Nonfuel Mineral Exploration 1998
David R. Wilburn and Kenneth E. Porter
U. S. Geological Survey
(Originally published in Mining Engineering, v. 51, no. 5, May 1999, p. 39-49.)
This summary of international nonfuel mineral exploration activities for 1998 draws upon available data from literature, industry, and U.S. Geological Survey (USGS) specialists.  Data on exploration budgets by region and commodity are reported, significant mineral discoveries and exploration target areas are identified, and government programs affecting the mineral exploration industry are discussed.  Inferences and observations on mineral industry direction are drawn from these data and discussions.
Statistical Interpretation of International Mineral Exploration for 1998
Data compiled by Metals Economics Group (MEG) are the principal source of statistical information reported in this summary of worldwide exploration budgets for precious and base metals and for nonferrous and industrial mineral targets for 1998.  While the MEG report provides a valuable indication of planned exploration activities for 1998, it does not report figures reflecting actual exploration expenditures.  Rather, MEG data are for planned exploration budgets of selected companies.  MEG estimates that their survey results cover 81 percent of 1998 world exploration budgets.  Data are not included for companies with budgets of less than US$2.9 million, for those which chose not to participate in the MEG study, for private companies which do not publish figures, and for government-funded exploration activities.  
Temporal interpretations of these data, such as trend analyses, should be done with caution because the number of mining companies surveyed by MEG varies with time and companies included in the survey change on a year-to-year basis. Data from 1998 are particularly influenced by a lower number of exploration companies supplying data, a reflection of the large number of company mergers and failures that took place toward the end of 1997 and extended into 1998.  Inferences and observations in this article are based upon compiled information from MEG that is supported by additional literature, industry contacts, and USGS specialist data.	
The total commercial international exploration budget for nonfuel, nonferrous-metal targets in 1998 of $3.5 billion was estimated by MEG to be 31 percent lower than the corresponding budget for 1997.  For the 182 companies canvassed by MEG in their 1998 study, the total amount budgeted for 1998 international exploration was $2.83 billion (55.1 percent for gold, 33 percent for base metals, 9.4 percent for diamond, and 2.5 percent for other minerals).  Figure 1 shows 1998 planned worldwide exploration spending by region.
MEG “regions” reflect a mixture of individual countries, continents, and other groupings, but they are reported consistently on an annual basis and provide a means of tracking the flow of budgeted exploration expenditures from year to year.  Regional allocations for 1998 were Latin America, $814 million; Australia, $495 million; Africa, $494 million; Canada, $308 million; the Pacific region, $266 million;  the United States, $243 million;, and the rest of the world, $210 million.
A two-year comparison of budget allocations resulted in decreased spending in all regions. The largest dollar reduction was $269 million in the Pacific region, followed by a $179 million reduction in Latin America.  The largest proportionate reduction in budget allocation between 1997 and 1998 took place in the Pacific region, a decrease of 40 percent.  Budgeted exploration spending in all other regions decreased at least 25 percent. In terms of world percentage, Africa, Australia, and Canada showed increases, mainly due to larger decreases in other regions.  Latin America, the Pacific region, and the United States showed proportional decreases in the regional exploration budget.   
Available information indicates budgeted exploration expenditures in 1998 decreased in all regions, an abrupt change from a five-year record of increases.  Figure 2 summarizes MEG exploration data for the period 1993 to 1998.  While there is good reason to believe that a substantial drop in exploration budgets took place between 1997 and 1998, MEG survey data should be viewed with caution because of the corresponding drop in surveyed companies reported for 1998.  Because MEG reports a consistent level of coverage for the 1997-1998 reporting period (about 80%), it is reasonable to assume the reported drop in companies responding to the MEG survey reflects a corresponding reduction in companies exploring during 1998.  Market conditions forced the industry to consolidate, and a number of company mergers, takeovers, and failures were reported to have occurred during this period.
Although gold continued to attract the greatest amount of exploration dollars in 1998, the amount budgeted for gold exploration decreased 40 percent to $1.56 billion from the $2.61 budgeted for 1997.  The decrease in anticipated gold exploration reflects continued low gold prices, enhanced investor wariness for funding exploration activities, and uneasiness resulting from the financial turmoil in eastern and Far East Asia. Asian gold buyers, one of the principal sources for exploration funding in recent years, appear to have been hurt by weakness in their currencies.  As a result, less money was available in 1998 for exploration investment.
Exploration budgets for base metal projects also dropped in 1998, but at a lower rate than gold.  This resulted in an apparent percentage increase from 27.1 percent of the MEG world exploration budget for 1997 to 33 percent of the world exploration budget for 1998.  Base metal prices were also at lower levels in 1998, but strong copper demand from Western countries continued to encourage the search for base metals.
A bright spot in 1998 was the increase in diamond exploration activity, apparently linked to the drop in gold and base metals spending, revised policies of De Beer’s Central Selling Organization, and recent exploration successes in Africa, Canada, and Australia.  Exploration budgets for other minerals and metals increased slightly in terms of world percentage.
Interpretation of Domestic Mineral Exploration in 1998
A 10-year trend of relatively stable U.S. exploration activity was halted in 1998, with an anticipated 33 percent decline in total exploration expenditure as reported by MEG.  U.S. exploration budget allocations fell by $121.9 million to $242.7 million in 1998, or 8.6 percent of the world total.
The share of exploration expenditure continues to shift away from the United States in favor of foreign projects.  While mining companies may be retreating from most States, exploration in Alaska remained strong.  Many countries have revised their mining laws, offered incentives for foreign investment, and, in some cases, opened up areas previously not available for exploration.
In contrast, the United States (excluding Alaska) is a relatively mature exploration province where recent legislation requiring a flat $100 annual claim fee has resulted in decreased exploration activity by small prospectors.  Recent technological improvements have generally improved the economics of mining operations in the United States, but the permitting process and environmental requirements in the United States are still perceived by some mining companies as restrictive, time-consuming, and costly to accommodate.  For example, the State of Montana recently banned the use of cyanide in the processing of precious metal ores for new or expanded operations, an action that has prompted lawsuits and a reevaluation of exploration and mining in that state by some mining companies.  Consequently, there has been a shift of some exploration activities away from the United States to other areas.  U.S. exploration activity focused on gold, although there was some renewed interest in copper in the southwest.
Forecasted low gold prices and the recent identification of high grade reserves associated with the newly commissioned Ken Snyder gold mine in Nevada have led many exploration companies to redirect U.S. exploration efforts to search for higher-grade, Ken Snyder-type deposits.  Other companies continue their focus in the search for large-tonnage, low-grade deposits, whose chances of recovery have been enhanced by improvements in heap leaching, bulk mining, and carbon technologies.   The search for deposits of this nature is focused on geologically favorable areas such as thrust plates, acid volcanic rocks, and collapsed caldera structures.
The search for deposits at considerable depth or offshore has also been made easier by recent technological advances in drilling and geophysical detection.   Deep drilling for underground extensions of known gold occurrences on the major producing trends continue.  In 1997,  20 percent of Nevada’s gold production came from underground mining operations, up significantly from previous levels.  The Gold Institute estimates that by the year 2000, one-third of U.S. production will come from underground mines. 
The political, technological, and geologic factors discussed above suggest reasons for the trend in exploration activity since 1991 away from industrialized countries toward developing countries.  Figure 3 shows this trend in terms of percentage of planned exploration budgets.  For the first time since 1991, budgeted expenditures for “developing” countries decreased in terms of world percentage while corresponding exploration budgets for “industrialized” increased slightly.  Whether this reflects a changing trend or is a short term condition, only time will tell. 
The decline of metal prices continued into 1998, causing some exploration companies to curtail efforts or rethink future plans.  MEG data suggest that 1997 appears to have been the “high water mark” for exploration spending.  Whether this is proven true in large part depends upon whether the current low price levels for many commodities will increase in 1999 and how the industry adjusts to current prices.
Regional Exploration Statistics
Exploration activities are often linked with significant international events.  Such events  have regional impacts, so a regional assessment of exploration activity is appropriate.  The regional designations considered in this summary have been used consistently for exploration analyses conducted by the USGS over the past four years.  While these “regions” reflect a mixture of individual countries, continents, and other groupings, they are reported consistently on an annual basis and provide a means of tracking changes in budgeted exploration expenditures from year to year.  
Latin America.  For the fifth consecutive year, Latin America (Mexico, Central America, and South America) had the greatest amount of budgeted exploration dollars.  Exploration was stimulated by continuing clarification and refinement of mining laws, ongoing privatization of government-owned companies and properties, and improvement of investment laws to accommodate foreign and private interests.  Exploration spending in Latin America accounted for 28.8 percent of the total budget for all companies surveyed by MEG.   Budgeted spending for exploration, however, decreased from $1.17 billion in 1997 to $814 million in 1998.
Countries with the greatest exploration activity, in descending order by exploration budget, included Mexico, Argentina, Peru, and Chile.  Interest in Bolivia increased in 1998; mining legislation enacted in 1997 removed most barriers to overseas investment and discrimination against foreign enterprises.  Exploration in Brazil suffered from the withdrawal of foreign risk capital and the potential for a drop in the value of its currency, which occurred early in 1999.  By exploration target, Latin America was anticipated to receive 28.5 percent of the total 1998 reported expenditures for gold and 35.7 percent for base metals.  
Exploration continued at a brisk pace throughout much of 1998, although not at the level of 1997.  Most Latin American countries appeared to have weathered the impact of the Asian financial crisis of 1997, although the stability of the Brazilian real was questionable.   Chile, Brazil, and Peru continued the process of privatization, liberalization of foreign investment laws, and modernization of mining codes.  Argentina is striving to adopt similar measures to attract foreign investment, with a measure of success.  
Latin America continues to attract the greatest amount of exploration interest, both in terms of dollars and activity.  An annual Mining Journal survey of executives from leading international mining companies (Mining Journal, October 23, 1998, p. 1) ranked the South American countries of Chile, Argentina, Peru, and Brazil at the top of its emerging country rating.  Appeal is reportedly based on the geologic potential, property value, ease of doing business, and political stability of these countries.
Because of its proximity and export potential to the United States and Canada, Mexico was viewed as an investment opportunity by some U.S. and Canadian companies searching for mineral resources in areas less encumbered by permitting restrictions.  Money continued to flow into Mexico for mineral exploration of gold, silver, and base-metal targets, by what appeared to be the largest contingent of foreign mining companies, estimated at about 375 at the beginning of 1998.  Mexico’s commitment to privatization continued during 1998, releasing additional land for exploration.
Argentina, with a rapidly growing gross domestic product, expected a total investment in its mining sector of $3.3 billion between 1997 and 2000, all from private sources (USGS, Mineral Commodity Summaries 1999, chapter on Significant International Events, p. 6-15).  About 25 percent of this overall amount was allotted for exploration.  Canadian and Australian companies have been the leaders in Argentinian mining investment; U.S. companies have tended to be more cautious by waiting to see if stability in that country will continue.  Exploration for gold and copper in Chile continued.  Approximately $230 million was budgeted for exploration in 1998; 52 percent was by Canadian companies, 14 percent European, 13 percent U.S., 12 percent Chilean, and 9 percent Australian companies.  Exploration in Peru continued for gold and copper, but weakened copper prices hindered several copper development projects from advancing beyond the feasibility stage.
Australia.  Figure 2 shows a 27 percent decrease in total budgeted exploration spending in Australia from $673 million to $495 million.  In spite of this, budgeted Australian expenditures increased from 16.7 percent of the world budget in 1997 to 17.5 percent in 1998.  Australia was able to maintain the second largest regional exploration budget in 1998 for the sixth consecutive year, although budgeted spending for exploration in Africa kept pace with Australia.
The gold budget percentage for Australia increased in 1998 after more than four years of a downward trend; reported base-metals expenditures decreased slightly from 1997 levels. Although mineral exploration expenditures fell considerably in 1998, the value of committed minerals projects continued to rise as mining companies shifted their focus to developing advanced stage projects.   
Delays in granting exploration titles are reportedly being experienced across Australia by native title claims (Mining Journal, June 5, 1998, p. 434).  In Western Australia, over 4,000 mining lease applications are currently being held up in the native title process; similarly, over 700 applications for exploration permits and 400 applications for mining titles have not been resolved in Queensland.  Parliamentary discussions on this subject continued in 1998.  Several initiatives were proposed to stimulate mining and exploration. 
Africa.  Exploration statistics for Africa mirrored those of Australia for the period 1997-1998.  While the total African exploration budget fell to $494 million in 1998, its percentage share rose to 17.4 percent.  The year began with continued interest by Canadian and Australian exploration companies in established mining countries such as Ghana, countries such as Mali that are developing their mining base, and countries such as Tanzania with potential to attract investment.  During the past year, companies from India and China have become interested in African exploration.  South African majors have expanded exploration activities into west Africa.  More recently, some of this activity has stalled as exploration capital has become more scarce and as widespread conflict has spread across Africa.
While nations in both east and west Africa were actively promoting mineral development, Tanzania, Ghana, Zambia, South Africa, the Democratic Republic of the Congo (Congo-Kinshasa), Burkina Faso, Mali, and Angola experienced the highest levels of exploration activity in 1998, based on data collected for this study.  Gold, diamonds, and base metals (primarily copper) generated the most interest.
Pacific.  The financial crisis that began in the Pacific and Southeast Asia in 1997 continued into 1998.  The Busang (Bre-X) situation continued to affect the region.  Exploration spending in the region reportedly dropped by 39.7 percent from 1997 levels to 286 million. Difficulties in raising finance and perceived problems with government policy caused a large number of junior companies, as well as some majors, to discontinue or reduce exploration activities in the region (Mining Annual Review 1998, Mining Journal Ltd., p. 5).  In spite of this, Indonesia and Papua New Guinea remained within the top ten exploration targets as reported by MEG.  Exploration for gold and copper continued to be predominant.
Canada.  According to MEG data, budgeted exploration spending in Canada for 1998 decreased $128 million to $308 million, with little change in its share of overall worldwide percentage of 10.9 percent.  A survey released by the Canadian Government (Natural Resources Canada. Mineral Exploration Remains Vigorous in Canada fact sheet, June 1998), however, reported projected 1998 exploration spending at $529 million.  The difference can be explained by looking at the distribution of spending levels between senior and junior companies and the number of companies surveyed.  Junior exploration budgets increased in Canada from approximately 21 percent of the total exploration budget in 1992 to about 41 percent in 1998.  Most Canadian junior companies had 1998 exploration budgets less than $US2.9 million, the minimum cutoff for the MEG survey.  Spending budgets for senior companies in 1998 were down in both surveys, due in part to the decline in metal prices and difficulties in obtaining financing.
Canadian exploration remained strongest in the Northwest Territories (diamond and gold), Quebec (gold and base metals), Ontario (gold), and British Columbia (gold and base metals).  Exploration for diamond is projected to reach $86 million in 1998, with large increases in the Northwest Territories and Alberta.
United States.  Budgets for U.S. exploration decreased from $365 million in 1997 to $243 million in 1998, and percentage of world exploration share decreased from 9.1 percent in 1997 to 8.6 percent in 1998.  Budgeted exploration expenditures decreased by 33.4 percent, possibly reflecting permitting and environmental uncertainty and delays, low metals prices, and resulting cost containment measures taken by mineral exploration companies.
The Gold Institute reports similar projections, showing a 36 percent decrease in domestic gold exploration by surveyed companies from 1997 to 1998. The report suggests the percentage of gold exploration dollars spent domestically has declined from 51 percent in 1993 to 25 percent in 1998.  A similar trend is shown by MEG for precious and base metals; the United States has shown a steady decline in exploration share from 21.4 percent in 1992 to 8.6 percent in 1998.
States showing considerable exploration activity (in order of activity) include Nevada, Alaska, Arizona, and California.  While gold remains the principal target, the United States shows an increase of 6.8 percent in exploration activities for other minerals (cobalt, titanium, and silver). 
A study conducted by the Fraser Institute of Canada to assess how mineral potential and public policy factors affect exploration investment in North America suggests that the United States continues to attract interest in minerals exploration (E&MJ, January 1999, p. 16FF).  Both Nevada and Utah were included in the five top-rated regions in North America for their policy climates.  Nevada also was included as one of the five top-rated regions for its attractiveness based on geology.  Nevertheless, there appears to have been a shift in exploration funding away from the United States toward Latin America, Australia, and the Pacific region. 
Rest of the World.  Exploration budgets for the rest of the world (including Europe, Asia, and the former Soviet Union) decreased by $73 million in the MEG 1998 survey, but increased slightly to about 7.4 percent of world share on a percentage basis. While the countries of Europe and Central Eurasia continued to reform their respective economic, social, and political environments throughout 1998, the year represented a time of instability for minerals markets.  Exploration in Western Europe continued to focus on gold and base metals, as well as diamond in Scandinavia.  The search for gold and base metals continued in Central Europe and the Balkans, but political instability hampered foreign investment in some parts of the region.  Russia, Kazakhstan, and the Ukraine remained the former Soviet Union’s dominant producers of mineral commodities.  Interest in minerals exploration in China increased as economic reform and social development plans progressed during 1998.
Commodity Trends
Gold remained the principal exploration target in 1998, but reported spending decreased 40 percent from the reported 1997 level.  In 1998, about 55 percent of the MEG exploration budgets were directed toward gold (see figure 4), down from about 65 percent in 1997.  Continued low gold prices, investor wariness, regional unrest, and economic instability all contributed to the lower spending allocations.  Latin America continued to receive the greatest interest in gold exploration; budgeted expenditures for gold exploration in the United States and Australia increased in 1998. 
Based on MEG statistics, allocations for base metals decreased 14 percent from the 1997 level to $934 million, but the overall percentage of base metals exploration increased from about 27 percent of the total proposed exploration budget in 1997 to 33 percent in 1998.  Copper exploration constituted about 59 percent of the base metals exploration budget, zinc and nickel each represented slightly over 20 percent of the base metals total.  Exploration for base metals was greatest in Latin America, Australia, and Canada.
Budget allocations for targets other than gold and base metals were reported to increase to $336 million, or to 11.9 percent of the 1998 budget total, compared to about 8 percent in 1997.  Diamond exploration accounted for about 79 percent of this amount, or about 9.4 percent of the total worldwide exploration budget reported by MEG for 1998.  Exploration for other mineral commodities increased from 1.9 percent of the total 1997 exploration budget to 2.5 percent in 1998.  Increases in both dollar amounts budgeted and budget percentage appear to be related to the corresponding drop in exploration for gold and base metals, recent exploration successes, and policy changes of De Beer’s.  An 8 percent increase, primarily for diamond exploration, was estimated for Canada in 1998.  A 6.8 percent increase was estimated for the United States, primarily for cobalt and titanium.
Analysis of Exploration Activity
Information on approximately 1126 exploration targets in 1998 was gathered from USGS commodity, country, and mineral-resource specialists, industry contacts, and trade journals.  This information was incorporated into figure 5, which portrays international exploration activity for the period 1995 to 1998.  For each year, the relative level of exploration activity in a given country was represented, according to the number of reported exploration sites considered by the USGS. A high level of activity was assumed for countries actively exploring more than 50 sites; a medium level was assumed if 11-50 sites were being explored; and a low level was assumed if 2-10 sites were being explored.  Country data showing the number of noteworthy sites included in table 1for each of these years are also reported.
Figure 5 suggests that the United States, Canada, and Australia have maintained high levels of exploration activity for the four-year period of 1995 to 1998.  Interest in Latin America (including Mexico), western and southern Africa, and the Pacific region has generally increased; however, 1998 activity in the Pacific region has decreased as a result of the reported Busang fraud and recent financial difficulties within the region.  Investment interest in countries of the former Soviet Union peaked in 1996, but with continued economic turmoil in this region, exploration activity appears to have decreased.  Investment interest in China appears to have increased during 1998.
The number of sites having exploration activity within a country does not necessarily correspond to the amount budgeted for exploration.  Australia, which ranks second in terms of dollars budgeted but sixth regionally in terms of number of project sites, illustrates a region where exploration activity is relatively mature.  Budgets for advanced projects are generally higher as companies expend higher amounts per site for feasibility and pre-development work.  Canada, on the other hand, represents a region where numerous junior companies are exploring, but few sites as yet warrant large capital expenditures.  Junior companies spending less than $2.9 million for exploration were not included in the MEG budget estimates, but sites being explored by junior companies have been included for the most part in the USGS analysis.  Canada ranks first in terms of number of sites being explored, but ranks fourth in terms of total dollars budgeted.
Using all available information, the 100 exploration sites considered most noteworthy in 1998 were selected for table 1.  Selection was based on the following criteria:
●	The high level of exploration activity at the site, determined either by level of drilling activity or exploration investment;
●	The large amount of resources delineated;
●	The high potential for near-term development, based upon reported tonnage and grade estimates.
Each of these sites represents a new or recent discovery, delineation of a new ore zone, or a significant increase in resources reported in 1998.  Sites undergoing preproduction development or currently producing were excluded from this list, unless significant reserves/resources were delineated in 1998 by exploration activity.
As shown by table 1, gold continues to dominate the list of reported exploration activities in 1998.  Of the 100 selected sites reported in table 1, there are 57 gold, 13 copper, 8 nickel, 7 silver, 6 zinc, 4 diamond, and 4 other commodity targets.  Categorization by commodity was based on the contained value of the resources at each target.  There appears to be less emphasis on gold or a greater emphasis on multiple-commodity targets in 1998 than in 1997.  Latin America (Mexico, Central America, and South America) continues as the region with the greatest amount of exploration activity in terms of both dollars and number of sites, although significant exploration continues in Canada and the United States.
Table 1 suggests that a large proportion of exploration activity taking place around the world is by junior companies, which typically are the first to explore an area, stake the area or develop a lease agreement, and perform initial exploration.  Additional partners are then invited to share in the capital necessary for development in exchange for an interest in the property, or the junior company may opt to sell the property.  While resource estimates reported in table 1 are based on preliminary estimates at various stages of verification, should these resources be verified, they would add over150 Moz of gold, 1.3 billion ounces of silver, 70 million tons of copper, and 11million tons of nickel to the world’s identified resources for these commodities. 
Africa.  Gold accounted for approximately 59 percent of the reported African exploration projects, diamond accounted for about 18 percent, and copper accounted for about 10 percent.  Other minerals actively being explored, in order of significance, were nickel, titanium, cobalt, zinc, lead, and platinum-group metals.  Most diamond exploration and development focused on the southern African countries of Angola, Botswana, Lesotho, and South Africa, with early exploration work proceeding in west central Africa.  Exploration for gold concentrated on the Sub-Saharan African countries of Burkina Faso, Congo-Kinshasa, Ghana, Mali, Niger, Tanzania, and Zimbabwe.  Many African nations were actively promoting mineral development, but widespread civil unrest impacted foreign exploration investment.
Most African exploration projects are in the early drilling stages, primarily by Canadian and Australian junior companies. Some companies have pulled out of Africa, or are considering joint ventures with major companies to provide funds for African exploration.  Major feasibility assessments are ongoing at the Taparko gold deposit in Burkina Faso, the Tenke Fungurume copper-cobalt deposit in the Congo (Kinshasa), the Touba Biankouma nickel-cobalt deposit in the Ivory Coast, the  Morila gold deposit in Mali, the Skorpion zinc deposit in Namibia, the Samira Hill gold deposit in Niger, and the Bulyanhulu gold and Kabanga base metals deposits in Tanzania.   A development decision was reached by Anglo American Corp. to proceed with development of the Gamsberg zinc deposit in South Africa in 1998. 
Australia.  Base metals accounted for approximately 45 percent of the reported Australian exploration projects, one half of which were nickel targets and one quarter were copper targets.  Gold accounted for about 35 percent and diamond accounted for about 10 percent.  Other minerals actively being explored, in order of significance, were titanium, zinc/lead, and vanadium.  The greatest amount of exploration activity occurred in Western Australia, principally for gold and nickel.  
Australian exploration in 1998 suffered as a result of weakness in gold and base metal prices, declining investor confidence, limited recent exploration successes, and continued concerns over land access for exploration and mining.  Junior explorers were especially hard hit, their future ability to generate investment capital will influence their survival.  Major Australian exploration companies such as Broken Hill Proprietary Company Ltd, MIM Holdings Limited, Rio Tinto, and Western Mining Corporation Limited, all reported reduced exploration budgets and personnel cuts in 1998.  Increased emphasis has been placed on expanding exploration of advanced projects and bringing developing projects into production.
Canada.  Gold accounted for approximately 46 percent of the reported Canadian exploration projects.  Base metals accounted for about 34 percent,  one half of which were copper targets, 32 percent were lead/zinc targets, and 18 percent were nickel targets.  Diamond accounted for about 12 percent of all exploration targets in 1998.  Other minerals actively being explored, in order of significance, were platinum-group metals, silver, and uranium.  The greatest amount of gold exploration activity occurred in Ontario, Quebec, and Newfoundland.  Significant diamond exploration occurred in the Northwest Territories and Alberta, spurred on by the success of the Ekati and Diavik projects. Base metals activity occurred in the Northwest Territories, Newfoundland, Ontario, and Quebec.
The Canadian Government (Natural Resources Canada.  Mineral Industry Review, summer 1997, 74 p.) estimated that exploration expenditures for grassroots exploration in 1998 was about $400 million; advanced exploration was estimated at about $125 million.  In 1998, junior companies were expected to account for about 41 percent of total exploration expenditures in Canada.
Highlights for 1998 in Canada include the opening of the Ekati diamond mine in the Lac de Gras area of the Northwest Territories, significant expansion of resources at the nearby Diavik diamond field, and additional diamond discoveries in the Northwest Territories and Alberta.  Development of the Voisey’s Bay nickel-copper deposit in Newfoundland has been delayed in the midst of controversies over political, technical, and environmental directives.
Latin America.  During 1998, Latin America continued to benefit from substantial exploration activity as individual countries continued efforts to attract foreign investment.  Exploration, based on reported activity, focused on Mexico, Peru, Argentina, Chile, Brazil, and Bolivia.  Gold attracted about 65 percent of total exploration activity, but interest in base metals reached 23 percent and silver achieved about 10 percent of the total.  Investment was primarily used to further define newly discovered resources.
Mexico continued to benefit from an improved investment climate, favorable resource potential, and proximity to the United States and Canada.  The Fraser Institute study cited earlier suggested that some 68 percent of the companies surveyed indicated a planned increase in the proportion of their budget to be spent in Mexico in 1998.  Exploration in Peru, Chile and Argentina also appeared to be on an increase.  Exploration highlights in Latin America include further expansion of resource potential at the El Sauzal gold-silver deposit and San Nicolas base-metals property in Mexico, the Agua Rica copper-gold property in Argentina, and the Antimina base-metals property and La Quinua gold deposit in Peru.  Placer Dome Inc. reported plans to invest over $40 million during 1998-1999 at its Aldebaran gold-copper property in Chile.
Pacific Region.  Exploration in the Pacific region fell during 1998 as a result of recent economic difficulties in Southeast Asia, which reduced investor confidence in minerals exploration activities.  Exploration continued to focus on Indonesia, Papua New Guinea, the Philippines, and the Solomon Islands.  Gold attracted about half of all exploration interest in this region.  Copper attracted about 27 percent of regional exploration activity, and nickel attracted about 14 percent to this target commodity.  Interest in coal and platinum group metals also was visible in 1998.  Drilling increased nickel resources at Halmahera in Indonesia and Ramu in Papua New Guinea.  Expansion of copper-gold resources at Batu Hijau in Indonesia and Freida River in Papua New Guinea continued.  In spite of regional concerns, interest in the region was fostered by revisions of mining legislation, privatization, and favorable geologic environment.
United States.  Exploration interest in the United States for gold has been centered in Nevada and Alaska, with additional interest in copper in Arizona and gold in California and Idaho.  Most activity was centered around active mining areas or historic mining districts.  While gold remains the principal target, the United States has had an increase in exploration activities for other minerals (principally cobalt, titanium, and silver).  In 1998, 141 U.S. exploration projects were reviewed; 46 percent were located in Nevada and 19 percent were in Alaska.  Of those considered, 65 projects were new for 1998.  The 1997 study considered 163 U.S. exploration projects; three advanced to the development stage in 1998 and one initiated production.  About 65 percent of the 1998 projects were being actively explored, but had not yet reached the development stage. 
Low metals prices and reduced interest in financing exploration activity in 1998 resulted in companies rethinking their exploration options.  Many U.S. exploration companies such as Homestake Mining Co. chose to reduce domestic exploration budgets in 1998.  Foreign mining companies such as Broken Hill Proprietary Company Ltd. terminated exploration activities in eastern Canada, the eastern United States, the Caribbean, the Philippines, and Papua New Guinea, in favor of core interest areas such as Latin America and Australia.  
In spite of much downsizing of activities, several prominent exploration projects continued in the United States.  In Alaska, the Pogo joint venture between Teck Corp. and Sumitomo of Japan expanded gold resources based on an active drilling program.  Battle Mountain Gold Corp. continued to extend the Phoenix zone at its mine in Nevada.  Barrick Gold Corp. continued to develop the Rossi/Storm gold deposit in Nevada, even as Franco-Nevada’s Ken Snyder mine advanced toward production.  The first U.S. discovery of kaolin in 40 years was made in Utah during 1998.  
Rest of the World.  Although it had been hoped that Europe, with the forthcoming of the European Union, would be a regional financial stronghold, the repercussions from the effects of financial turmoil that began in Southeast Asia and the Russian financial crisis took its toll on investment optimism. The countries of Europe and Central Eurasia continued the financial reforms begun earlier.  China continued to grow, and the Government restructured its State Council to enhance economic reform and promote social development.  Interest in minerals exploration in China showed marked improvement from 1997.  In addition to China, interest was highest, based on activity, in Sweden, Spain, Russia, Greece,  and Kazakhstan.  Gold was the primary target, but interest in base metals, diamond, uranium, titanium, and several other metals continued.  
Although recent discoveries of gold and base metals were made in some countries, notably Greece, Spain, Portugal, and Romania, foreign political risk remained a problem.  Several exploration companies found it necessary to terminate what was thought to have been worthwhile ventures in Kazakhstan, China, Mongolia, and Turkey.
Government Programs
Over the past 20 years, more countries have opened their doors to private sector mineral exploration. Some governments have revised their mining laws or are in the process of doing so.  In 1998, incentives have taken various forms, including privatization, trade alliances, regulatory reforms, foreign investment provisions, and tax relief.  In some cases, greater private sector involvement has led to a withdrawal of the State from mineral exploration, occasionally resulting in less reconnaissance-scale prospecting or deterioration of available government exploration data. 
Civil wars and border conflicts continued to destabilize a number of African countries, significantly increasing political risks and constraining investment in mineral exploration and development.  In spite of ongoing conflict, efforts to revise mining legislation were underway in Congo-Kinshasa.  Mineral rights was a major political issue in Congo-Kinshasa, with legal ownership of some key concessions questioned by the Government.
In South Africa, a Minerals & Mining policy paper issued in October 1998 has the potential to lead to the first major post-Apartheid change in mineral policy.  It proposes vesting mineral rights in the State and introduces policies designed to free up unused mineral rights, which would be made available to new foreign investors or new local black economic empowerment groups.  South African mining houses continued to restructure, relocate, or seek overseas listings.
In 1998, an accord was signed to harmonize foreign investment laws among sixteen Francophone and West African countries.  The countries include Benin, Burkina Faso, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Cote d’Ivoire, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Mali, Niger, Senegal, and Togo.  Also during 1998, new mining laws designed to promote increased foreign investment were put in place in Botswana, Sierra Leone, and Tanzania.  Additional mining legislation revisions were planned for South Africa and Uganda.
The Australian Government proposed several initiatives in 1998 to stimulate the country’s mining industry.  A 10 percent goods and services tax was proposed to replace a number of indirect taxes.  Under this proposal, all input taxes would be rebated at the point of export, benefitting net exporters, such as mining companies.  Other possible revisions affecting the mining industry include abolition of the fringe benefit tax on housing in remote areas, modifications to diesel fuel taxation, and an examination of the tax status of unrecoverable expenses such as mineral exploration and feasibility studies.  Native title issues remained unresolved, delaying advanced mineral project development in some cases.
Development of the large Voisey’s Bay nickel-copper deposit in Labrador continued to be delayed in 1998 as a result of an increasingly bitter dispute between Inco Inc. (Inco), the large Canadian mining company, and the Newfoundland Government.  The Provincial Government continues to insist that Inco build processing facilities in the province as originally intended.  Inco, however, refuses to commit to construction as it contends that at today’s depressed metals prices a new smelter-refinery complex in the region would not be economic. The standoff intensified in November, when the Newfoundland Government tabled amendments to its Minerals Act, a move which strengthened legislation stating that companies must process ore within the province, if economically viable to do so.
Exploration investment continued in Latin America, but at a reduced rate from that of 1997.  Although the Asian economic crisis impacted mine exploration and development in Latin America, particularly in the capital-intensive latter development stages, progress was made in many countries.  Exploration was stimulated by continuing clarification and refinement of mineral legislation, foreign investment laws, and privatization.  
Argentina is aggressively seeking foreign investment related to its natural resources through recent legislative reforms, including an attempt to clarify royalty and tax issues.  Bolivia removed most barriers to overseas investment and discrimination against foreign enterprises.  Recent legislation in Brazil offered a tax exemption on profits generated after 1996, but added additional taxes on land owned by mining companies.  Privatization of State-owned corporations continued in Brazil and Peru.  The Peruvian Government continued its policy of improving the power and transport infrastructure in remote areas where mineral potential is highest.  Efforts in Peru to improve tax structures for new investments are ongoing, as are regulations requiring environmental assessments and restoration programs for all mining exploration projects in excess of 20 hectares.  Mexico continued to reduce the amount of land held in its National Mining Reserve, freeing up land for exploration and development. 
The State of Montana passed legislation banning the use of cyanide commonly used in processing precious metal ores mined by surface methods (open-pit, heap leaching).  This regulation applies to any new or expanded operation throughout the State.  Such a regulation will impact mining in Montana, as cyanide technology is widely used for treatment of precious metal ores.
Several measures took affect in 1998 related to mining and exploration in China.  An amendment to the Mining Law of 1986 provided that, with necessary governmental approval, exploration rights and mining rights can be transferred, provided that certain conditions apply.  The original Mining Law of 1986 prohibited transfer, leasing, or mortgaging of rights to mineral resources in China.  Exploration, Mining and Transfer Registration Regulations also took effect in January, 1998, providing foreign investment rules subject to three tiers of regulations depending upon the economic sector in which the foreign investment is made.  The Government also restructured its State Council into 29 ministries, with the intent of streamlining bureaucracy, enhancing economic reform, and promoting social development.  
The countries of Europe and Central Eurasia continued to reform their respective economic, social, and political environments throughout 1998.  In Western Europe, mineral exploration and development have been encouraged by European Union (EU) unification efforts, up-to-date mining legislation, deregulation, and tax relief.  Central Europe has undergone an economic winnowing process; surviving industries have increasingly been able to attract foreign investment, often centered on industrial minerals.  Restructuring efforts in Russia and other countries of the former Soviet Union have been hampered by low commodity prices, Asian financial difficulties, and internal economic problems.  Regional issues arose as natural tensions increased between the EU-member nations and non-EU nations of Central and Eastern Europe increased.  Kyrgyzstan adopted its second mining law in 1998.  The new law is similar to measures adopted in neighboring Kazakhstan and proposed for Russia with respect to issues related to exploration and mining licensing.  Cyprus has abolished the condition for mining companies to be majority-owned by Cypriot companies.
The USGS collects and analyzes data on more than 100 mineral commodities, both in the United States and worldwide.  This article draws from both public and private sector sources and the knowledge and expertise of USGS commodity, country, and mineral resource specialists.  More detailed information on the material covered in this article may be obtained from the author, David Wilburn, U.S. Geological Survey, P. O. Box 25046, MS 750, Denver Federal Center, Denver, CO 80225-0046; telephone 303-236-8747, extension 337, fax 303-236-4208 or wilburn@usgs.gov.  For additional information on mineral commodities and foreign minerals activities, inquiries may be directed to Kathy Keys, 988 National Center, U.S. Geological Survey, Reston, VA 20192; telephone 703-648-4961 or kkeys@usgs.gov.