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Signs of Life? The State of the Mineral Exploration Industry
Manitoba Mineral Review 2016
Felix Lee
2
PDAC 101
State of mineral finance
State of mineral exploration
Attracting explorers
PRESENTATION OVERVIEW
• Sustain a vibrant and responsible Canadian mineral exploration and development industry
• Support the Canadian exploration industry, worldwide, to secure access to land, skills and capital
Vision
Mission
A competitive Canadian exploration and development industry that operates responsibly around the world to find the minerals and metals that are essential to modern life
PDAC: A national association with global reach
33
4THE STATE OF MINERAL FINANCE
4
5
6
5.84
13.16
1.88
6.44
3.51 4.38
5.49
4.66
1.42
1.60
0.93
1.90
48.5%
26.1%
43.1%
19.9%21.0%
30.2%
0%
10%
20%
30%
40%
50%
60%
-
2
4
6
8
10
12
14
16
18
20
2011 2012 2013 2014 2015 2016*
($B)
Canada Rest of the World
% of Canada
* 2016 figures are annualized estimation Source: SNL Metals & Mining
Financing for Mineral ExplorationCanada vs. Rest of World 2011-16 ($B)
7
1,059
655
354 396 349
577
699
755
186183 284
287
60.2%
46.4%
65.5%68.3%
55.1%
66.8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2011 2012 2013 2014 2015 2016*
(C$M)
Non-FTS FTS FTS %
* 2016 figures are annualized estimation Sources: TMX (FTS data); SNL Metals & Mining (Non FTS data)
Exploration Equity Financing in Canada Flow-Through vs. Hard Dollars 2011-16 (C$M)
3.7
6.1
7.0
3.2
5.1
7.6
8.0
4.9
3.5
2.6
51.3%
55.1%
50.7%
40.0%
43.9% 44.1%
38.9%
33.8%
32.3%
29.3%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
0.0
5.0
10.0
15.0
20.0
25.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
$ Billion
GLOBAL EXPLORATION BUDGETS*By company type: 2006-2015 ($B)
Other Government Junior
Intermediate Major Junior ShareSource: SNL Metals & Mining
*Non-ferrous exploration only8
2.84.5 5.3
2.73.8
5.8 6.34.8
3.2 2.5
38.6%
41.0%
38.2%
33.8%
32.9%
33.6%
30.7%
33.0%
30.1%
29.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
0.0
5.0
10.0
15.0
20.0
25.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
$BillionGLOBAL EXPLORATION BUDGETS
By Stage: 2006-2015 ($B)
Minesite Late Stage & Feasibility
Grassroots Share of Grassroots9
41%4%
38
33%
Source: SNL Metals & Mining
*Non-ferrous exploration only
Value /
Spending
Senior Cos $ 12.5 46% 21 24% 8.7 54% $ 7.9 39% 0.63
Junior Cos $ 14.6 54% 66 76% 7.3 46% $ 12.1 61% 0.83
----- ------ ------ ------- ------ ------- ------- ------- -------
TOTAL inc Bulks $ 27.2 100% 87 100% 16 100% $ 20.0 100% 0.74
TOTAL excl Bulks $ 24.6 79 15 $ 19.1 0.77
Exploration
Spend (2014 $b)
No of
Discoveries #
Tier 1+2
Discoveries
Estimated Value
(2014 $b)
VALUE PROPOSITION OF JUNIORS(1975-2014)
Note: “Junior” defined by NRCan as those companies and prospectors that don’t have access to sales revenues
Note: The Estimated Value is approximate only, and ignores the value of unreported discoveries
From R. Schodde, MinEx Consulting©,
March 2015. All Rights Reserved 10
11
THE STATE OF MINERAL EXPLORATION
IN CANADA
DECLINING BUDGETS IN CANADA
12
LOSING GROUND
10.4% 12.3% 14.3% 13.6% 13.2% 13.1% 12.3%13.1% 11.7% 12.2%
19.3% 21.1% 20.5% 17.1% 19.2% 18.1% 15.8%13.3% 13.9% 13.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
AUS/CAN Share of Global Non-Ferrous Exploration Budgets
Canada - Share of total Australia - Share of total13
MAXIMIZING THE LAND BASE
REDUCING LAND ACCESS COSTS
REDUCING LAND ACCESS DELAYS
IMPROVING EXPLORATION
EFFICIENCY
SECURING A SOCIAL LICENSE
14
ATTRACTING EXPLORERS
CHALLENGE #1: LAND WITHDRAWAL
15
CHALLENGE #2: REMOTENESS COST PREMIUM
NWT:
69% NU:8
5%YK: 77%
Prepared for PDAC by Minex
Consulting (2015) 16
CHALLENGE #3
17Source: mining.com (Fraser
Institute, 2016)
CHALLENGE #4: EXPLORATION AT DEPTH
From R. Schodde, MinEx Consulting©
March 2015. All Rights Reserved 18
CHALLENGE #5: SOCIAL LICENSE
19
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