(Kitco News) – The amount of exploration spending for gold and other metals has declined in the last few years along with prices, said David Cox, senior sales executive for SNL Metals & Mining, during a presentation to the Denver Gold Forum Monday.
Exploration by junior-mining companies has fallen especially sharply, with a weaker equity market cutting into the amount of money these firms can raise for drilling and other work to discover new mines, he said.
The reduced exploration and capital spending have implications for the future supply of metals. “Discovery is the only way to add new resources and reserves to supply,” Cox said.
He said over the last decade, “there has been a declining rate of discoveries in the gold sector, and now that’s being exacerbated by the capital cutbacks, in particular by the majors but also junior companies are unable to raise money to do their work.”
Gold production kept climbing into 2014, even though this was a few years after the metal hit its all-time high price in 2011, he said. Projects already under construction kept moving forward, Cox said
“But now, for 2015, we’re looking at about a 2% decrease, followed by similar-level decreases through 2020,” Cox said.
Exploration spending for all nonferrous metals rose 10-fold from a low of $2 billion in 2002 to more than $20 billion by 2012, Cox said.
“Since then, we’ve dropped about 39% in 2013 and another 26% in 2014,” Cox said. This spending has tracked the prices of metals, with less than a year of lag time, he continued.
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