Nonfuel Mineral Exploration 2001
David R. Wilburn
U.S. Geological Survey
(Originally published in Mining Engineering, v. 54, no. 5, May 2002, p. 26-36.)
Exploration budgets fell for a fourth successive year in 2001, reflecting low mineral commodity prices, mineral-market investment reluctance, company failures, and a continued trend of company mergers and takeovers, which traditionally reduce the amount spent on mineral exploration.  Gold continued to be the main exploration target during 2001, although interest in diamond and platinum-group metals appears to have increased, based upon the amount budgeted for those target minerals.  Based on the Metals Economics Group (MEG) reported exploration budget summaries, the principal targets for exploration in 2001 were in Latin America, Australia, and Canada.
Statistical Interpretation of International Mineral Exploration for 2001
This summary of international nonfuel mineral exploration activities for 2001 draws upon available data from literature, industry, and U.S. Geological Survey (USGS) specialists.  The report documents data on exploration budgets by region and commodity, identifies significant mineral discoveries and exploration target areas, discusses government programs affecting the mineral exploration industry, and presents inferences and observations on mineral industry direction based upon these data and discussions.
Two types of information are reported and analyzed in this annual review of international exploration for 2001: 1) budgetary statistics provided by MEG, and 2) information on regional and site-specific exploration activities in 2001 compiled by the USGS.  The MEG information summarizes planned company budgets for exploration activities in 2001 worldwide, primarily for precious and base metals; however, it does not report figures reflecting actual exploration expenditures.  MEG includes information on additional mineral targets where it is available.  MEG estimates that their post-1999 surveys cover 90 percent of world exploration budgets.  The MEG survey statistics were changed in 1999 to include companies with budgets between US$100,000 and US$2.9 million, as well as those companies included in prior studies whose anticipated budgets were above US$2.9 million.  The 2001 survey also did not include budgets for those companies who chose not to participate in the MEG study, for private companies that do not publish figures, and for government-funded exploration activities.
USGS compilations described here cover nonfuel minerals, with an emphasis on precious and base metals and diamond.  Analyses are based on information provided by USGS mineral commodity, country, and mineral-resource specialists, as well as industry contacts and trade journals.
Care should be taken when performing temporal interpretations of the MEG exploration data, such as trend analyses, 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.  Post-1999 data reported in this summary differ from prior-year data as a larger number of companies were included in the more recent survey results.  The significant amount of corporate restructuring that occurred between 1997–2001 also impacted statistical compilations.
MEG estimated the total 2001 commercial international exploration budget for nonfuel mineral targets (excluding iron ore and aluminum) to be US$2.2 billion, 15 percent lower than the corresponding estimated budget for 2000.  For the 679 companies canvassed by MEG in their 2001 study, the total amount reported as budgeted for international exploration in 2001 was US$2 billion (42.5 percent for gold, 38.9 percent for base metals, 9.9 percent for diamond, and 8.7 percent for other mineral commodities).  Figure 1 shows the 2001 planned worldwide exploration budgets, 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 indicating the flow of budgeted exploration expenditures from year to year.  Regional allocations based on data from companies canvassed by MEG for 2001 were: Latin America, US$576 million; Australia, US$349 million; Canada, US$333 million; Africa, US$277 million; the United States, US$158 million; the Pacific region, US$133 million; and the rest of the world, US$175 million.
MEG data indicate that planned exploration budgets (in current dollars) for 2001 decreased from 2000 levels in all regions of the world.  The general decreasing trend may be attributed to changing exchange rates, continued low commodity prices, investor wariness for funding exploration activities, and tighter company budgets.  Anticipated exploration spending in Canada and Africa were only slightly less than 2000 levels (down 4 percent and 6 percent, respectively), perhaps because of increased interest in the search for diamond and platinum-group metals in these areas.  In contrast, exploration budgets for the United States and the Pacific region decreased approximately 33 percent from 2000 levels, as reported by MEG.  Figure 2 shows trends in reported exploration budgets for nonfuel mineral targets in selected regions for the period 1995–2001.
Figure 2 summarizes MEG exploration budget data in terms of both regional dollar allocations and regional percentage of the total exploration budget.  The largest budget dollar reduction between 2000 and 2001 (US$86 million) took place in Latin America, followed by an US$76 million reduction for exploration in the United States.  In terms of percentage of worldwide exploration budget, the United States dropped from a reported 10.0 percent share in 2000 to 7.9 percent in 2001; similarly, the Pacific region decreased from a share of 8.5 percent in 2000 to 6.7 percent in 2001.  The Canadian nonfuel minerals exploration budget share in 2001 increased to 16.6 percent, and the African minerals exploration budget share increased to 13.8 percent in 2001.  In spite of a budgetary decrease, Latin America remained the region with the highest exploration budget.
The apparent data gap that is reflected in figure 2 for 1999 reflects the change in MEG data reporting methodology mentioned previously.  The 538 companies included for the first time in the 1999 MEG study, while individually spending between US$100,000 - US$2.9 million in annual exploration, together accounted for about US$91 million in budgeted exploration, or 18 percent of the total exploration budget.  Post-1999 MEG studies are estimated to account for approximately 90 percent of the worldwide mineral exploration budget.
Prices for some metals in 2001 remained near 2000 levels (gold, lead, and silver), although others (copper, nickel, and zinc) fell.  The average palladium price for 2001 was 11 percent higher than the average 2000 price, while the average 2001 platinum price fell slightly from the high level reported for 2000.  Table 1 shows the change in price of selected precious and base metals for the years 1995–2001.

Table 1.   Prices for selected base and precious metals, 1995–2001	
	Average price for specified year, in U.S. currency	
Commodity	19951	19961	19971	19981	19992	20003	20013	
Copper4	1.38	1.09	1.07	0.79	0.76	0.88	0.77	
Gold5	386	389	332	295	280	280	272	
Lead6	0.42	0.49	0.46	0.45	0.44	0.44	0.44	
Nickel7	3.73	3.40	3.14	2.10	2.73	3.92	2.70	
Palladium8	153	130	184	290	360	692	770	
Platinum9	425	398	397	373	379	549	540	
Silver10	5.15	5.19	4.89	5.54	5.25	5.00	5.00	
Zinc11	0.53	0.51	0.65	0.51	0.54	0.56	0.44	
1USGS Metal Prices in the United States Through 1998, published in August 1999.	
2Estimated price reported in USGS Mineral Commodity Summaries 2001.	
3Estimated price based on oral and written communication, USGS mineral commodity specialists.	
4U.S. producer cathode (99.99%-pure copper), in Platts Metals Week, dollars per pound.	
5Englehard Corp., published in Platts Metals Week, dollars per troy ounce.	
6North American producer price, delivered (minimum 99.97% pure), in Platts Metals Week, dollars per pound.	
7London Metal Exchange cash price for primary nickel (minimum 99.80% pure), in Platts Metals Week, dollars per pound.	
8New York price (99.9% pure in 100-ounce lots), in Platts Metals Week, dollars per troy ounce.	
9New York price (99.9% pure in 50-ounce lots), in Platts Metals Week, dollars per troy ounce.	
10New York price (99.9% pure silver), in Platts Metals Week, dollars per troy ounce.	
11U.S. Dealers Special High Grade zinc (99.99% pure) delivered price, in Platts Metals Week, dollars per pound.	
Figure 3 illustrates the distribution of reported mineral exploration budget estimates for 2001 by commodity grouping.  Gold continued to be the greatest exploration target, although in 2001 it only represented 42.5 percent of exploration funding.  The amount budgeted for gold exploration (US$849 million) was 22 percent lower in nominal terms than that budgeted for gold in 2000.  This decrease probably reflects the continued weak gold price, the strength of the U.S. dollar in the global economy, and slowing retail consumption.  According to MEG, the combined market capitalization for junior (capitalized at less than US$200 million) gold exploration companies fell about 72 percent since December 1996 to a June 30, 2001 level of US$7.5 billion (MEG, Strategic Report, November/December 2001).  Based on MEG budget estimates, the principal targets for gold exploration in 2001 were in Latin America, Australia, and Africa.  Percentage increases occurred for Canada, Africa, and Latin America.  Major companies are likely allocating more of their budgets to established mining areas, where prospects of discovering additional resources are possible with lower exploration costs.  Grassroots gold exploration has continued to decrease; since 1997, early-stage gold exploration has dropped by 76 percent, or US$1.1 billion.  Late-stage exploration for gold has also decreased, but at a slower pace (MEG, Strategic Report, November/December 2001).
Exploration budgets for base-metal projects (MEG includes copper, lead, zinc, and nickel) dropped from US$886 million in 2000 to US$779 million in 2001 due to the general decrease in exploration funding.  However, base metals accounted for about 38.9 percent of the total MEG world exploration budget in 2001, compared to 37.9 percent in 1999.  The percentage increase for base metals is attributed in part to the larger drop in budgets for gold exploration, as well as to the sustained focus required for base metals exploration.  Copper exploration constituted about 53 percent of the base-metals exploration budget; zinc about 23 percent, and nickel about 24 percent of the base-metal total.  Less money was budgeted for copper, zinc/lead, and nickel targets in 2001 compared to 2000.  In 2001, base-metal budgets increased in Canada by 17 percent and Africa by 7 percent, from 2000 levels.  Latin America continued to receive the greatest share of base metal exploration budgets, followed by Canada, Australia, and the Pacific region.  Early-stage base metals activity has increased an average of 3 percent a year since 1997, while late-stage base metals activity has increased about 2 percent during this period.
Diamond exploration in 2001 decreased 11 percent from the 2000 level.  MEG attributed the decrease to the economic slowdown in the United States, the world’s largest importer of diamonds.  About 41 percent of diamond-related exploration funds were targeted for Canada (down from 45.8 percent in 2000) and 35 percent was targeted to Africa.  Diamond exploration in Africa increased 22 percent from the reported 2000 level.  Grassroots spending for diamond increased 25.2 percent (US$30 million) between 2000–2001.  The increase is due to greater grassroots spending by DeBeers, as well as higher grassroots diamond budgets for North American junior companies that are focusing on diamond exploration.  Late stage diamond exploration dropped by 62.3 percent, largely due to DeBeers reducing allocations for late-stage exploration.
Exploration budgets for mineral targets other than gold, base metals, and diamond reached their highest level (8.7 percent of the world exploration budget) in five years.  This may reflect the surge in platinum and palladium prices at the end of 2000, and continued strong interest in the search for silver.  Exploration for platinum-group metals accounted for about 3.4 percent of the world exploration budget in 2001.  Weaker demand for platinum in the jewelry and electronics industries was offset by increased usage of the metal in fuel cells and its substitution for palladium in catalytic converters.  Most silver exploration is occurring in conjunction with gold or base metal exploration because silver is mostly found in association with other metals.
Interpretation of Domestic Mineral Exploration in 2001
Spending on mineral exploration in the United States appeared to decline at a higher rate than the regional average in 2001, based on reported MEG statistics.  Budgeted exploration expenditures dropped to US$158.2 million (7.9%) in 2001 from the budgeted amount of US$234.5 million (10%) in 2000.  Anticipated exploration spending in the United States in 2001 was about US$76 million less that for 2000, constituting a drop of about one-third.  Exploration spending in the United States is about 43 percent of the level it was in 1997, when worldwide spending peaked at about US$5.2 billion, based upon MEG data.
Recent suggested changes in U.S. mining regulations aimed at increased environmental protection are believed to have contributed to the decline in exploration in the United States.   As a relatively mature exploration province (except for Alaska), deeper (more expensive) drilling may be required to locate new zones of mineralization.  Stringent permitting standards also add to the cost of exploration.
In spite of these higher costs, a recent survey of 132 junior exploration companies and 30 senior exploration companies conducted by the Fraser Institute of Canada suggests that the United States continues to attract interest in minerals exploration.  Exploration interest varies substantially based on location and State regulatory policies [Fraser Institute, December 18, 2000 (http://www.fraserinstitute.ca)].  In its 2001/2002 survey, Nevada was included in the five top-rated regions for its policy climate, but California, Washington, and Wisconsin were among the lowest rated regions in this category.  Alaska was included in the five top-rated regions for attractiveness based on geology, while South Dakota, Washington, and Wisconsin were among the lowest rated in this category.  Survey results suggest that the anticipated exploration expenditures allocated for the United States from both senior and junior mining companies dropped from about 15 percent of total expenditures in 2000 to about 7 percent for senior mining companies and 9 percent for junior mining companies in 2001.  It appears that during this period of generally low metal prices, the necessity for some exploration companies to contain costs led them to shift their exploration focus away from areas where environmental costs may be significant or exploration more expensive, in spite of favorable policy climate or geology.
USGS data suggest Alaska and Nevada had the greatest amount of exploration activity of U.S. States during 2001, primarily for gold and platinum-group metals.  Anticipated exploration in Nevada was expected to be down 26 percent from 2000 expenditures of US$80 million, based on data reported by the Nevada Division of Minerals (Pay Dirt, October 2001, p. 20).  The mining survey claim total for 2001 was projected to be 42,360, down from 57,466 in 2000.  Alaskan exploration in 2001 focused on expanding resources on State and native lands near the Fort Knox (gold) and Red Dog (zinc) mines, as well as in southwestern Alaska, where drilling at Donlin Creek have delineated a resource of over 10 million ounces of gold grading 3 grams per ton (Nova Gold Resources Inc., company data, accessed February 2, 2002, at www.novagold.net).
Analysis of Exploration Activity
Exploration budgets for Australia, Canada, and the United States, all highly industrialized areas with extensive past mineral exploration, decreased during the period 1997 to 1999 in favor of developing regions with under-explored areas now being developed (Africa, Latin America, the Pacific, and other regions).  During these years, low commodity prices, regional unrest (central Africa), financial turmoil (Asia-Pacific), and post-Busang investor trauma all seemed to focus investor interest towards areas with established mineral potential and away from areas with more potential risk.  This trend has since stabilized, such that the cumulative exploration budgets of both regional areas for the period 1999 to 2001 are about that of the 1995 to 1996 period.  Figure 4 shows these trends in terms of percentage of planned exploration budgets.
For 2001, information on 1266 exploration targets was gathered from USGS specialists, industry contacts, and trade journals.  Regional distribution of these exploration targets is represented in figure 5, based on the number of projects reported for each region.  When compared to similar data for 2000, exploration activity appears to have increased in Africa, Australia, and Canada, while exploration activity in Latin America, the Pacific region, and the United States appears to have decreased.
The number of sites having exploration activity within a country or region does not always correspond to the amount budgeted for exploration.  Australia had a 50 percent increase in the number of sites reportedly being explored in 2001, but its exploration budget dropped 13.7 percent from 2000.  This suggests that advanced deposits covered in 2000 may have reached the construction stage (not included in this analysis), and more early stage exploration (at generally lower costs) may have been reported.  Canada, on the other hand, represents a region where numerous junior companies are exploring, but few sites have as yet received large capital expenditures.  Canada ranks first in terms of number of sites being explored, but ranks third in terms of total dollars budgeted.
Table 2 presents 100 exploration sites considered most noteworthy in 2001, based on available information.  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; and
●	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 2001.  Sites undergoing preproduction development or currently producing were excluded from this list, unless significant reserves/resources were delineated in 2001 by exploration activity.
 As shown by table 2, gold continues to dominate the list of reported exploration activities in 2000.  Of the 100 selected sites reported in table 2, there are 45 gold, 17 copper, 9 nickel, 9 platinum-group metal, 7 diamond, 5 heavy-mineral, 3 zinc, and 5 other commodity targets.  Categorization by commodity was based on consideration of the value of the contained resources at each target.  Gold remained the most sought-after mineral commodity in 2001.  Interest in base metal deposits remained strong, especially for targets with multi-commodity potential.  Interest in platinum-group metal targets increased, both as a primary target and in association with nickel and copper sulfides, perhaps because of higher recent prices for precious metals (see table 1).  Interest in titanium-rich mineral sand deposits continued in 2001, particularly in Australia.  These data are consistent with the findings of MEG for 2001.
The estimated resources reported in table 2 reflect various stages of verification, different methodologies, and multiple sources of information.  However, should these resources be verified, they would add over 172 million ounces of gold, 1.38 billion ounces of silver, 30 million tons of copper, 20 million tons of zinc, 16 million tons of nickel, and 75 million ounces of platinum-group metals to the world’s identified resources for these mineral commodities. The USGS reports a 2002 world reserve base of 78,000 tons (2.5 billion ounces) of gold, 430,000 tons (14 billion ounces) of silver, 650 million tons of copper, 440 million tons of zinc, and 160 million tons of nickel, and 73,000 tons (2.3 billion ounces) of platinum-group metals (USGS, Mineral Commodity Summaries 2002).
Table 3 reports the number of major exploration sites by region for the years 1996–2001, based on the criteria used to develop Table 2 of this report.  In terms of the major sites considered, there appears to be an increase in noteworthy exploration projects in Australia and the “other” regions during 2001, with a corresponding decrease in highlighted African, Latin American, and U.S. exploration projects.  There appears to be a relative balance of major exploration sites among regions in 2001.
Table 3.  Major exploration sites1 by region, for the years 1996–2001	
Region	1996	1997	1998	1999	2000	2001	
Africa	16	13	20	10	17	11	
Australia	9	8	4	11	12	21	
Canada	13	24	19	20	15	17	
Latin America2	30	26	29	27	24	17	
Pacific3	14	10	9	7	10	12	
United States	9	13	10	16	14	10	
Other4	9	6	9	9	8	12	
1Based on data developed by the USGS and appearing in table 2 of the exploration summary discussion published in the May issue of Mining Engineering for the years 1997–2002.	
2Including Central America, Mexico, and South America.	
3Including Southeast Asia and islands in the Pacific Ocean.	
4Including Asia, Europe, and the former Soviet Union.	
Regional Exploration Activities
The level of exploration activity in a region often reflects the impact of significant international events.  Exploration-related activities and events within each region are summarized below.
Latin America.  Although Latin America maintained its top position as a destination for proposed exploration spending, it incurred a 13 percent decrease in 2001, based on MEG data.  By commodity, Latin America was targeted for about 26 percent of the world gold exploration budget and nearly 39 percent of the budget for base metals.  Peru, Chile, Brazil, Mexico, and Argentina were ranked in MEGs top 10 countries for 2001 exploration, based on exploration budget.  Similarly, an annual survey of executives from leading international mining companies conducted by the Fraser Institute [December 18, 2001 (http://www.fraserinstitute.ca)] ranked the Latin American countries of Chile and Brazil at the top of its emerging country rating for exploration investment based on their financial attractiveness for investment in 2000.  Investment appeal is reportedly based on the geologic potential, property value, ease of doing business, and political stability of these countries.
Based on data compiled for this review, countries with the greatest exploration activity, in descending order by number of reported sites, were Mexico, Argentina, Peru, Argentina, Chile, and Brazil.  Gold attracted about 49 percent of total exploration activity, but interest in base metals reached 34 percent and silver achieved about 9 percent of the total.  Investment in 2001 was primarily used to further define newly discovered resources and conduct feasibility studies of promising deposits.
In spite of continued interest in exploration in Mexico, the country’s mining industry appears to be faltering.  Mexico’s major mining companies report poor financial returns in light of low metals prices and poor currency exchange rates.  The Mexican Chamber of Mines reports that of the 400 small mining and exploration companies operating in Mexico a decade ago, only 70 firms survive (Metal Bulletin, 2001).  A number of incentives have been proposed to boost the Mexican mining industry.
The opening of the Antamina copper mine in Peru continues to stimulate exploration interest in the region.  This mine is expected to add 69 million tons of copper, 5.7 million tons of zinc, 244 million troy ounces of silver, and 160 thousand tons of molybdenum to the world’s mineral reserve base (Mining Magazine, Nov. 2001). The mine is expected to boost Peru’s mineral exports by 30 percent (Mining Engineering, 2001).  Antamina is just one of the region’s mineral discoveries.  The Peruvian Ministry of Energy and Mines is projecting that between 1999 and 2008, almost US$1 billion would be directed to expansion of existing operations, US$2.5 billion would be committed to the construction of new projects, US$3.6 billion on feasibility studies, and approximately US$1.6 billion for early-stage exploration (Mining Magazine, May 2001).
The border region between Argentina and Chile has also been heavily explored in anticipation of ratification of a 2001 agreement that allows companies to explore and exploit mineral deposits along this border.  Discovery of the Veladero gold-silver deposit by Argentina Gold Corp (acquired by Homestake Mining Corp.) and the Pascua-Lama gold-silver deposit by Barrick Gold Corp. has intensified the search for precious metals in the region.  With the completed merger between Homestake and Barrick, there is the potential for the joint development of a combined resource currently containing a reserve of 25 million ounces of gold and 724 million ounces of silver.  Delineation of both deposits is continuing.
Australia.  Exploration budget allocations reported by MEG for Australia in 2001 showed continued slippage in budgeted exploration in dollar terms.  MEG reported a decline of 14 percent between 2000 and 2001, while the Australian Bureau of Statistics (ABS) reported a 2 percent decline from 1999 to 2000.  These results are attributed to continued low world commodity prices and increased competition for capital (Western Australia Department of Minerals and Energy, Statistics Digest 2000, p. 30), and deteriorating exploration discovery record and low profitability levels for international mining companies (Parry, 2001). Native title issues continued to be a predominant issue affecting mineral exploration and development in Australia during 2001.  A 55 percent drop in exploration expenditures between 1997 and 2000 in US dollar terms is reported by Parry, who expected a continued drop into 2001.  In spite of this drop in exploration spending, Australia has faired reasonably well when compared to other countries.
The greatest amount of budgeted exploration expenditures (about 62 percent) was allocated for Western Australia, principally for gold and nickel.  According to the ABS, as reported by the Western Australia Department of Minerals and Energy, gold accounted for 62 percent of Western Australia’s mineral exploration expenditure of A$676 million (US$432 million) in 2000.  Exploration allocations for base-metal targets in Western Australia were reported as A$91 million (US$58 million) for the same period.  Most of this expenditure was on nickel prospects; copper-lead-zinc exploration was reported to be stagnant or declining.  Western Australia accounted for most of the A$19 million (US$20 million) reported for Australian iron ore allocations during three quarters of 2000.  Western Australian diamond exploration expenditures in 2000 was reported at A$24 million (US$16 million), with activity centered in the Kimberly region (Western Australia Department of Minerals and Energy, Statistics Digest 2000, p. 30).
Exploration for heavy mineral sands in the Murray Basin region of southern Australia has accelerated in the last 5 years.  The region covers parts of New South Wales, South Australia, and Victoria, and potentially contains 67 million tons of coarse-grained heavy mineral sands (Industrial Minerals, November 2001).  Development of the Wemen project (a joint venture of RZM Pty. Ltd. and Sons of Gwalia Ltd.) and release of a joint government and industry assessment of the potential of the region during 2000 increased exploration of the area.   Since 1995, exploration has led to the resource estimation of 30 deposits controlled by four Australian companies.  Active drilling continues to delineate additional mineral resources in the region.  Development of this region could overtake Western Australia as the nation’s largest producer of mineral sands in the next 10 years.  Murray Basin deposits have tended to have higher proportions of rutile and zircon than Western Australian deposits, thus giving them a higher value and compensating somewhat for transporting them the extra distance to port (Western Australia Department of Minerals and Energy, Statistics Digest 2000, p. 29).
Approximately 54 percent of the reported Australian exploration activity for 2001 is attributed to Western Australia, based on site data collected for this annual review.  Companies also reported significant interest in exploring for minerals in New South Wales and Queensland, with limited activity in other states.  Gold accounted for approximately 32 percent of the reported Australian exploration projects, base metals (primarily nickel) accounted for 25 percent, heavy minerals accounted for 16 percent, and diamond accounted for about 9 percent.  Exploration for gold was concentrated in Western Australia, Queensland, and New South Wales.  Nickel exploration was focused upon Western Australia, and heavy minerals activity occurred in the Murray Basin, primarily in New South Wales and Victoria.  Approximately 20 percent of the Australian activity had reached the feasibility level, while 11 percent involved developing or producing deposits.
Canada.  Statistics released by the Canadian Government (Natural Resources Canada, July 2001 fact sheet) show anticipated 2001 exploration spending at C$458 million (US$302 million), about 40 percent of the reported exploration expenditure for 1997.  MEG reported budgeted exploration spending in Canada for 2001 at US$333 million, accounting for 16.6 percent of the overall worldwide exploration budget.  Exploration spending allocations for 2001 as reported by the Canadian Government were greatest in Ontario (about 22 percent of Canadian total exploration budget), Quebec (15 percent), the Northwest Territories (13 percent), Nunavut (12 percent), and British Columbia (10 percent).  Compared to 2000 exploration expenditures, spending in British Columbia was expected to increase about 30 percent, while exploration spending in Quebec was expected to decrease about 31 percent.  Approximately 70 percent of the reported Canadian exploration budget was allocated for initial exploration (up to and including the first delineation of a mineral deposit).  Spending by junior companies was expected to increase from C$149 million (US$98 million) in 2000 to C$167 million (US$110 million) in 2001, while spending by senior companies was expected to decline from C$325 million (US$214 million) in 2000 to C$291 million (US$192 million) in 2001.  If this estimate is confirmed, the 2001 senior expenditures would be the lowest in the last 30 years (in constant 2000 dollars).
Based on data collected during this study, gold targets accounted for approximately 20 percent of reported Canadian exploration.  The greatest amount of gold activity, based on the number of active sites, took place in Quebec, Ontario, and British Columbia.  Base metals accounted for about 31 percent (with copper targets accounting for about 40 percent and nickel targets about 36 percent of base metals) with copper exploration focused on British Columbia and Ontario, and nickel exploration focused on Ontario and Quebec.  Diamond exploration activity increased in 2001 to about 20 percent of all Canadian exploration targets, mainly in the Northwest Territories, Nunavut, Ontario, and Quebec.  Exploration was encouraged by recent discoveries and renewed interest by De Beers, who spent 50 percent of their 2001 exploration budget on Canadian diamond projects.  Platinum-group metals, primarily in Ontario, were also targeted in 2001, accounting for about 17 percent of reported Canadian exploration projects.  Tantalum was also a sizeable exploration target in 2001.  Approximately 92 percent of all reported exploration targets were considered early-stage sites, consistent with Government statistics, which indicate much of the Canadian exploration activity is being conducted by junior companies.
During 2001, progress was reported in defining diamond potential at the AK/Kennady Lake deposits (Northwest Territories), nickel and platinum-group-metal potential at Ferguson Lake (Nunavut) and River Valley (Ontario), and gold potential at Hope Bay (Nunavut). Development or expansion activities centered around diamond at Snap Lake (Northwest Territories), platinum-group metals at Lac des Iles, and gold at the Red Lake mine in Ontario and the Joe Mann, LaRonde, and Sleeping Giant mines in Quebec.  At least 17 companies have staked ground for diamonds in the Otish Mountains region of Quebec, after promising core results were reported by Ashton Mining of Canada Inc.  Development of the Voisey’s Bay nickel-copper deposit in Newfoundland continued to be delayed in the midst of controversies over political, technical, and environmental issues.
Africa.  Exploration activity as defined by reported company exploration budgets for Africa continued to decline during 2001.  MEG reported a modest drop in exploration spending for Africa of about 6 percent from the 2000 level.  In terms of worldwide allocation, however, Africa actually increased to 13.8 percent, compared to the reported 2000 allocation of 12.5 percent.
Africa represents a continent with both tremendous mineral potential and tremendous perceived investment risk.  Exploration in some parts of Africa increased in 2001 as the threat of civil strife eased. In other areas, civil wars, internal ethnic or political conflicts, and refugee displacements continued to destabilize other African countries and constrained new investment in mineral exploration in many areas.  Some international mining companies have expressed reluctance to invest heavily in some areas of Africa due to its perceived long-term instability, increased incidence of HIV/AIDS, and a poor record of recent successful base metal development (Hinde, 2001).  Mining Journal recently ranked South Africa, Ghana, Tanzania, and Namibia in the top 10 countries of the world in terms of development opportunity, while Angola, Nigeria, and Ethiopia appeared in the list of the 10 least favorable countries of the 50 considered (Mining Journal, 2000).
Recent low mineral commodity prices and industry consolidation and restructuring have increased the competition among North American, Australian, and African companies searching for the more advanced projects on the continent.  Following a period of corporate restructuring in South Africa, companies such as AngloGold, Gold Fields Ltd., and Randgold Resources Ltd., along with Ashanti Goldfields Company Ltd. of Ghana, were aggressively competing with foreign companies to expand their exploration and acquisition activities into other parts of Africa.  These companies were targeting junior exploration companies who had successfully located drill-identified gold resources during the peak exploration years of 1996–99, during which nearly US$2 billion was spent on African mineral exploration (George Coakley, USGS African country specialist, oral commun., December 2000).
African countries experiencing the highest levels of exploration activity in 2001, in descending order by exploration activity based on site data collected for this annual review, were South Africa, Tanzania, Mali, Ghana, Burkina Faso, and Namibia.  Gold accounted for approximately 53 percent of the reported African exploration projects, diamond accounted for about 20 percent, platinum group elements accounted for about 12 percent, and base metals accounted for about 11 percent.  Exploration for gold was concentrated in the sub-Saharan African countries of Burkina Faso, Ghana, Mali, and Tanzania.  Several diamond and platinum-group-element projects in South Africa and gold projects in Tanzania were reported to have reached the advanced development or early production stages.
Most diamond exploration and development focused on the southern African countries of Botswana, Namibia, and South Africa, and in the northwestern African countries of Guinea and Sierra Leone.  Offshore diamond exploration in Namibia continued to stimulate a mining sector that has declined in recent years.  The higher prices for platinum-group metals early in 2001 stimulated the search for these minerals and several major new platinum-group-metal development projects were announced, as well as proposed expansion of existing platinum-group-metal operations.
United States.  Budgeted exploration spending in the United States decreased approximately 33 percent in 2001, according to MEG data.  Increased environmental protection regulation, higher energy costs of early 2001, and higher claim fees contribute to a 4-year decline.  Exploration in the United States accounted for 7.9 percent of the world exploration budget total in 2001.
Although Nevada received the most activity, a recent survey taken by the Nevada Division of Mines suggested claim totals have been declining steadily since 1992, with a reported 26 percent drop in new mining claims since 2000 (Pay Dirt, October 2001).  It was estimated that approximately US$50 million would be spent on exploration in Nevada in 2001.  Exploration was centered about active mining areas or historic mining districts.
While gold was the principal target for 57 percent of the reported exploration sites, the United States has had an increase in exploration for platinum-group and base metals.  Rio Tinto conducted a sizeable exploration program for borates in California.  In 2001, data on 78 U.S. exploration projects were collected and reviewed by the USGS; 37 percent were located in Nevada and 26 percent were in Alaska.  Of those considered, 43 projects were not in the 2000 review (i.e., they are new, names were changed, or data were not available in 2000).  The 2000 study considered 117 U.S. exploration projects; only one project achieved production status in 2001 (the True North ore zone of the Fort Knox mine, Alaska).  About 80 percent of the 2001 projects had not yet reached the full feasibility stage of development.
Drilling in close proximity to existing domestic deposits continued in 2001.  Gold exploration in Alaska focused on expanding resources at Donlin Creek and True North.  Drilling in Nevada was focused on expansion of active gold mining areas along the Carlin Trend, such as the Millennium zone of the Marigold mine, and extension of the Crossroads zone at the Pipeline deposit.  Extensive drilling also continued at the Cresson gold mine in Colorado.  Polymet Mining Corp. continued to extend resources at the NorthMet base and platinum-group-metals deposit in Minnesota.  Strong interest in platinum-group metals spurred continued exploration near the Stillwater Complex in Montana and at several locations in Alaska.
Pacific Region.  Based on MEG data, budget allocations for mineral exploration in the Pacific region and Southeast Asia decreased substantially in 2001 from US$199.2 million to US$133 million due largely to reduced investor confidence, perceived problems with government policy related to regional autonomy laws, and continued unrest in the region, some of which is directly related to anti-mining sentiment (MEG, 2001).  Spending allocations amounted to 6.7 percent of world exploration.  Much of the activity in this region (excluding Southeast Asia) took place at sites with previously established investment.  Perhaps the greatest greenfield exploration success was at the Boyongan copper-gold deposit in the Philippines, where a sizeable drilling project continues in spite of civil strife in the area.  Foreign companies such as Newmont Mining Corp. have suspended exploration for new sites across Indonesia.  Aggressive drilling programs are reported in Southeast Asia at the Sepon gold-copper deposit in Laos and the Nui Phao tungsten deposit in Vietnam.
Based upon data collected during this study, exploration activity was greatest in Indonesia, the Philippines, and Papua New Guinea, mostly associated with established or developing mining areas.  Gold targets accounted for about 48 percent of all exploration interest in the Pacific region, and base metal targets accounted for 43 percent of the reported activity in 2001.
Rest of the World.  Exploration budgets for the rest of the world (including Europe, Asia, and the former Soviet Union) decreased by a relatively modest 11 percent in the MEG 2001 survey, and accounted for 8.7 percent of world share on a percentage basis.  Exploration in Europe (including Russia) accounted for 54 percent of the total.  Based on data collected for this study, activity focused on Turkey, Russia, Finland, and Iran, in order of decreasing activity.  There was also significant exploration activity occurring in China, Greenland, Ireland, Mongolia, and Sweden.
European exploration activity focused on Finland, where the Arctic Platinum Partnership recently announced some significant platinum-group-metal resource estimates, and Riddarhyttan Resources AB delineated substantial gold values at the Suurikuusikko project.  Base metal exploration concentrated in Sweden and Ireland, while exploration for gold continued in Bulgaria, Greenland, Romania, and Spain.  Many prior mining areas of Europe are being re-evaluated with current technology, after gravity surveying led to the recent discovery of the concealed Las Cruces massive sulfide deposit in Spain (Mining Journal, May 26, 2000, p. 410).
Minerals exploration in the eastern Mediterranean region increased in 2001.  Exploration activity in Iran, Turkey, and Yemen revived for both gold and base metals.  Resource estimates have increased based on ongoing feasibility drilling at the Kisladag gold deposit in Turkey and the Mediabad base metals deposit in Iran.
In Russia, exploration focused on the search for gold, platinum-group metals, and diamond.  On the Kola Peninsula, platinum-group-metal resources reportedly totaled 1040 tons (33 million ounces) in the Pana tundra deposit, making this one of the world’s richest platinum-group-metal resources.  Extensive drilling programs were ongoing at the Birkachan gold deposit and the Verkhotina diamond deposit.  Exploration by foreign companies for new deposits in Russia during 2001 was limited.
Mineral exploration in China has grown since the country opened its mining sector to foreign investment during the 1990s.  About 30 foreign mining and exploration companies are reported to be currently active in China.  Of these, 17 are reported to have active exploration joint ventures and 19 are evaluating projects (Mining Engineering, September 2001). Projects cover a wide variety of minerals.
Government Programs
Over the past 20 years, mineral exploration has changed dramatically.  Improved technology has led to a wider remote sensing capacity and real-time data collection and analysis capability.  Land access for exploration has increased in portions of the former Soviet Union, Eastern Europe, and China.  Many governments have revised their mining laws or are in the process of doing so, using incentives including privatization, trade alliances, regulatory reforms, foreign investment provisions, and tax relief.  Environmental issues have increased both the cost and risks of mining in many areas.  The World Bank and other financial institutions have extended their programs to support project financing in emerging countries.  Globalization and integration continued at an even faster pace in 2000 and 2001.  In spite of these changes, however, regional strife and economic turmoil have subdued some mineral development efforts.  Continued low mineral commodity prices, renewed economic concerns, and increased risk in some areas have further reduced investment for exploration.
For several years, Africa’s mineral riches (gold and diamonds, and more recently tantalum) have reportedly been used to finance civil wars and border conflicts that have destabilized a number of central African countries.  This has significantly increased political risks and constrained investment in mineral exploration and development in the region.  Revenues from “conflict” diamonds have supported civil strife in Angola and Sierra Leone and were valued at US$255 million in 1999, or about 4 percent of the world diamond market (U.S. Geological Survey, Mineral Commodity Summaries 2001, p. 11).  After more than a year of talks, government and industry negotiators from dozens of countries agreed in 2001 on a framework for a system to certify legitimately traded diamonds.  The plan has since gone to the U.N. General Assembly for its endorsement (Denver Post, November 30, 2001).
In spite of ongoing conflict, efforts to revise mining legislation were underway during 2001 in Algeria, South Africa, Tanzania, and Zambia.  Algeria has adopted a new mining law that opens its mineral resources to foreign investment, removes discrimination between public and private operators, and introduces fiscal incentives for exploration and mining (Engineering and Mining Journal, October 1, 2001).  The South African Code for Reporting of Mineral Resources and Mineral Reserves, which is an attempt to set rules and guidelines for the reporting of mineral reserves/resources, was recently finalized after two and a half years of deliberations.  In addition, development of policies designed to free up unused mineral rights, which would be made available to new foreign investors or new local black economic empowerment groups, is underway.  South African investment abroad continues to accelerate, with some of the smaller South African companies also making their debut on the international scene.  The government of Tanzania is preparing legislation to restrict foreign investment in the country, in an attempt to encourage local entrepreneurs.  The government of Zambia completed the privatization of Zambia’s copper industry that began in the mid-1990s.
Across Australia, native title issues continue to be the dominant issue affecting exploration and mining.  In 2001, the Kalkadoon Indigenous Land Use Agreement was signed between the Australian Aboriginal Kalkadoon people, MIM Holdings Ltd., Anglo American plc, and the Government of Queensland.  The agreement allows mineral exploration in northwest Queensland, which had been suspended, to proceed immediately after registration with the National Native Title Tribunal (Mining Journal, September 21, 2001, p. 225).
During 2001, several pieces of legislation were implemented or proposed in Canada to encourage investment in mineral exploration.  The new British Columbia government recommended a 20 percent flow-through share tax credit for mining-related investment, and proposed the staged elimination of the general corporation capital tax, the provincial sales tax on machinery and equipment, and a reduction in the corporate income tax rate (Northern Miner, August 13-19, 2001, p. 5).  The National Geoscience Mapping Program continues to focus on evaluating the gold potential of Nunavut.  Saskatchewan is providing funding for several mining industry projects to stimulate mineral exploration in the province (Government of Saskatchewan, press release, November 26, 2001).  The Yukon Territory has extended its mineral exploration tax credit to April 1, 2003.  In Ontario, Operation Treasure Hunt, the government’s ongoing 3-year, C$29M (US$20 million) geoscience mapping program, continues to identify areas with high mineral potential, such that staking-rushes have occurred in several areas of Ontario.
Chinese mining laws and regulations pertaining to joint ventures with foreign mining companies continue to evolve slowly but positively, from an international investment perspective (Mining Engineering, September 2001, p. 19).  About 30 foreign mineral companies are currently active in China.  Reforms are continuing to stimulate investment in mineral development, including establishing rules for exploration and development rights of foreign companies, developing uniform policies for mineral resource planning and management, and improving procedures for the granting of exploration and mining licenses (China Mining Association, SME Annual Meeting preprint 01-157, 2001, p. 4).
A new reporting code for geologists in Europe came into effect in October 2001.  The “Code for Reporting of Mineral Resources and Mineral Reserves”, similar to the one implemented in Canada in 2000, updates the reporting standards used by the Institution of Mining and Metallurgy, the European Federation of Geologists, and the Institute of Geologists of Ireland,.  It sets out guidelines for public reporting of mineral exploration results, mineral reserves, and mineral resources in the United Kingdom, Ireland, and Europe (Mining Journal, December 7, 2001).
The Indian government has reported that it is formulating new legislation that would allow for the systematic exploitation of minerals of the Indian coast (Mining Journal, July 20, 2001, p. 46).  The Indian state of West Bengal has introduced a new mineral policy to encourage investment in the minerals sector (Mining Journal, November 9, 2001, p. 361).  The Pakistani government has approved a US$15.6 million developmental aid program for the minerals sector.  The bulk of the funds would pay for the Geological Survey of Pakistan to complete a 5-year geochemical and geophysical mapping survey of the entire country on a scale of 1:50,000 (Mining Journal, June 8, 2001, p. 436).
Improvement in available geologic data and mining law reform continued to encourage mineral exploration in Latin America in 2001.  The Multinational Andean Project, a 5-year international mapping effort, is nearing completion.  The C$12 million project was funded by the Canadian International Development Agency and the geoscience agencies of Argentina, Bolivia, Chile, and Peru.  Airborne geophysical surveys of northwestern Argentina, the border area between Argentina and Chile, and areas of Peru, Bolivia, and Chile have been or are being completed and metallogenic maps of these regions are being prepared (Northern Miner, May 7-13, 2001, p. 5).  Ecuador has overhauled its mining code by increasing mining and exploration titles to 30 years, abolishing royalties, and increasing the efficiency of mining administration (Northern Miner, November 5, 2001).  A series of revisions to the mining law of El Salvador were passed during 2001.  Among the changes, mineral royalties were reduced, the length of exploration licenses were increased, and concession size restrictions were eliminated (Northern Miner, September 3, 2001, p. 2).  Mexico plans to launch a venture capital fund to encourage mineral exploration.  The governments of Mexico and Japan have signed an exploration and development agreement for the Zacualpan-Mamantla region east of Mexico City (Mining Journal, December 21, 2001, p. 473). The Peruvian government promulgated a law during 2001 exempting sales tax on mining and oil exploration (Metals & Minerals--Latin America, January 14, 2002).  On April 9, 2001, Legislative Decree 912 reduced mining claim fees in Peru from US$5/hectare to US$4/hectare during 2001, and to US$3 thereafter (Mining Journal, May 4, 2001, p. 336).
Amendments to the Russian Production Sharing Agreement of 1996 were passed on December 20, 2000.  The purpose of the law is to introduce a simplified and more stable regime of foreign investment into the Russian natural resource sector (Mining Journal, February 23, 2001, p. 143).  Other proposed changes are also being considered.
Efforts are under way to stimulate mineral resource development in Saudi Arabia.  The Saudi Arabian Ministry of Petroleum and Mineral Resources has signed a contract with Watts, Griffis, and McOuat Ltd. to develop a comprehensive strategy for mineral development and to attract and maintain foreign investment within the mineral sector of the country (Engineering and Mining Journal, October 2001, p. 16BB).
The control of mining in Indonesia passed to local authorities at the start of 2001, as part of sweeping new laws on decentralization.  The legal uncertainty generated by such laws have caused a number of mining companies, including Newmont Mining Corp., to suspend exploration activities for one to two years (Mining Journal, February 23, 2001, p. 145).
In response to high power costs in the western United States at the beginning of 2001, a coalition of mining companies, power companies, and resort casinos have filed suit in the Nevada Supreme Court seeking passage of a bill that could affect how large electricity-users buy their power.  Bill 661 would allow large power users such as mining companies to buy electricity on the open market, rather than depend upon local utility companies.  The U.S. House of Representatives passed the “Clean Diamonds Act” in November 2001, giving the President the authority to impose sanctions against a country that does not have a system of controls on illegal diamonds.  The bill now goes to the Senate for approval.
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 mineral 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 USGS information on mineral commodities and international minerals activities, inquiries may be directed to Kathy Keys, U.S. Geological Survey, 988 National Center, Reston, VA 20192; telephone 703-648-4961 or kkeys@usgs.gov.