant-sized depositsModerate 0.101 Mt Cu, Major 1-5 Mt Cu, Giant >5 Mt Cu Source: Minex Consulting © April 2019

12

88

243

149

480


Million Tonnes of Copper foundCircum-Pacific Region: 1950-2018

0

20

40

60

80

100

120

140

160

180

200

1950 1960 1970 1980 1990 2000 2010 2020

Est Unreported Discoveries

No of Discoveries

Mt Cu

Note: Based on Primary copper discoveries >100kt CuIncludes an adjustment for unreported discoveries in recent years.No expenditure data available prior to 1993


13


PACRIM Region Copper Discoveries : 1970-79

Note:Bubble size refers to pre-mined resource of copper metal tonnes

100Mt Cu

20Mt Cu

5Mt CuOlympic Dam

Los Pelambres [38 Mt]

Los Bronces [34 Mt]

Antamina [29 Mt]

Quebrada Blanca [19 Mt]

260 Mt Cu in 49 Cu deposits


14

Source: Minex Consulting © April 2019Total Cu tonnage for the decade includes by-product metal from Au and other deposits



100Mt Cu

20Mt Cu

5Mt Cu

Escondida [131 Mt]

Grasberg [56 Mt]



15

Source: Minex Consulting © April 2019Note:Bubble size refers to pre-mined resource of copper metal tonnes

Total Cu tonnage for the decade includes by-product metal from Au and other deposits



100Mt Cu

20Mt Cu

5Mt Cu

Collahuasi [91 Mt]

Tampakan [15 Mt]



16





100Mt Cu

20Mt Cu

5Mt Cu

Pebble [37 Mt]

Pampa Escondida[34 Mt]

Resolution [28 Mt]

Los Sulfatos[18 Mt]



17





100Mt Cu

20Mt Cu

5Mt Cu

Hu’u [? Mt]

Cascabal[11 Mt]



18




5. DISCOVERY HISTORY FOR GOLD

Since 1970 a total of 3011 Moz has been found in 658 gold deposits in the circum-pacific region

19


Number of gold discoveries by sizeMineral discoveries in Circum-Pacific Region: 1950-2018

0

5

10

15

20

25

30

1950 1960 1970 1980 1990 2000 2010 2020

Est Unreported

Moderate

Major

Giant

Number

23



Note: Based on Moderate-, Major- and Giant-sized depositsModerate 0.101 Mt Cu, Major 1-5 Mt Cu, Giant >5 Mt Cu Source: Minex Consulting © April 2019

20

96

237

271

717


Moz of Gold foundCircum-Pacific Region: 1950-2018

0

20

40

60

80

100

120

140

160

1950 1960 1970 1980 1990 2000 2010 2020


No of Discoveries

Moz Au


21

Note: Based on Primary gold discoveries >100koz AuIncludes an adjustment for unreported discoveries in recent years.


PACRIM Region Gold Discoveries : 1970-79

100 Moz Au

20 Moz

5 Moz

Olympiada

Pueblo Viejo [42 Moz]

397 Moz in 70 Au deposits

397 Moz in 70 Au depositsHycroft [33 Moz]

Gold Quarry [27 Moz]

Round Mountain [25 Moz]

22

Source: Minex Consulting © April 2019Note:Bubble size refers to pre-mined resource of gold

Total Moz for the decade includes by-product metal from Cu and other deposits




964 Moz in 232 Au depositsCarlin – Barrick [77 Moz]

Lihir [68 Moz] Yanacocha[57 Moz]

Porgera[36 Moz]

Pascua-Lama [22 Moz]

100 Moz Au

20 Moz

5 Moz

23







Donlin Creek[45 Moz]

Cadia East[37 Moz]

Turquoise Ridge [29 Moz]

Veladero [20 Moz]

Penasquito [19 Moz]

100 Moz Au

20 Moz

5 Moz

24






778 Moz in 129 Au depositsKSM [98 Moz]

Snowfield [35 Moz]

La Colosa [28 Moz]

Caspiche [25 Moz]

100 Moz Au

20 Moz

5 Moz

25







100 Moz Au

20 Moz

5 Moz

Swan –Fostrville [3Moz]

26




6. TREND IN DISCOVERY COSTS

Unit discovery costs in the Circum-Pacific Region have dramatically risen in the lastdecade

27


Exploration Expenditures and number of discoveries : CopperCircum-Pacific Region: 1950-2018

$0

$1

$2

$3

$4

0

5

10

15

20

1950 1960 1970 1980 1990 2000 2010 2020


No of Discoveries

Exploration Expenditure

Number



28

2018 US$ BillionDiscovery performance has declined in recent

years

Discovery performance has declined in recent

years

Exploration Spend


Average cost per copper deposit foundPACRIM Region versus the World: 1975-2018

$0

$100

$200

$300

$400

1975 1985 1995 2005 2015

Note: Based on a 3-year rolling AverageBased on primary copper deposits >100kt CuIncludes an adjustment for the number of unreported discoveries in recent years

2018 US$m per Discovery

WORLD

PACRIM Region

3-Year Rolling Average

PACRIM is simply following the same trend as the rest of the World …

$320m

$154m

Over the last decade unit discovery costs have

significantly risen


significantly risen

$105m

$282m

$33m

… no real surprise given that it accounts for half of global spend


29


Exploration Expenditures and Mt Cu found : CopperCircum-Pacific Region: 1950-2018

$0

$1

$2

$3

$4

0

20

40

60

80

100

120

140

160

180

200

1950 1960 1970 1980 1990 2000 2010 2020


No of Discoveries


Mt Cu



30

2018 US$ Billion

Exploration Spend


Average cost per pound of copper foundPACRIM Region versus the World: 1975-2018

0

2

4

6

8

10

1975 1985 1995 2005 2015

Note: Based on a 3-year rolling AverageBased on primary copper deposits >100kt CuIncludes an adjustment for the number of unreported discoveries in recent years

2018 US Cents/lb Cu

WORLD

PACRIM Region


PACRIM is now twice as expensive as the global average

8.7 c/lb

1.5 c/lb


significantly risen


significantly risen

1.3 c/lb

3.2 c/lb

0.3 c/lb


31


Exploration Expenditures and number of discoveries : GoldCircum-Pacific Region: 1950-2018

$0

$1

$2

$3

$4

$5

$6

0

10

20

30

40

1950 1960 1970 1980 1990 2000 2010 2020


No of Discoveries


Number


32

2018 US$ Billion

Exploration Spend

Note: Based on Primary gold discoveries >100koz AuIncludes an adjustment for unreported discoveries in recent years.No expenditure data available prior to 1993


Average cost per gold deposit foundPACRIM Region versus the World: 1975-2018

$0

$100

$200

$300

$400

1975 1985 1995 2005 2015

Note: Based on a 3-year rolling AverageBased on primary gold deposits >100koz AuIncludes an adjustment for the number of unreported discoveries in recent years

2018 US$m per Discovery

WORLD

PACRIM Region3-Year Rolling Average

PACRIM’s costs are higher than the global average

$330m

$191m in 2018


significantly risen


significantly risen

$27m

$384m in 2017

$66m

$47m

$210m


33


Exploration Expenditures and Moz found : GoldCircum-Pacific Region: 1950-2018

$0

$1

$2

$3

$4

$5

$6

0

20

40

60

80

100

120

140

160

1950 1960 1970 1980 1990 2000 2010 2020


No of Discoveries


Moz Au


34

2018 US$ Billion

Exploration Spend

Note: Based on Primary gold discoveries >100koz AuIncludes an adjustment for unreported discoveries in recent years.No expenditure data available prior to 1993


Average cost per ounce of gold foundPACRIM Region versus the World: 1975-2018

$0

$100

$200

$300

1975 1985 1995 2005 2015

Note: Based on a 3-year rolling AverageBased on primary gold deposits >100koz AuIncludes an adjustment for the number of unreported discoveries in recent years

2018 US$ per Ounce

WORLD

PACRIM Region


PACRIM’s costs are higher than the global average

$220/oz

$85/oz in 2018


significantly risen


significantly risen

$7/oz

$186/oz in 2017

$16/oz

$18/oz


35


7. COMPARISON WITH SILLITOE’S 1995 STUDY OF THE REGION

In a landmark paper Dick Sillitoe assessed the discovery history of 52 major precious and base metal deposits in the region

36


Assessed 54 major deposits found in the

period 1970-1994

Assessed 54 major deposits found in the

period 1970-1994

38 gold 14 copper

1 silver1 zinc

For the same time-period, MinEx has data on 296

major deposits found in the region

For the same time-period, MinEx has data on 296

major deposits found in the region

ie >1 Moz Au, > 1 Mt Cu

37


Sillitoe’s analysis was comprehensive and covered the entire region

38


Many of the deposits in Sillitoe’s study grew in size

COPPERChange in Pre-Mined Resource

0

20

40

60

80

100

120

140

0 10 20 30 40

Mt Cu in 2018

Mt Cu in 1995

1x

On average, copper deposits grew in

size by 3.1x

On average, copper deposits grew in

size by 3.1x

GOLDChange in Pre-Mined Resource

0

20

40

60

80

100

120

140

0 10 20 30 40

Moz Au in 2018

Moz Au in 1995

1x

On average, gold deposits grew in

size by 2.1x

On average, gold deposits grew in

size by 2.1x

39


5x

3x

5x

3x


8. PRE-DISCOVERY EFFORTS

Sillitoe found that, on average it took ~3 companies and ~19 years of exploration effort to make a discovery

40


It takes persistence and patience to make a discoveryTime delay and number of companies involved prior to the actual discovery of a Major base- or precious-metal deposit

0%

20%

40%

60%

80%

100%

0-1 2-5 6-10 11-15 16-20 >20 Total

9%

11%

30%

4%

15%

31% 100%

Time spent (in years) exploring the property before the discovery was made

0%

20%

40%

60%

80%

100%

1 2 3 4 5 >5 Total

6%11%

28%

31%

11%

Number of Companies who explored the property before the discovery was made

13% 100%

Note: Analysis is based on 54 Major base- and precious-metal discoveries in the circum-Pacific region between 1958-1994. The analysis excludes any historical small-scale operations on the project lease.

Source: Minex Consulting © April 2019, based on discovery data from RH Sillitoe 1995

The average exploration time for a Major discovery was 19 years. One third were

found within 5 years

The average exploration time for a Major discovery was 19 years. One third were


On average, 2.8 companies explored the property prior to discovery


Note: 9 of these discoveries had a delay of >40 years.

Excluding these drops the average to 2.6 companies

and 12 years

Note: 9 of these discoveries had a delay of >40 years.

Excluding these drops the average to 2.6 companies

and 12 years

41


MinEx carried out a similar analysis, based on the discovery histories for 100 copper and gold projects, as given in NR43-101 reports

42


It takes persistence and patience to make a discoveryTime delay and number of companies involved prior to the actual discovery of a significant copper or gold deposit

0%

20%

40%

60%

80%

100%

0-1 2-5 6-10 11-15 16-20 >20 Total

14%

21%

21%

12%

12%

20% 100%

Time spent (in years) exploring the property before the discovery was made

0%

20%

40%

60%

80%

100%

1 2 3 4 5 >5 Total

Number of Companies who explored the property before the discovery was made

Note: Analysis is based on 100 significant (>100koz, >100 kt Cu) gold and copper discoveries in the Western Worldbetween 1960-2018. The analysis excludes any historical small-scale operations on the project lease.


The average exploration time for a significantdiscovery was 12 years. One third were


The average exploration time for a significantdiscovery was 12 years. One third were




14%

29%

20%

30%

5% 2% 100%

0%

20%

40%

60%

80%

100%

0-1 2-5 6-10 11-15 16-20 >20 Total

Time spent (in years) by the successful company exploring the property before the discovery was made

9%41%

47%

3% 100%

The successful company took on average 2.5 years to find the deposit

The successful company took on average 2.5 years to find the deposit

43


The speed of discovery is slowing down

6.98.1 7.5

14.2 13.814.7

3.6 3.02.0 1.7

2.7 3.1

0

2

4

6

8

10

12

14

16

1960-69 1970-79 1980-89 1990-99 2000-09 2010-18

1.72.3

2.7 2.42.8

2.6

0

1

2

3

4

Discovery Year

Number of Companies to make the discovery

Years required to make the Discovery

All Companies

Successful Company

Avg = 2.5 Companies

Avg = 12 Years

Avg = 2.6 Years

Note: Analysis is based on 100 significant (>100koz, >100 kt Cu) gold and copper discoveries in the Western Worldbetween 1960-2018. The analysis excludes any historical small-scale operations on the project lease.


44


Summary

1. The Circum-Pacific Region covers 41 jurisdictions over 16% of the Worlds’ surface area

2. Over the last decade the CPR accounted for 41% of the World’s exploration expenditures on gold For copper the figure was 49%

3. The CPR hosts 50% of the World’s historic mineral endowment for copper and 34% of the World’s gold endowment4. Since 1970:

a total of 302 copper deposits containing ~1300 Mt Cu have been found in the CPRa total of 658 gold deposits containing ~3000 Moz Au have been found in the CPR

While the number of discoveries and the amount of metal found appears to have fallen off in recent years, this may simply be due to theinherent delay in drilling out a discovery. Deposits found 25 years ago are now 2-3x larger in-size

5. Unit discovery costs have risen in the last decade in the CPR. It currently costs ~$280m to make a copper discovery (or 3.2 cents/lb Cu) and $380m ( or $186/oz) for a gold discovery. This is double the World average.

6. In 1995 Dick Sillitoe published a landmark study assessing the discovery history of 54 deposits in the CPR. He found that on average, it took 19 years and 2.8 companies to make a discovery.

7. MinEx carried out a study assessing 100 gold and copper discoveries (around the World) and found that, on average it took 12 years and 2.5 companies to make the discovery. The successful one (ie the last company in the chain) took 2.5 years to find the deposit. Over the last 40 years the rate of discovery appears to be slowing down.

45


Conclusions

The Circum-Pacific Region is highly fertile for copper and gold, and it will continue to deliver giant discoveries in the future.

46

.. However, of concern is that unit discovery costs arenow higher than the World Average


Contact details

Richard SchoddeManaging DirectorMinEx Consulting Melbourne, Australia

Email: [email protected]: MinExConsulting.com

Copies of this and other similar presentations can be downloaded

from my website

Copies of this and other similar presentations can be downloaded

from my website

47

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