Operating Environment
During FY19, concerns regarding the global macro environment had a short-term impact on capital expenditure and exploration plans.
Despite those concerns:
- Mining production levels and commodity prices support further investment in the industry;
- The major and intermediate resource companies are increasing their expenditure to replace diminishing reserves;
- The discovery of new mines requires more drilling and is likely to have longer development times;
- New discoveries are likely to be under cover and at depth; and
- Resource companies are embracing innovation and new technologies to lower costs, increase safety and achieve greater productivity.
In relation to the juniors companies, conditions improved towards the end of FY19 due to the stronger gold price and as reported by Bloomberg, there has been a recent uplift in capitals raisings globally.
INDUSTRY IS PROGRESSIVELY LOOKING UNDER DEEPER COVER OVER TIME
Note: Size of the bubble refers to Moderate, Major and Giant discoveries. Excludes satellite deposits within existing camps. Analysis excludes Nickel laterites and under-sea deposits.
Source: MinEx Consulting © March 2017
The recent PWC Mine 2019 report highlights that the capital expenditure budget of the top 40 miners globally is on the rise. As miners balance sheets improve, we would expect further lift in capital spend. Whilst the capex spend incorporates all facets of miners growth, increasing drilling activities (exploration, infill, resource definition & mine production) will benefit from the lift in spend.
Source: PWC MINE 2019