Nonfuel Mineral Exploration 2002
David R. Wilburn
U.S. Geological Survey
(Originally published in Mining Engineering, v. 55, no. 5, May 2003, p. 30-42.)
Exploration budgets fell for a fifth successive year in 2002, reflecting unsettled mineral commodity prices and continued reluctance to invest in mineral-markets.  Industry consolidation, which appeared to peak in 2001, affected 2002 exploration spending, as the exploration budgets of acquired companies effectively disappeared in 2002.  Most surviving companies did not increase their exploration budgets despite their expanded exploration portfolio.  Copper and gold project budgets continued to account for more than 50 percent of the total planned exploration expenditures.  Interest in diamond and platinum-group metals appears to have increased, as the relative amount of capital budgeted for those target minerals rose from newly announced projects and advancement of existing projects.  Based on the Metals Economics Group (MEG) reported exploration budget summaries and Engineering & Mining Journal’s annual project investment survey, the principal targets for exploration in 2002, in order of decreasing budget size, were in Latin America, Canada, and Australia.
Statistical Interpretation of International Mineral Exploration for 2002
This summary of international nonfuel mineral exploration activities for 2002 draws upon available data from literature and industry and U.S. Geological Survey (USGS) specialists.  The report provides 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 2002: 1) budgetary statistics provided by MEG, and 2) information on regional and site-specific exploration activities in 2002 compiled by the USGS.  The MEG information summarizes planned company budgets for exploration activities in 2002 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 2002 survey 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 include nonfuel minerals, with an emphasis on precious and base metals and diamond.  Mineral exploration generally focuses on commodities that are more sensitive for supply disruption (platinum-group metals, tin) or have a high value per unit weight revenue potential (gold).  Analyses are based on information provided by USGS mineral commodity and country specialists, and by other USGS scientists, as well as industry contacts and trade journals.  This work is contributing to the Sustainable Minerals Roundtable discussion process, a joint USGS and U.S. Forest Service effort to develop a set of indicators highlighting trends and priorities related to mineral/material and energy systems, to better define progress toward U.S. sustainability goals.  Data on mineral fuel exploration have also been compiled; these data can be accessed at URL http://www.unr.edu/mines/smr.
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 during the period 1997–2002 also impacted statistical compilations.
MEG estimated the total 2002 commercial international exploration budget for nonfuel mineral targets (excluding iron ore and aluminum) to be US$1.9 billion, 14 percent lower than the corresponding estimated budget for 2001.  For the 724 companies canvassed by MEG in their 2002 study, the total amount reported as budgeted for international exploration in 2002 was US$1.73 billion (45 percent for gold, 30 percent for base metals, over 13 percent for diamond, 6 percent for platinum-group metals, and 5.7 percent for other mineral commodities).  Figure 1 shows the 2002 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 2002 were: Latin America, US$448 million; Canada, US$317 million; Australia, US$304 million; Africa, US$257 million; the United States, US$125 million; the Pacific region, US$85 million; and the rest of the world, US$197 million.
MEG data indicate that planned exploration budgets (in current dollars) for 2002 decreased from 2001 levels in most regions of the world.  The general decreasing trend may be attributed to changing exchange rates, continued low commodity prices, abundant metal inventories, investor wariness for funding exploration activities in a time of uncertainty about economic recovery, terrorism, and possible war, and tighter company budgets.  Anticipated exploration spending in Canada and Africa were only slightly less than 2001 levels (down 5 percent and 7 percent, respectively).  Canadian exploration activity was aided by increased investment in Canadian junior companies, who generally were able to raise exploration funds in the search for gold, diamond, and platinum-group-metal targets.  Although Africa possesses large geologic potential for the discovery of significant mineral deposits, regional conflicts, worker and property security issues, and high levels of malaria and AIDS have discouraged or delayed exploration activity.  Exploration budgets for the Pacific region decreased approximately 36 percent from 2001 levels, while Latin American budgeted exploration was forecast to decrease 22 percent, as reported by MEG.  Figure 2 shows trends in reported exploration budgets for nonfuel mineral targets in selected regions for the period 1995–2002, in terms of regional dollar allocations and in regional percentage of the total exploration budget.
The largest budget dollar reduction between 2001 and 2002 (US$128 million) took place in Latin America, followed by an US$48 million reduction for exploration in the Pacific Region and US$45 million reduction in Australia.  In terms of percentage of worldwide exploration budget, Latin America dropped from almost 29 percent in 2001 to less than 26 percent in 2002; similarly, the Pacific region decreased from 6.7 percent in 2001 to 4.9 percent in 2002.  The exploration budget percent share of Rest of World countries increased from 8.7 percent in 2001 to more than 11 percent in 2002, primarily a result of improved survey coverage in Russia.   The Canadian percent share increased from less than 17 percent in 2001 to more than 18 percent in 2002, as many Canadian junior exploration companies focused their exploration efforts in relatively low-risk areas close to home.  In spite of a budgetary decrease, Latin America remained the region with the highest exploration budget.
The apparent data shift seen in figure 2 for 1999 reflects the change in MEG data reporting methodology previously mentioned.  The 538 companies included for the first time in the 1999 MEG study, while individually budgeting 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.
There was no distinct trend for metals prices in 2002, perhaps reflecting a year of economic uncertainty.  Prices for some metals in 2002 remained near 2001 levels (copper, lead, and platinum), other metal prices rose slightly (gold, nickel, and silver), and others (palladium and zinc) fell.  The average palladium price for 2002 was 45 percent lower than the average 2001 price, while the average 2002 gold price increased about 14 percent from the level reported for 2001.  Table 1 shows the change in price of selected precious and base metals for the years 1995–2002.
Table 1.   Prices for selected base and precious metals, 1995–2002	
	Average price for specified year, in U.S. currency	
Commodity	19951	19961	19971	19982	19992	20002	20012	20023	
Copper4	1.38	1.09	1.07	0.79	0.76	0.88	0.77	0.76	
Gold5	386	389	332	295	280	280	272	311	
Lead6	0.42	0.49	0.46	0.45	0.44	0.44	0.44	0.44	
Nickel7	3.73	3.40	3.14	2.10	2.73	3.92	2.70	3.07	
Palladium8	153	130	184	290	363	692	611	337e	
Platinum9	425	398	397	375	379	549	533	540e	
Silver10	5.15	5.19	4.89	5.54	5.25	5.00	4.39	4.60e	
Zinc11	0.53	0.51	0.65	0.51	0.54	0.56	0.44	0.39	
eEstimated.	
1USGS Metal Prices in the United States Through 1998, published in August 1999.	
2Estimated price reported in USGS Mineral Commodity Summaries 2003.	
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 2002 by commodity grouping.  Gold continued to be the greatest exploration target, representing over 45 percent of exploration funding in 2002.  The amount budgeted for gold exploration (US$784 million) was 7.7 percent lower in nominal terms than that budgeted for gold in 2001.  In 2002, gold returned as the top target for all stages of exploration based on MEG data, suggesting the beginnings of renewed strength.  The current strengthening of the gold price and a weakened U.S. dollar leads MEG to expect an increase in gold exploration in 2003.  Based on decreasing MEG budget estimates, the principal geographic areas for gold exploration in 2002 were in Latin America, Australia, and Canada (MEG, Strategic Report, January/February 2003).
Exploration budgets for base-metal projects (MEG includes copper, lead, nickel, and zinc) dropped from US$779 million in 2001 to US$512 million in 2002 consistent with the general decrease in exploration funding.  Base metals decreased to about 30 percent of the total MEG world exploration budget in 2002, compared to about 39 percent in 2001, ending four consecutive years of percentage increases.  Sustained weak base metals prices are believed to be the main contributor for the decrease.  Copper exploration constituted about 60 percent of the base-metals exploration budget; nickel increased to almost 26 percent, and zinc decreased to less than 15 percent of the base-metal total.  Although Latin America remained the region with the greatest minerals exploration budget for base metals, 2002 base metals exploration budgets for Latin America declined in both percentage and budget terms.  The percentage of the base metals budget remained stable or increased slightly in Canada, the United States, Australia, the Pacific region, and in the rest of the world category in 2002.  The African base metals budget dropped in 2002.   For base metals, the budget percentage dropped significantly for both grassroots and late-stage exploration work in Africa, and dropped less significantly for mine site exploration in 2002.
Budgeted diamond exploration in 2002 increased to over $234 million from about $198 million in 2001.  As a result, diamond exploration accounted for 13.5 percent of the total exploration budget in 2002.  Much of this apparent increase is due to the inclusion for 2002 of the budget for the Russian diamond exploration company Alrosa, which was unavailable in the 2001 statistics.  MEG estimated that the 2002 increase in the diamond exploration budget was actually $8.4 million, in contrast to decreases for most other commodities.  Significant diamond exploration was occurring in Africa (about 35 percent), Canada (32 percent), and Russia (15 percent).
Exploration budgets for other mineral targets (primarily borates, heavy minerals, platinum-group metals, and tantalum) reached their highest level (almost 12 percent of the total budget) in six years.  Platinum-group metals accounted for 51 percent of this total, and exploration for platinum-group metals increased from 3.4 percent in 2001 to 6 percent of the world total in 2002.  Silver was considered by many companies to be a significant target, however, most silver exploration was 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 2002
The U.S. mineral exploration budget for 2002 appeared to decline at a somewhat higher rate than the regional average in 2001, based on reported MEG statistics.  Budgeted exploration expenditures dropped to US$125.2 million (7.2 percent of world total) in 2002 from the budgeted amount of US$158.2 million (7.9 percent) in 2001.  Anticipated exploration spending in the United States in 2002 was about US$33 million less that for 2001, constituting a drop of over 20 percent.  The U.S. exploration budget is about 34 percent of the level it was in 1997, when the worldwide budget reportedly peaked at about US$5.2 billion, based upon MEG data.
The USGS has compiled data on U.S. exploration activity for selected natural resource sectors for the years 1949–2000, expressed by the amount of drilling that was conducted for the indicated period.  Figure 4 reports data for the nonfuel minerals, oil and gas, and uranium sectors, as reported at URL http://www.unr.edu/mines/smr.

Domestic exploration activity, as measured by drilling activity, shows that current levels are at their lowest levels for the time period considered.  For some mineral deposits in districts heavily explored prior to the last decade (such as copper in the southwestern United States), resources sufficient to meet forecasted demand for many years already have been identified by prior exploration.  Therefore, the lack of current exploration in these districts, or other comparable areas of the world, may not suggest lack of interest for future exploration. Since the mid 1990s, gold has accounted for 45-65 percent of the U.S. nonfuel mineral exploration budget.  Base metals accounted for 25-40 percent of domestic exploration activity, and diamond exploration accounted for about 5-10 percent.
A number of factors have contributed to the decline in minerals exploration in the United States.  These factors include proposed changes in U.S. mining regulations to address environmental protection of national resources, the relative maturity of the U.S. exploration province (except for Alaska), and the depth of drilling (expense) that may be required to locate new zones of mineralization.  More stringent permitting standards also have added to the cost of exploration.  Based on the types of deposits being encountered in recent exploration, Alaska has entered a higher level of maturity.  Base metal deposits discovered in the 1970s and 1980s were unlike those encountered in the state prior to that time.  New gold deposit types previously unreported for Alaska are currently being discovered and developed.   Potentially economic Alaskan platinum, tantalum, and diamond occurrences like those currently being reported were unknown just a few years ago (E&MJ, October 2002, p. 18).
In spite of declining exploration, a recent survey of 131 junior exploration companies and 27 senior exploration companies conducted by the Fraser Institute of Canada suggests that the United States continues to attract interest in minerals exploration, but only in selected regions.  Exploration interest varies substantially based on location and State regulatory policies [Fraser Institute, December 30, 2002 (http://www.fraserinstitute.ca)].  In its 2002/2003 survey, Nevada was included in the five top-rated regions for its policy climate, and California, Washington, and Wisconsin were among the 10 lowest rated regions in this category.  Nevada was included in the ten top-rated regions for attractiveness based on geology, while Minnesota, South Dakota, Washington, Wisconsin, and Wyoming were among the lowest rated in this category.  In general, Nevada was given a positive rating for its regulation/land-use policy climate, while California, Colorado, Minnesota, Washington, and Wisconsin were rated low in these areas.  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 10 percent for junior mining companies in 2001.  It appears that during this period of generally low metal prices, the necessity for some senior 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.  Canadian junior companies, on the other hand, because of leaner economic times, tended to invest in projects closer to home, with less money allocated for U.S. investment.
USGS data suggest Alaska and Nevada had the greatest amount of exploration activity of U.S. States during 2002, primarily for gold.  In Nevada, interest in reviving several properties that have been dormant for many years has been stimulated by gold prices above $300 per troy ounce.  Anticipated exploration in Nevada in 2002 was expected to be $46.3 million, about 10 percent less than 2001 expenditures of US$51 million, based on data reported by the Nevada Division of Minerals (Nevada Exploration Survey 2001, June 2002, p. 1).  Reported distribution of exploration expenditures was 75 percent on actual exploration, 7 percent on corporate overhead, 10 percent on land holding, 7 percent on permitting and compliance, and 1 percent other costs.  The total number of mining claims projected for Nevada in 2002 was 36,362.  In 2001, 38,075 claims were recorded in Nevada.  Alaskan exploration in 2002 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 has delineated a resource of over 14.8 million ounces of gold.
Analysis of Exploration Activity
Exploration budgets for Australia, Canada, and the United States, all highly industrialized areas with extensive past mineral exploration histories, decreased during the period 1997 to 1999 in favor of regions with under-explored areas now being evaluated (Africa, Latin America, the Pacific, and other regions).  During these years, low commodity prices, regional unrest (central Africa), financial turmoil (Asia-Pacific), and fraudulent mineral value claims 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 groupings for the period 1999 to 2001 were about that of the 1995 to 1996 period.  For 2002, planned exploration in the more developed regions appeared to be increasing slightly relative to other areas.  Figure 5 shows these trends in terms of percentage of reported exploration budgets.
For 2002, information on almost 2000 exploration sites was gathered from USGS specialists, industry contacts, and trade journals.  The regional distribution of these exploration targets is represented in figure 6, based on the number of projects reported for each region.  When compared to similar data for 2001, exploration activity appears to have increased in all regions except Africa, based on the number of reported exploration projects.  In terms of percent of world share, however, activity decreased in Africa, Canada, and Latin America.
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 110 percent increase in the number of sites reportedly being explored in 2002, but its exploration budget dropped almost 13 percent from 2001.  Possible reasons for such a situation include (1) recent discoveries generated multiple exploration efforts in surrounding areas, (2) a greater focus on early stage (lower cost) exploration, or (3) advanced deposits reaching engineering or construction stage (generally not included as exploration).  Similarly, Canada 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 second in terms of total dollars budgeted.
Table 2 presents exploration sites considered most noteworthy in 2002, 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.
The came criteria have been used in previous exploration summaries reported annually by Mining Engineering.  Although 100 sites were reported in previous years, in 2002, only 90 sites met these criteria, suggesting that for 2002, at least, capital funding limitations hit exploration activity at even the most noteworthy sites or fewer sites merited exploration at levels required for inclusion in the table.
Each of these sites represents a new or recent discovery, a delineation of a new ore zone, or a significant reported increase in resources in 2002.  Sites undergoing preproduction development or currently producing were excluded from this list, unless significant reserves/resources were delineated in 2002 by exploration activity.
 As shown by table 2, gold continues to dominate the list of noteworthy exploration sites for 2002.  Of the 90 selected sites reported in table 2, 55 are for gold, 12 for copper, 10 for platinum-group metals, 4 for nickel, 3 for diamond, and 6 for other commodity targets.  Determination of the primary commodity was based on consideration of the value of the contained resources at each site.  Gold remained the most sought-after mineral commodity in 2002.  Interest in base metal deposits remained strong, especially for targets with polymetallic potential.  Interest in platinum-group metal targets remained steady as a primary target and in association with nickel and copper sulfides, even though 2002 prices for these precious metals were lower than in 2001 (see table 1).  Interest in titanium-rich mineral sand deposits continued in 2002, particularly in Australia.  These data are consistent with the findings of MEG for 2002.
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 112 million ounces of gold, 344 million ounces of silver, 18 million tons of copper, and 38 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 89,000 tons (2.8 billion ounces) of gold, 520,000 tons (16 billion ounces) of silver, 950 million tons of copper, and 80,000 tons (2.5 billion ounces) of platinum-group metals (USGS, Mineral Commodity Summaries 2003).
Figure 6 and table 3 reports the number of major exploration sites by region for the years 1996–2002, based on the criteria used to develop table 2 of this report.  In terms of the major sites considered, there appears to be a significant increase in noteworthy exploration projects in Africa for 2002, with a corresponding decrease in the Pacific region and U.S. exploration projects.  Although there appears to be a relative balance of major exploration sites among regions in 2001, fewer sites in the Pacific region and the United States were targeted for high levels of activity.  It is likely that socio-political unrest in the Pacific region and economic uncertainty in the United States caused exploration companies to defer major capital investments in targets within these regions in 2002.
Table 3.  Major exploration sites1 by region, for the years 1996–2002	
Region	1996	1997	1998	1999	2000	2001	2002	
Africa	16	13	20	10	17	11	16	
Australia	9	8	4	11	12	21	20	
Canada	13	24	19	20	15	17	19	
Latin America2	30	26	29	27	24	17	15	
Pacific3	14	10	9	7	10	12	4	
United States	9	13	10	16	14	10	6	
Other4	9	6	9	9	8	12	10	
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 1997–2003.	
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 capital, there was a 22 percent decrease in 2002, based on MEG data.  By commodity, Latin America was targeted for 26 to 27 percent of the world gold exploration budget and almost 37 percent of the budget for base metals.  Peru, Brazil, Chile, Mexico, and Argentina were ranked in MEGs top 10 countries for 2002 exploration, based on the amount of the proposed exploration budget.  Similarly, an annual survey of executives from leading international mining companies conducted by the Fraser Institute [Fraser Institute, December 30, 2002 (http://www.fraserinstitute.ca)] ranked the Latin American countries of Brazil, Chile, and Peru as the top three countries on its emerging country rating for exploration investment based on their financial attractiveness for investment in 2002.  Investment appeal is reportedly based on the geologic potential, property value, ease of doing business, and political stability of the countries.
Despite the significant drop in budgeted exploration expenditures in 2002, exploration expenditures for late-stage gold projects in Latin America increased almost 48 percent to $106.9 million from $72.4 million in 2001.  This suggests that available funds are being spent on larger, later-stage projects at the expense of smaller, earlier-stage projects.  Average advanced-stage project size increased to 2.7Moz of contained gold in 2002, compared to 1.6Moz Au in 2001 (Metals Economics Group, Strategic Report, November/December 2002, p. 1).  MEG reports 26 Latin American projects that each contain a resource of more than 1 million ounces of gold.
Based on data compiled for this review, Latin American countries with the greatest exploration activity, in descending order by number of reported sites, were Mexico, Argentina, Peru, Chile, and Ecuador.  Gold attracted about 65 percent of total exploration activity, but interest in base metals reached 20 percent and silver achieved about 10 percent of the total.  Investment in 2002 was primarily used to further define newly discovered resources (75 percent) and conduct feasibility studies of promising deposits (14 percent).
In spite of continued interest in exploration in Mexico, the country’s mining industry remains weak.  Mexico’s major mining companies report poor financial returns in light of low metals prices and poor currency exchange rates.  In 2001, the Mexican Chamber of Mines reported that of the 400 small mining and exploration companies operating in Mexico a decade ago, only 70 firms continue to operate (Metal Bulletin, 2001).
Barrick Gold Corporation’s (Barrick) discovery of the Alto Chicama gold deposit in Peru has led to aggressive exploration in the country.  Barrick reported it is spending US$35 million in 2002 at Alto Chicama, including 135,000 meters of drilling.  Exploration on Peru’s northern border with Ecuador has opened up, both as a result of the 1998 peace accord between the two nations that removed claims restrictions near the border and recent discoveries in the region (Metal Bulletin, May 20, 2002, p. 5).  Peru is the focus of greenfield exploration; of AngloGold Limited’s 682 exploration targets in Peru, only 2 have reached the drilling stage (Metal Bulletin, May 27, 2002, p. 7).
The border region between Argentina and Chile continues to be heavily explored.  Improved gold prices at the end of 2002 may have spurred Barrick to announce the sequential development of their Veladero and Pascua Lama properties, which together report a joint resource currently containing over 26 million ounces of gold and 700 million ounces of silver.  Delineation of both deposits is continuing.  Coeur d’Alene Mines Corporation began production at its Cerro Bayo silver/gold mine in 2002, and acquired the nearby Martha mine property; extensive exploration work in 2002 delineated significant additional gold and silver resources along the border of Argentina and Chile.
Australia.  Exploration budget allocations reported by MEG for Australia in 2002 showed continued slippage in dollar terms.  MEG reported a decline of 13 percent between 2001 and 2002 to $304 million, while the Australian Bureau of Statistics (ABS) estimates minerals exploration expenditures for the 2001-02 period of A$641 million (US$336 million) (ABARE, December 2002, p. 53).  The Australian Bureau of Agricultural and Resource Economics (ABARE) issued a report showing a decline in real mineral exploration in Australia between 1996-97 and 2001-02 of 49 percent, bringing reported exploration to its lowest level since 1978-79 (ABARE, December 2002, p. 13).  The report attributed the downturn to reduced spending for gold and base metals, together accounting for 72 percent of Australian exploration expenditure in 2001-02, as a result of demand side impacts on the global business cycle, official gold sales by major banks since 1997, increased rationalization of exploration budgets by merged companies, and domestic land access restrictions.
According to the ABS, as reported by the Western Australia Department of Minerals and Petroleum Resources, gold accounted for 65 percent of Western Australia’s mineral exploration expenditure of A$276 million (US$148 million) in 2001.  Exploration allocations for base-metal targets in Western Australia were reported as A$74 million (US$39 million) for the same period, allocation for diamonds was A$30 million (US$16 million), A$20 million (US$11 million) for iron ore, and A$8 million (US$4 million) for heavy minerals (Western Australia Department of Minerals and Petroleum Resources, Statistics Digest 2001, p. 10).
Between the years 2000-01 and 2001-02, Australian mineral exploration expenditures varied significantly by sector.  Exploration expenditures for heavy mineral sands increased almost 37 percent, expenditures for copper targets increased about 23 percent, and expenditures for minerals other than base metals, diamond, energy minerals, gold, and iron ore increased about 18 percent.  On the other hand, lead-zinc and silver exploration expenditures in 2001-02 decreased 39 percent, expenditures for nickel-cobalt targets decreased 28 percent, and gold exploration expenditures decreased 13 percent from 2000-01 levels (ABARE, December 2002, p. 36).  The Murray Basin region, covering portions of New South Wales, South Australia, and Victoria, is viewed as a medium term-replacement for mineral sands deposits currently being depleted. Development and subsequent production of the Wemen deposit (a joint venture of RZM Pty. Ltd. and Sons of Gwalia Ltd.) in the year 2001 and release of a joint government and industry assessment of the potential of the region during the year 2000 increased exploration in the area.
Based on preliminary statistics complied by the ABS for 2001-02, Western Australia accounted for 59.5 percent of Australian mineral exploration expenditures reported for this period.  Companies also reported significant interest in exploring for minerals in Queensland (over 14 percent), Northern Territory (7.6 percent), and New South Wales (7.5 percent).  A similar trend was noted based on reported site data compiled by the USGS for this report.
Canada.  Statistics released by the Canadian Government (Natural Resources Canada, October 2001 data sheet) show anticipated 2002 exploration spending at C$501 million (US$286 million), or close to the 1999 spending level.  MEG reported budgeted exploration spending in Canada for 2002 at US$317 million, accounting for over 18 percent of the overall worldwide exploration budget.  Exploration budget allocations for 2002 as reported by the Canadian Government were greatest in Ontario (about 25 percent of Canadian total exploration budget), Quebec (22 percent), Nunavut (14 percent), British Columbia (9 percent), and Saskatchewan (8 percent).  Provinces with significant 2001-2002 increases include Nova Scotia (+111 percent), Alberta (+98 percent), and British Columbia (+54 percent).  Provinces with sizeable 2001-2002 decreases include New Brunswick (-62 percent), Northwest Territories (-56 percent), and Newfoundland/Labrador (-37 percent).  Approximately 72 percent of the reported Canadian exploration budget was allocated for initial exploration (up to and including the first delineation of a mineral deposit).  Budgets of junior companies was expected to increase from C$178 million (US$113 million) in 2001 to C$209 million (US$133 million) in 2002, while budgets of senior companies was expected to decline from C$335 million (US$213 million) in 2001 to C$292 million (US$186 million) in 2002.
Based on data compiled by the USGS for this study, gold targets accounted for approximately 43 percent of reported Canadian exploration.  The greatest amount of gold activity, based on the number of active sites, took place in Ontario, British Columbia, and Quebec.  Copper targets accounted for 11 percent and nickel targets accounted for about 7 percent of Canadian activity, with copper exploration focused on British Columbia and Ontario, and nickel exploration focused on Ontario and Quebec.  Diamond exploration activity continued to increase in 2002, accounting for about 21 percent of all Canadian exploration targets, mainly in the Nunavut, Northwest Territories, Ontario, and Quebec.  Exploration was encouraged by recent discoveries and renewed interest by De Beers, who spent 40 percent of their US$73 million 2002 exploration budget on Canadian diamond projects (Northern Miner, August 19, 2002, p. 1).  Platinum-group metals, often associated with nickel and copper sulfides primarily in Ontario, were also targeted in 2002, accounting for about 16 percent of reported Canadian exploration projects.  Approximately 92 percent of all reported exploration targets were considered early-stage sites, consistent with Government statistics, which indicate junior companies are conducting much of Canadian exploration activity.
During 2002, extensive work was conducted to define further diamond potential at the Gahcho Kue (Kennady Lake) deposit (Northwest Territories) and along the Hope Bay greenstone belt (Nunavut).  Drilling continued to search for additional nickel-copper and platinum-group-metal potential at Ferguson Lake (Nunavut) and near the McCreedy West and River Valley deposits (Ontario).  Drilling continued to define gold potential at Hope Bay and Meadowbank (Nunavut).  Construction finally began at the large Voisey’s Bay nickel-copper deposit in Newfoundland after being delayed by controversies over political, technical, and environmental issues.
Africa.  Exploration activity as defined by reported company exploration budgets for Africa continued to decline during 2002.  MEG reported a modest drop in exploration spending for Africa of about 7 percent from the 2001 level.  In terms of worldwide allocation, however, Africa actually increased to almost 15 percent, compared to the reported 2001 allocation of about 14 percent.
Based upon recent company surveys (Fraser Institute, Mining Journal), Africa continues to represent a continent with new mineral production potential, but with a high degree of investment risk.  Exploration in some parts of Africa increased in 2002 as the threat of civil unrest 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 continue to be reluctant 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), while others express optimism over African potential (Mining Magazine, September 2002).
Exploration activity in southern Africa has been affected by the political instability in Zimbabwe and the movement of some major exploration groups out of South Africa.  One exception was exploration for platinum-group metals in the Bushveld Complex of South Africa.  Lower copper prices and political instability have hampered the revival of exploration and development of mineral resources in the Central African Copperbelt of the Democratic Republic of the Congo and Zambia.  In Tanzania, initial production results from the Bulyanhulu gold mine have spurred new exploration in the region.  In Ghana, a number of projects have been suspended pending clarification of policy on mining in forested areas (Mining Journal, March 1, 2002, p. 6).
African countries experiencing the highest levels of exploration activity in 2002, in descending order by exploration activity based on site data collected for this annual review, were South Africa, Tanzania, Ghana, Mali, Guinea, Zambia, and Botswana.  Gold accounted for approximately 55 percent of the reported African exploration projects, diamond accounted for about 16 percent, platinum-group elements accounted for about 13 percent, and base metals accounted for about 15 percent.  Exploration for gold was greatest in the sub-Saharan African countries of Ghana, Mali, and Tanzania; exploration also continued in Botswana, Burkina Faso, and Guinea.
Most diamond exploration and development focused on Guinea, Namibia, and South Africa.  Offshore diamond exploration in Namibia continued to stimulate a mining sector that has declined in recent years.  Exploration for platinum-group metals continues, expanded resources at several site have been delineated, and continued development of several projects on the eastern Bushveld Complex were announced.
United States.  Budgeted exploration spending in the United States decreased approximately 21 percent in 2002, according to MEG data.  Increased environmental protection regulation, higher energy costs of early 2001, and higher claim fees contribute to a 5-year decline.  Exploration in the United States accounted for 7.2 percent of the world exploration budget total in 2002.
Although Nevada received the most activity, a recent survey taken by the Nevada Division of Minerals suggested claim totals have been declining steadily since the enactment of the $100 Federal claim maintenance fee in 1992.  This decline is projected to continue into 2002.  Based upon the survey’s results, approximately US$46 million would be spent on exploration in Nevada in 2002, a 10 percent decline from 2001 (Nevada Division of Minerals, June 2002).  Commodity prices are reported to be the biggest factor influencing exploration activity.  Exploration was centered about active mining areas or historic mining districts.
While gold was the principal target for 72 percent of the reported exploration sites in the United States, there was an increase in exploration for platinum-group and base metals (primarily copper and nickel).  In 2002, data on 160 U.S. exploration projects were collected and reviewed by the USGS; 45 percent were located in Nevada and 28 percent were in Alaska.  Of those considered, 120 projects were not in the 2001 review, either because they represent new targets, project names changed, or because data on activity were not available in 2001.  Many of these sites, however, have had prior exploration.  This suggests that economic conditions were such that exploration companies were reevaluating known prospects in light of improved economic conditions or new technology.  About 86 percent of the 2002 projects had not yet reached the full feasibility stage of development.
Drilling in close proximity to known domestic resource potential continued in 2002.  Gold exploration in Alaska focused on expanding resources at Donlin Creek and Pebble.  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 gold resource of the Hollister zone at Ivanhoe.  Extensive drilling accompanied the expansion of the Cresson gold mine in Colorado.  Interest in platinum-group metals spurred continued exploration near the Stillwater Complex in Montana, the Duluth Gabbro in Minnesota, and at several locations in Alaska.
Pacific Region.  Based on MEG data, budget allocations for mineral exploration in the Pacific region and Southeast Asia continued to decrease substantially in 2002 from US$133 million to US$85 million due largely to civil unrest in the region, compounded by reduced investor confidence and perceived problems with government policy related to regional autonomy laws (MEG, 2002).  Spending allocations amounted to 4.9 percent of world exploration.  Much of the activity in this region (excluding Southeast Asia) took place at sites with previously established investment.  In spite of regional unrest, aggressive drilling programs are reported in the Philippines at the Boyongan gold-copper deposit, and in Southeast Asia at the Sepon gold-copper deposit (Laos).
Based upon data collected during this study, exploration activity was greatest in Indonesia and the Philippines, mostly associated with established or developing mining areas.  Significant activity also occurred in Laos and Papua New Guinea.  Gold targets accounted for about 65 percent of all exploration interest in the Pacific region, and base metal targets accounted for 27 percent of the reported activity in 2002.
Rest of the World.  Exploration budgets for the rest of the world (including Asia, Europe, and the countries of the former Soviet Union) increased by 13 percent in the MEG 2002 survey, and accounted for more than 11 percent of world share on a percentage basis.  Exploration in Europe (including Russia) accounted for 68 percent of the total.  Based on data collected for this study, activity focused on Mongolia, Sweden, China, Finland, Turkey, Romania, and Russia, in order of decreasing activity.
Gold exploration focused on Mongolia, Spain, and Turkey, with significant activity occurring in Bulgaria, China, Romania, and Russia.  Base metal exploration concentrated in Mongolia and Sweden.  Many prior mining areas of Europe are being re-evaluated with current technology; areas rich in base-metal sulfides are often being revaluated for platinum-group metals.
Minerals exploration in the eastern Mediterranean region increased in 2002.  Exploration activity continued in Cyprus, Jordan, Macedonia, Oman, Saudi Arabia, Turkey, and Yemen for both gold and base metals.
In Russia, exploration focused on the search for gold, platinum-group metals, and diamond.  Vein deposits account for 54 percent of Russian gold reserve base, massive sulfides account for 28 percent, and placer deposits account for 18 percent (Mining Magazine, July 2002, p. 25).  Because of new technological processes, Russia is undergoing a gradual shift from the development of predominantly placer gold occurrences to more active mining of vein deposits. The major share of this projected increase is expected to come from Krasnoyarsk territory in south-central Russia.
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
Mineral exploration has changed dramatically over the past 20 years.  Improved technology has led to wider remote sensing capacities and real-time data collection and analysis.  Land access for exploration has increased in portions of Eastern Europe, China, and the former Soviet Union.  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, which peaked in 2001, continue to affect exploration budgets.  In spite of these changes, however, regional strife, economic conditions, and political policies have limited some mineral development efforts.  Low mineral commodity prices, fears of renewed conflict, and increased risk in some areas have further reduced investment for exploration.
After the events of September 11, 2001, minerals-related activities in Africa made headlines related to international terrorist activities.  Reports appeared that Al Qaeda had profited from purchased diamonds in Sierra Leone and Congo (Kinshasa).  This was in addition to previous reports that Africa’s mineral riches (gold and diamonds, and more recently tantalum) have been used to finance civil wars and border conflicts that have destabilized a number of central African countries.  Such reports have significantly increased political risks and constrained investment in mineral exploration and development in the region.  The United Nations issued a report recommending a moratorium on the exportation of high-value commodities, including columbite-tantalite, cobalt, copper, and gold from Congo (Kinshasa), and other countries supporting terrorist activities (U.S. Geological Survey, Mineral Commodity Summaries 2002, p. 11).  An international initiative of approximately 35 countries to address the linkage between rebel-directed conflicts and rough diamond trade, known as the Kimberly Process, implemented a certification process scheme for monitoring illicit diamond trade on January 1, 2003 (National Resources Canada, Press Release, January 1, 2003).  The U.N. Security Council endorsed the process in a January 28, 2003 resolution (World Diamond Council, press release, January 31, 2003).
On July 11, 2002, the parliament of the Democratic Republic of the Congo approved a World Bank sponsored Mining Code that largely replaces government mineral property ownership with a system of duties, export taxes, and corporate income tax (Tenke Mining Corporation, Press release, September 30, 2002).  In legislation designed to fit with the Mining Code adopted by Mauritania in 1999, the Mauritanian Parliament adopted a mining model agreement on January 3, 2002 outlining a taxation formula for mining companies.    This agreement concerns the economic, customs, fiscal and foreign exchange conditions under which mining investment can be made in Mauritania, but does not change any of the provisions in the 1999 Mining Code.  As a result of these changes, an increase in the number of exploration permits has been reported (Mining Journal, February 1, 2002, p. 78).  The Geological Survey of Zambia, in collaboration with the British Geological Survey, has recently completed two major projects providing data on the geology and mineral resources of Zambia.  The first project, funded by the European Development Fund of the European Union, published five structural maps, 37 geological maps, and 45 explanatory texts between 1996 and 2000.  The second, funded by the World Bank, conducted new geological mapping and geochemical sampling in northwest Zambia, provided the digital capture of existing maps and minerals data of northeast Zambia, and produced a revised summary of Zambian geology and minerals (Mining Journal, February 1, 2002, p. 79).
Across Australia, native title claims issues continue to be the dominant issue affecting exploration and mining.  During 2002, several Indigenous Land Use agreements were signed and several court decisions on Native Title claims were handed down.  An agreement that provides for the granting of mining leases in the Mt. Cuthbert region of Queensland was signed between Matrix Metals Ltd., the Australian Aboriginal Kalkadoon people, and the Government of Queensland (Mine Box, October 28, 2002).  Another agreement, between Hamersley Iron, Rio Tinto plc., the Eastern Guruma people, and the Western Australia State Government, allows for mineral exploration and subsequent mining in the Pilbara region of Western Australia (Mine Box, December 9, 2002).  The Western Australia State Government has invested more than A$2.8M to speed up processing of mineral tenement applications on land under Native Title claim (Mine Box, October 28, 2002).
There were other 2002 Australian Government activities impacting mineral exploration.  The Northern Territory Central Region mineral study, aggregating data compiled by the Northern Territory State Government, the Australian Commonwealth, and mining organizations, found the Tennant Creek area to be prospective for base metals, diamonds, gold, manganese, mineral sands, and phosphate (Mine Box, November 18, 2002).  In July, the Western Australia State Government announced a policy of prohibiting the mining of uranium from any mining lease granted after June 22, 2002, and strictly controlling the mining of thorium.  This policy was designed to allow for the extraction and sale of other associated minerals, while preventing use of uranium and thorium for nuclear purposes (Mine Box, July 1, 2002).   The Australian Commonwealth announced in September 2002 that they would adopt a Mineral Exploration Action Agenda to develop a clearly defined strategy for increasing mineral exploration activity (Mine Box, September 13, 2002).
The Canadian Government implemented a 3-year exploration investment tax credit in October 2000 to stimulate mineral exploration.  Since that time, exploration expenditures have risen modestly.  Canada’s mining industry is currently lobbying for an extension of this legislation, but no decision has yet been announced (Mining Journal, November 8, 2002, p. 321).  In British Columbia, several amendments to the Mines Act and Mineral Tenure Act have been introduced that would clarify land rights and reduce regulatory burden in the province (Northern Miner, May 27, 2002, p. 5).  The government of Quebec passed a law offering a 60% tax credit until 2007 on all expenses incurred in mineral exploration (Mining Engineering, October 2002, p. 11).  Several exploration projects in the northern territory of Nunavut would benefit from plans to build a 290-km all weather road linking the region to a new deep water port on the Arctic Sea.  A feasibility study of the project was completed in 2002 (Mining Journal, July 26, 2002, p. 56).  The “Wachiya” Native Title agreement was concluded between the Cree Nation and Dianor Resources Inc., allowing the two to partner in diamond exploration activities in Quebec (Skillings Mining Review, March 9, 2002, p. 8).
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). Reforms are continuing to stimulate investment in mineral development, including establishing rules for exploration and development rights of foreign companies (China Legal Change, 2000), submission and use of geologic data (China Legal Change, April 15, 2002), and regulations governing foreign investment in the rare earth industry (China Legal Change, August 12, 2002).  About 30 foreign mineral companies are currently active in China.
Ireland’s Minister of State for the Department of Communications, Marine and Natural Resources, announced a two-year initiative to boost mineral exploration by waiving the minimum expenditure requirements and capping expenditure requirements for prospecting licenses.  Such procedures would allow companies to review work programs and regroup for future activity without losing their licenses (Mining Journal, August 16, 2002, p. 118).  In Poland, thousands of jobs in the mining industry are at risk following the expiration of legislation protecting the mining industry from bankruptcy (The Northern Miner, January 13, 2003, p. 5).
In India, approval to conduct airborne geophysical surveys below 120 meters was refused by the Director General of Civil Aviation.  The Ministry of Coal and Mines had requested that a variance from the minimum height requirements be granted for such surveys (Mining Journal, January 11, 2002, p. 23).  Recent changes in the Indian Government’s national mineral policy now allow exploration of previously ‘reserved’ minerals by the private sector.  As a consequence, there has been an increase in diamond exploration in India by such companies as De Beers, Rio Tinto, BHP Billiton, and Ashton Mining (BHP Billion, press release, November 6, 2002).  The government of the Pakistani province of Balochistan implemented a National Minerals Policy through the passage of the Balochistan Mineral Rules 2002, creating a more modern legal environment for mineral exploration and mining (Lake Resources NL, Press Release, April, 22, 2002).
Argentina’s Mining Investment Law was put on hold following the resignation of President de La Rua in December 2002.  Proposed regulations would have included rebates for mineral exploration activity (Business News Americas, January 2003).  Columbia’s Mining and Energy Ministry published its Environmental Mining Guide in 2002, detailing procedures for mineral exploration, development, construction, mineral processing, and mine closure (Business News Americas, July 16, 2002).  A decree prohibiting all future open-pit mining projects in Costa Rica was signed in 2002.  The measure could affect three Canadian gold companies pursuing projects in the country (Business News Americas, June 6, 2002).  Legislation establishing a system where companies purchase exploration and development rights under a single contract and scraping a 3% royalty in favor of annual concession fees starting at US$1/hectare was approved in Ecuador during 2002 (Business News Americas, March 14, 2002).  Peru and Bolivia are reported to be close to signing a mutual mining cooperation agreement similar to the Chile-Argentine treaty signed in 2001 Business News Americas, March 2002).
Russian tax reform, which began in 1998 with subsequent amendments in 2000 and 2001, went into effect on January 1, 2002.  Reduced tax rates for individuals and corporations, provisions affecting foreign investors, changes to Russian mineral taxation, and direct production sharing regulations should benefit foreign exploration and mining companies (Mining Journal, January 18, 2002, p. 39). In addition, Decree No. 742 (June 21, 2001) effectly made it easier for producers to trade their commodities on the foreign market, including refined gold and silver, with no quotas or additional licenses imposed (Mining Magazine, July 2002, p. 26).  The Government of Armenia approved a new Mineral Prospecting and Mining Law, which established acquisition procedures, rights and obligations for a range of mineral exploration and mining licenses (Mining Journal, January 18, 2002, p. 37).
The Noumea Accord of 1998 and the subsequent Organic Act of 1999 redefined the distribution of powers between the New Caledonian authorities and the French State.  Several provisions under these laws require redesign of financial and mineral legislation.  The New Caledonian Congress is currently addressing these issues, and future legislation is pending (Mining Journal, January 25, 2002, p. 58).
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.