- The global nonferrous exploration budget fell for the first time in three years, declining US$300 million year-over-year, or 3%, to US$9.8 billion.
- A key cause of budget falls was merger & acquisition activity.
- Base metals spend was to outpace gold with budgets for the precious metal declining US$559 million, or 6%, to US$4.29 billion.
- Australia had the largest budget increase and is to spend more than Canada for the first time since 2001.
Difficult market conditions and high-profile M&A activity have unsurprisingly impacted budgets the most, as the amount of money being raised by companies dropped sharply from November 2018 through February of this year.
S&P Global Market Intelligence metals and mining research associate director Mark Ferguson
S&P Global Market Intelligence metals and mining research has found global exploration budgets for 2019 have declined by US$300 million, or 3%, year-on-year as Australia became the only top-4 region by forecasted exploration spend to increase its annual budgets.
According to the S&P data published as part of its Corporate Exploration Strategies series, Australia became number two region in budgetary stakes and will spend more in 2019 than Canada, outpacing the North American country for the first time since 2001.
S&P Global Market Intelligence metals and mining research associate director Mark Ferguson highlighted a number of causes of reduced global exploration budgets and flagged the outfits expected outlook for next year.
Ferguson said, “Difficult market conditions and high-profile M&A activity have unsurprisingly impacted budgets the most, as the amount of money being raised by companies dropped sharply from November 2018 through February of this year.
“As the market remains volatile, we anticipate exploration budgets remaining relatively flat in 2020, as any increase to gold budgets will likely be offset by lower allocations to other commodities.”
Budgets decline after major mergers
Global exploration budgets have declined for the first time since 2016, with spending flagged to fall US$300 million year-over-year, or 3%, to US$9.8 billion.
Exploration budgets previously declined globally in 2013-16 after they hit their highest levels in 2012, in 13 years of data measurement.
After major companies merged this year, their post-merger budgets tended to be dramatically lower.
Among the mergers making an impact were the Newmont-Goldcorp and Barrick Gold-Randgold mergers which took $102 million or about a third of the exploration budget decline out of the market.
Newmont Goldcorp Corp (NYSE:NEM) (FRA:NMM) (TSE:NGT) (SWX:NEM) cut US$48 million in exploration funds from its budget after its merger while Barrick Gold Corp (NYSE:GOLD) (TSE:ABX) (ETR:ABR) (BCBA:ABX) shaved US$54 million from its exploration budget, when comparing the annual spends to the companies 2018 budgets.
Positive signs
S&P has seen positive trends in the market in recent times.
Ferguson said, “We are encouraged … by some positive signs, such as the rising number of active companies and copper recording a year-over-year increase.”
Research outfit S&Ps 2019 dataset measured US$9.29 billion in budgetary allocations by companies and also estimated totals for companies that spent less than US$100,000 and private companies that do report their data.
Base metals budgets grow
Gold explorers shaved cash off their exploration budgets as the global price for the metal increased and goldRead More – Source
