IMDEX Limited

Our Operating Environment

FY18 Market Conditions

  • Broad-based recovery in the minerals sector globally
  • Recovery spanned all key mining areas – particularly the Americas
  • Commodity prices strengthened and were generally at the highest level in a little over three years. Potential US – China trade war adversely impacted commodity prices towards the end of FY18
  • Major, intermediate and junior companies were well funded with increased budgets
  • Mineral exploration/development drilling increased steadily
  • Exploration was principally associated with brownfield projects – some greenfield activity was evident
  • Resource companies continued to focus on increasing efficiencies and cost reductions
  • New technologies continued to gain momentum in order to achieve efficiencies and drive productivity
  • Mining companies need to replace diminishing reserves
  • Increased investment in junior explorers by major resource companies
  • Risk appetite of resource companies is likely to increase as mine life remains an issue

REFLEX INSTRUMENTS ON HIRE


WORLD MINERAL EXPLORATION

  • CY18 budgets forecast to increase by 15 – 20% to US$10bn
  • The Americas attracted >50% of expenditure, Asia/Pacific – 17.5%, Africa – 14%
  • Gold/copper represent >70% of global expenditure. Gold/base metals >80%

Source: S&P Global Market Intelligence


GOLD IN MAJOR DISCOVERIES (1990 – 2017)

  • US$54.3b gold exploration past 10 years 215.5m oz Au, 41 discoveries
  • US$32.2b in the preceding 18 years 1,726m oz Au in 222 discoveries
  • Easy deposits found – 263 major discoveries in past 28 years, 139 in 1990s and contain most of discovered gold
  • New mines – under cover, deeper, more drilling, more expensive and longer development time
  • Mined Au ore grades 2005 – 2015 declined from 2.44g/t to 1.83g/t, trending lower

Source: S&P Global Market Intelligence – Data as of July 25 2018


COPPER IN MAJOR DISCOVERIES (1990 – 2017)

  • US$26.6b spent on Cu exploration over past 10 years – 140m t Cu in 29 discoveries
  • US$12.4b spent over preceding 18 years – 862.8m t in 191 discoveries
  • Mined Cu ore grades 2005 – 2017 declined (0.74% to 0.59%)
  • Declining grades, more material moved and processed, water and energy consumption, achieve the same unit of produced metal
  • Size of mines increasing as low grade Cu deposits are typically larger ore deposits – larger economies of scale, increases waste rock removal, explosives consumption, tailings generation and area of local habitat disturbance
  • License to operate remains a challenge

Source: S&P Global Market Intelligence – Data as of July 25 2018