Exploration Budgets Rise; Companies Spent More Than $12 Billion In 2010

With commodity prices rising again and market conditions stabilizing, the Metals Economics Group (MEG) found that most mining companies increased their exploration budgets in 2010. In the groups 21st edition of the Corporate Exploration Strategies (CES), MEG found a 44-percent rise in the estimated worldwide exploration total for 2010. MEG found that the estimated total 2010 budget for nonferrous metals exploration reached $12.1 billion, reinstating almost two-thirds of the industry?s $6 billion in cuts to exploration in 2009. Nonferrous exploration refers to expenditures related to precious and base metals, diamonds, uranium and some industrial minerals; it excludes iron ore, aluminum, coal, and oil and gas. In 2008, exploration budgets were at an all-time high of $14.4 billion. This capped a six-year run in which budgets rose. In 2009, nonferrous exploration budgets dropped 42 percent in 2009 as the global economic crisis and declining prices for almost all commodities took their toll on the industry. Metals prices - the primary driver of exploration spending - have improved markedly since bottoming in early 2009, and have traded well above their long-term trends throughout 2010. In response, major, intermediate and junior companies have all increased their aggregate exploration allocations in 2010. In particular, the significant improvement in the availability of equity financings for the juniors over the past 12 to 18 months has allowed this group to account for the largest share of the overall increase in exploration spending this year.