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In This List

A Decade of Underperformance for Gold Discoveries

Greenhouse gas and gold mines Nearly 1 ton of CO2 emitted per ounce of gold produced in 2019

Essential Metals & Mining Insights - September 2020

Essential Metals & Mining Insights - August 2020

State of the Market: Mining Q2-2020

A Decade of Underperformance for Gold Discoveries

Our annual analysis of major gold discoveries has identified 278 deposits discovered over the 1990-2019 period containing 2,194.5 million ounces of gold in reserves, resources and past production. There are no major gold discoveries on our list in the past three years, and only 25 in the past decade. The lack is driven by exploration focusing on older discoveries and later-stage assets. While there are still plenty of gold assets to be developed, the lack of new major deposits being discovered means that the project pipeline is increasingly short of large, high-quality assets needed to replace aging major gold mines.

Dearth of recent discoveries

We have long documented the decrease in the number of major new deposits being discovered. This trend for gold is worsening, with only 25 deposits discovered over the past decade containing only 154.3 Moz, or 7%, of all gold discovered during the period. Although we believe the sharp decline is indeed reflective of the lack of new significant deposits being found (and explored), a portion of the recent shortfall reflects the remaining exploration effort required to expand the known endowment of newly found deposits beyond our major discovery threshold.

The severe lack of new major discoveries over the past decade is a result of companies focusing on advanced-stage assets and known deposits, rather than searching for new discoveries. Our Corporate Exploration Strategies annual series has long noted the industry shift away from risky grassroots exploration in favor for exploration at known deposits and around operating mines. The share of gold exploration budgets devoted to grassroots exploration has fallen by half since the 1990s. Both pure explorers and producers have shifted their spending, with juniors increasingly focused on expanding known deposits while producers have increasingly focused on exploration at their existing operations. Although some new major discoveries have been found at late-stage projects and existing mining camps, the potential to find new major discoveries at such projects is less than at riskier, early-stage prospects.

Even the grassroots exploration that is being conducted is focused on areas with known deposits or mineralization. These trends are clearly shown in the initial gold resource announcements made in 2019. None of the four resource announcements made in 2019 that meet our major discovery threshold were actually discovered in the past few years. The Gran Bestia announcement of 4.2 Moz made by Lumina Gold is a new zone at the Cangrejos deposit in Ecuador, which was discovered in 1999. The 4-Moz Chulbatkan deposit announced by N-Mining was first discovered in 1980, although this is the first resource for the project. The Nelligan initial resource of 3.2 Moz announced in 2016 is the group's most recent discovery, while the 2.5-Moz Estelle deposit was first drilled in 1988.

Relatively few high-quality assets

Of the 278 discoveries included, 135, or about half, containing 1,085.9 Moz are not yet in production. While this seems like a large pool of assets for potential development, the number of high-quality assets is much smaller. Only 30 have over 10 Moz of gold in reserves and resources, which would provide a 500,000-ounce-per-year project with a mine life of around 15 years. Only nine of these assets have a grade of 1 g/t or greater, however. Some of the assets will likely enter production over the next few years, such as Barrick’s Goldrush and Zijin’s Buritica; some, like Rosia Montana in Romania, face significant challenges and might never be developed; while others, like Donlin in Alaska, have a potentially long road to production. With production from existing mines expected to begin decreasing in 2022, there is a need for more high-quality assets that can be developed in the medium term.

Additional grassroots exploration is needed to ensure the pipeline has enough quality assets required to replace aging mines. The industry has trended away from this generative exploration over the last few decades, and we do not expect this trend to reverse in the near term. We expect quite the opposite in 2020, as COVID-19 impacts exploration plans for companies of all sizes.

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