R Schodde PDAC Conf March 2015 FINALminexconsulting.com/.../R...Conf-March-2015-FINAL.pdf · Years ,>200 ktpa Cu or >250koz pa Au, and Bottom Quartile costs. Have an NPV of >$1000m,

MinEx Consulting Strategic advice on mineral economics & exploration

Richard SchoddeManaging Director, MinEx Consulting

Adjunct Professor, University of Western Australia

PDAC 20153rd March 2014, Toronto


Overview

1. Trends in exploration spend

2. Number of discoveries

3. Quality of the discoveries made

4. Location of the discoveries

5. Depth of cover

6. Value Proposition for exploration

7. Outlook for exploration

8. Conclusions

2

Canada’s share of global expenditures

…. and who found them?

How many Tier 1, 2 & 3 deposits found?

Current “Hot Spots” for exploration

Does exploration make money?Which countries, companies andcommodities generate the best return ?

Will the junior sector survive?

How deep are we looking?


Exploration expenditures reached an all-time high in 2011-2012

3


Exploration expenditures: Worldby Region : 1975-2014

$0

$5

$10

$15

$20

$25

$30

$35

1975 1980 1985 1990 1995 2000 2005 2010

Rest of World

FSU + E Europe

China

Western Europe

Africa

Pacific / SE Asia

Latin America

USA

Australia

Canada

4

2014 US$ Billion

Note: Includes bulk minerals (such as iron ore, coal and bauxite) Sources: MinEx Consulting estimates © March 2015, based ondata from ABS, NRCan, MLR (China), OECD and SNL

Spend reachedan all-time

high in 2012

Spend reachedan all-time

high in 2012

1981

1985

1988

1993 2002

1997

Expenditureshave halved inthe last 3 years

Expenditureshave halved inthe last 3 years

More pain to come ?

Typically have a40-60% fall between

boom and bust

Typically have a40-60% fall between

boom and bust

$30.7Bin 2012

$15.6Bin 2014


Exploration expenditures: Worldby Region : 1975-2014

0%

20%

40%

60%

80%

100%

1975 1980 1985 1990 1995 2000 2005 2010

Rest of World

FSU + E Europe

China

Western Europe

Africa

Pacific / SE Asia

Latin America

USA

Australia

Canada

5

Percentage of total spend

13%

11%

6%

21%

5%

14%

3%

19%

7%

2%

China spends more onexploration than any other

country in the World

China spends more onexploration than any other

country in the World

Canada’s market sharehas halved in the last

3 decades

Canada’s market sharehas halved in the last

3 decades

Note: Includes bulk minerals (such as iron ore, coal and bauxite) Sources: MinEx Consulting estimates © March 2015, based ondata from ABS, NRCan, MLR (China), OECD and SNL

Canada


$0

$1

$2

$3

$4

$5

1975 1980 1985 1990 1995 2000 2005 2010

Exploration expenditures: Canada1975-2014

6

2014 US$ Billion

Source: MinEx Consulting estimates © March 2015,based on data from NRCan

$4.25Bin 2011

Canada peakedin 2011

Canada peakedin 2011

$1.95Bin 2014

Canada tends to lead therest of the industry …

early to boom and earlyto bust

Canada tends to lead therest of the industry …

early to boom and earlyto bust

Also Canada’s buststend to be more severe

Also Canada’s buststend to be more severe

1981

1983

1988

1992

2001

1996


$0

$1

$2

$3

$4

$5

1975 1980 1985 1990 1995 2000 2005 2010

Other

Coal

Iron Ore

Diamonds

Uranium

Base Metals

Gold

7

2014 US$ Billion


Exploration expenditures: Canadaby Commodity : 1975-2014


0%

20%

40%

60%

80%

100%

1975 1980 1985 1990 1995 2000 2005 2010

8


Exploration expenditures: Canadaby Commodity : 1975-2014

Gold continuesto be the main

target

Gold continuesto be the main

target

5% Iron Ore9% Coal

16% Other

Uranium

Base Metals(Cu, Ni, Zn, Pb)

Gold

Diamonds

Dramatic fall inDiamond exploration

Dramatic fall inDiamond exploration

4% Diamonds7% Uranium

22% Base Metals


37% Gold


2. NUMBER OF DISCOVERIES

Number of discoveries – by size, commodity and company type

9


Number of discoveries by commodityMineral discoveries in Canada: 1975-2014

0

5

10

15

20

25

1975 1985 1995 2005 2015

Other

Diamonds

Iron Ore

Coal

Uranium

Base Metals

Gold

10

Number

Source: MinEx Consulting © March 2015

183

368

77

24

Gold and Base Metalaccount for 71% ofall discoveries inthe last 40 years

Gold and Base Metalaccount for 71% ofall discoveries inthe last 40 years

Caution:Incomplete datain recent years

19

9

16

40

Note: Based on Moderate-, Major- and Giant-sized depositsExcludes satellite deposits in existing camps


Number of discoveries by sizeMineral discoveries in Canada: 1975-2014

0

5

10

15

20

25

1975 1985 1995 2005 2015

Moderate

Major

Giant

11

Number


Note: Includes bulk mineral discoveries (ie coal and iron ore)“Moderate” >100koz Au, >10kt Ni, >100Kt Cu equiv, 250kt Zn+Pb, >5kt U3O8

“Major” >1Moz Au, >100kt Ni, >1Mt Cu equiv, 2.5Mt Zn+Pb, >25kt U3O8

“Giant” >6Moz Au, >1Mt Ni, >5Mt Cu equiv, 12Mt Zn+Pb, >125kt U3O8

On average, 5-10significant discoveries

are made each year

On average, 5-10significant discoveries

are made each year

200

368

126

42



0

5

10

15

20

25

1975 1985 1995 2005 2015

Unknown

Other

Prospector

Junior Explorer

Small Producer

Moderate Producer

Major Producer

12

Number


The deposits were found by a range of company typesMineral discoveries in Canada: 1975-2014

Note: “Junior Explorer” has no income“Small Producer” has single small mine and <$50m pa sales revenue“Moderate Producer” has 1-3 mines and $50-500m pa sales revenue“Major Producer” has several large mines and >$500m pa revenue“Other” includes industrial companies, oil & gas producers, private companies and government agencies


17

34

7

169

13

42

86

368


0%

20%

40%

60%

80%

100%

1975 1985 1995 2005 2015

Unknown

Other

Prospector

Junior Explorer

Small Producer

Moderate Producer

Major Producer

13


The deposits were found by a range of company typesMineral discoveries in Canada: 1975-2014

Note: “Junior Explorer” has no income“Small Producer” has a single small mine and <$50m pa sales revenue“Moderate Producer” has 1-3 mines and $50-500m pa sales revenue“Major Producer” has several large mines and >$500m pa revenue“Other” includes industrial companies, oil & gas producers, private companies and government agencies

Percentage of Total

Over the last 40 years, only 2%of all discoveries were directly

made by Prospectors

Over the last 40 years, only 2%of all discoveries were directly

made by Prospectors

In the last decade 71% of alldiscoveries were made by

Junior Explorers

In the last decade 71% of alldiscoveries were made by

Junior Explorers



3. QUALITY OF THE DISCOVERIES

How many Tier 1, 2 and 3 deposits were found in Canada?

14


6%

Most of the wealth created arein Tier 1 and 2 discoveries

Estimated value of 87 discoveries found in Canada between 2005-2014

0%

20%

40%

60%

80%

100%

Number ofDeposits

NPV

15

Tier 1

40%

41%

13%

18%

2%

52%

Note: Limited to deposits >=“Moderate “ in sizeNPV values refer to the Net Present Value at the Decision-to-Build stageEV = Expected Value, which is the weighted average value of the NPV rangeValues are based on long run commodity prices as prevailing at Jan 2013

Caution: Values are indicative / approximate-only

‘Tier 1 deposits’ are Company making" mines.They are large, long life and low cost. … ie >20Years ,>200 ktpa Cu or >250koz pa Au, andBottom Quartile costs. Have an NPV of>$1000m, and EV of ~$2000m

‘‘Tier 2 deposits’ are “Significant” deposits -but are not quite as large or long life or asprofitable as Tier 1 deposits . They have anNPV of $200-1000m and EV of ~$500m

‘Tier 3 deposits’ are small / marginal depositsWhile they can be profitable they often only getdeveloped at the top of the business cycle . Atthey don’t meet more than one of the Tier 1 or 2criteria. NPV of $0 to $200m, EV of ~$100m

Definitions

Example: Detour Lake [Gold]

Example: Wheeler River [Uranium]

Example: Kennady Lake [Diamond]

Tier 2

Tier 3

Unclassified

Tier 1

Tier 2

Tier 3

‘Unclassified deposits’ are small depositsthat are less than “Major “in size and/or ofminimal value. EV of (say) ~$10m

Example: Errington [Zinc]

28%

Unclassified


0

5

10

15

20

25

1975 1985 1995 2005 2015

Unclassified

Tier 3

Tier 2

Tier 1

16

Number

Source: MinEx Consulting © March 2015Note: Includes bulk mineral discoveries (ie coal and iron ore)

184

368

144

27

13

In terms of quality deposits,Canada’s discovery rate has

been fairly constant

In terms of quality deposits,Canada’s discovery rate has

been fairly constant

On average, industry finds around three Tier1,seven Tier2 and forty Tier3 deposits per decade

Number of discoveries by qualityTier 1,2 & 3 discoveries in Canada: 1960-2014



4. LOCATION OF DISCOVERIES

Where were the discoveries made?

17


Tier 1, 2 & 3 discoveries in the World: 2005-2014

18

Au BaseMetal

U3O8 Other

Tier 2

Tier 3

Tier 1

Alaska/Yukon NorthernOntario

Latin America

Three of the ten current“Hot Spots” are in Canada

Three of the ten current“Hot Spots” are in Canada

West AfricaCentral Africa

China

Australia

Far EastRussia

Saskatchewan(Uranium)

SW USA/ Mexico


Over the last decade, 336 Tier 1, 2 & 3 deposits werefound in the World … 46 (or 14%) of these were in Canada

Over the last decade, 336 Tier 1, 2 & 3 deposits werefound in the World … 46 (or 14%) of these were in Canada

Excludes bulk minerals

MinEx Consulting Strategic advice on mineral economics & exploration 19

Tier 1, 2 & 3 discoveries in Canada: 2005-2014


Chester[Au: 2010]

Detour Lake[Au: 2005]

Canadian Malartic[Au: 2005]

Brucejack[Au: 2008]

KP405[Potash: 2013]

KSMMurray River

Snowfield

Black Thor

LalorLake

Roughrider

WheelerRiver

PatersonLake South

CoffeeAmaruq

Most of the discoveries were injust four Provinces - Ontario,

Quebec, BC and Saskatchewan

Most of the discoveries were injust four Provinces - Ontario,

Quebec, BC and Saskatchewan

Kronau

Includes bulk minerals


5. DEPTH OF COVER

The next generation of discoveries in Canada will be under deep cover

20


0

500

1000

1500

2000

1900 1920 1940 1960 1980 2000 2020

Gold

Base Metals

Uranium

Other

21

We are progressively exploring under deeper coverDepth of cover for discoveries in Canada: 1900-2014

Discovery Year

Depth of Cover (Metres)

Note: Excludes satellite deposits within existing Camps. EXCLUDES potash and bulk mineral discoveriesAnalysis based on Moderate-, Major- and Giant-sized deposits


… notwithstandingthis, 22% of the

discoveriesoutcropped

… notwithstandingthis, 22% of the

discoveriesoutcropped

Over last decade theaverage depth was

125 metres

Over last decade theaverage depth was

125 metres


Average depth of cover for discoveries - all metalsWorld: 2005-2014

198

162

125

9892

4539

350

78

0

50

100

150

200

250

55

22

WorldAverage

LatinAm

Africa Aust WEurope

Canada USAPacificSE Asia

Restof World

Metres

If you exclude SouthAfrica, the average

depth of cover falls from45 to 9 metres

If you exclude SouthAfrica, the average

depth of cover falls from45 to 9 metres

Note: Based on Moderate-, Major- and Giant-sized depositsExcludes bulk mineral, potash and undersea discoveries

FSU+EE+China



6. VALUE-PROPOSITION FOREXPLORATION

Does exploration create or destroy value?How does Canada compare against regions to explore?

23


0

5

10

15

20

25

1975 1985 1995 2005 2015

Unclassified

Tier 3

Tier 2

Tier 1

24

Number


184

368

144

27

13

Number of discoveries by qualityTier 1, 2 & 3 discoveries in Canada: 1975-2014



$0

$1

$2

$3

$4

$5

$6

1975 1985 1995 2005 2015

Unclassified

Tier 3

Tier 2

Tier 1

25

Source: MinEx Consulting © March 2015Note: Includes bulk mineral discoveries (ie coal and iron ore)Assumes a value (in 2013 US$) of $2000m / $500m/$100m/$10m for T1/T2/T3/Unassigned discoveries

Value of explorationTier 1, 2 & 3 discoveries in Canada: 1975-2014

2014 US$ Billion

Value creation is driven by finding rare(but valuable) Tier 1 and 2 deposits

Value creation is driven by finding rare(but valuable) Tier 1 and 2 deposits

$27b

$14b

$15b

$2b

$58b

Over the lastdecade US$19b

of value wasfound in Canada

Over the lastdecade US$19b

of value wasfound in Canada


$0

$1

$2

$3

$4

$5

$6

1975 1985 1995 2005 2015

Unclassified

Tier 3

Tier 2

Tier 1

26


Cost and Value of explorationExploration expenditures and Tier 1, 2 & 3 discoveries in Canada: 1975-2014

2014 US$ Billion

Over the last decade,US$27b was spent onexploration, deliveringUS$19b of value … ie a

“Bang per Buck” of 0.77

Over the last decade,US$27b was spent onexploration, deliveringUS$19b of value … ie a

“Bang per Buck” of 0.77

… the true situation islikely to be better, due to

delays in reportingdiscoveries

ExplorationSpend


Impact of adding-in unreported discoveriesCanada exploration spend and number of discoveries: 1975-2014

27

0

10

20

30

40

50

1975 1985 1995 2005 2015

Estimated No of unreported discoveries

Number of Discoveries


Note: Includes expenditures and discoveries for bulk mineralsDiscoveries refer to Moderate-, Major- and Giant-sized deposits.

Estimate

Estimatedunreporteddiscoveries

Estimatedunreporteddiscoveries



Impact of adding-in unreported discoveriesCanada exploration spend and number of discoveries: 1975-2014

28

$0

$1

$2

$3

$4

$5

$6

0

10

20

30

40

50

1975 1985 1995 2005 2015

Estimated No of unreported discoveries


Exploration Expenditures


Note: Includes expenditures and discoveries for bulk mineralsDiscoveries refer to Moderate-, Major- and Giant-sized deposits.

2014 US$ Billion

Even after adjusting forunreported discoveries ,

over the last decade alarge gap opened up

between expenditures andnumber of deposits found

Even after adjusting forunreported discoveries ,

over the last decade alarge gap opened up

between expenditures andnumber of deposits found

Estimate

… Gap was due tohigher input costs

(labour, drillingand admin)

Between 2001 & 2011Canada’s spend went

up ~10x and discoveryrate up ~5x

Between 2001 & 2011Canada’s spend went

up ~10x and discoveryrate up ~5x


ExplorationSpend


How does Canada compare to the Rest of the World?Spend & performance by Region: 2005-2014

Region ExplorationSpend (2014 $b)

No ofDiscoveries #

Tier 1+2Discoveries

Estimated Value(2014 $b)

Value /Spend

Australia $13 9% 100 18% 14 18% $13 14% 0.97

Canada $25 18% 79 14% 15 19% $19 21% 0.77

USA $10 7% 23 4% 5 6% $5 5% 0.48

Latin America $33 24% 109 19% 13 17% $19 20% 0.57

Pacific/SE Asia $8 5% 22 4% 2 3% $4 4% 0.49

Africa $20 14% 135 24% 20 25% $23 25% 1.19

W Europe $4 3% 23 4% 1 1% $2 2% 0.42

Rest of World $27 20% 78 14% 9 11% $8 9% 0.32

----- ------ ------ ------- ------ ------- ------- ------- -------

TOTAL $140 100% 569 100% 79 100% $93 100% 0.67

29

Note: Analysis excludes bulk minerals, and excludes satellite deposits found within existing campsDiscoveries refer to Moderate-, Major- and Giant-sized deposits.“Rest of World” includes China, FSU and Eastern EuropeThe Estimated Value is approximate only, and ignores the value of unreported discoveries

i.e. “Bang-per-Buck”i.e. “Bang-per-Buck”


Canada was better than average but not as good as Africa or AustraliaCanada was better than average but not as good as Africa or Australia


Senior versus Junior CompaniesSpend & performance in Canada: 2005-2014

ExplorationSpend (2014 $b)

No ofDiscoveries #

Tier 1+2Discoveries


Value /Spend

Senior Cos $12.5 46% 21 24% 8.7 54% $7.9 39% 0.63

Junior Cos $14.6 54% 66 76% 7.3 46% $12.1 61% 0.83

----- ------ ------ ------- ------ ------- ------- ------- -------

TOTAL inc Bulks $27.2 100% 87 100% 16 100% 20.0 100% 0.74

TOTAL excl Bulks $24.6 79 15 19.1 0.77

30

Note: The Estimated Value is approximate only, and ignores the value of unreported discoveries Source: MinEx Consulting © March 2015

Over the last decade Canadian Juniorsdid a 30% better job than the Majors

Over the last decade Canadian Juniorsdid a 30% better job than the Majors

Note: “Junior” defined by NRCan as those companies and prospectors that don’t have access to sales revenues


Greenfields versus Brownfields ExplorationSpend & performance in Canada: 2005-2014


No ofDiscoveries #

Tier 1+2Discoveries


Value /Spend

Greenfields $19.6 72% 54 62% 7 44% $6.0 30% 0.30

Brownfields $7.6 28% 33 38% 9 46% $14.1 70% 1.86

----- ------ ------ ------- ------ ------- ------- ------- -------

TOTAL inc Bulks $27.2 100% 87 100% 16 100% 20.0 100% 0.74

TOTAL excl Bulks $24.6 79 15 19.1 0.77

31


Over the last decadeBrownfields exploration gave

an excellent return

Over the last decadeBrownfields exploration gave

an excellent returnNote: All 5 of the Tier 1 discoveries were

Brownfield … hence the strong performance


Comparison between commoditiesSpend & performance in Canada: 2005-2014


No ofDiscoveries #

Tier 1+2Discoveries


Value /Spend

Gold $11.6 43% 38 44% 8 50% $12.3 62% 1.06

Base Metals $5.5 20% 16 18% 1 6% $1.0 5% 0.17

Uranium $2.3 8% 5 6% 3 19% $1.7 8% 0.72

Diamonds $1.7 6% 2 2% 0 0% $0.1 1% 0.07

Iron Ore $1.5 6% 5 6% 0 0% $0.4 2% 0.28

Coal $1.0 4% 3 3% 1 6% $0.5 3% 0.55

Other $3.6 13% 18 21% 3 19% $4.0 20% 1.11

----- ------ ------ ------- ------ ------- ------- ------- -------

TOTAL inc Bulks $27.2 100% 87 100% 16 100% 20.0 100% 0.74

TOTAL excl Bulks $24.6 79 15 19.1 0.77

32


Gold and “Other” Minerals performed muchbetter than Diamonds and Base Metals

Gold and “Other” Minerals performed muchbetter than Diamonds and Base Metals


7. OUTLOOK FOR EXPLORATION INCANADA

The health of the industry depends on the Junior Sector … but they arefacing “tough” times

33


$0

$1

$2

$3

$4

$5

1975 1980 1985 1990 1995 2000 2005 2010

Junior Companies

Senior Companies

34

2014 US$ Billion


Exploration expenditures: Canadaby Company Type : 1975-2014

Expenditures areextremely volatile …Much of the growth

(and subsequent fall)in recent years came

from JuniorCompanies

Expenditures areextremely volatile …Much of the growth

(and subsequent fall)in recent years came

from JuniorCompanies

Flow-Through Financingfor Juniors was first

introduced in 1985 …resulting in a boom in

spend

Flow-Through Financingfor Juniors was first

introduced in 1985 …resulting in a boom in

spend

$0.7 billion

$1.2 billion


0%

20%

40%

60%

80%

100%

1975 1980 1985 1990 1995 2000 2005 2010

35


Exploration expenditures: Canadaby Company Type : 1975-2014


Senior Companies

Junior Companies

Over the last decade JuniorCompanies accounted for54% of total exploration

spend in Canada

Over the last decade JuniorCompanies accounted for54% of total exploration

spend in Canada

67%

27%

The importance of the JuniorCompanies has been rising over time

The importance of the JuniorCompanies has been rising over time

52%

63%

13%

36%

5%


Most Canadian Junior Explorers currentlyhave less than C$0.2m in Cash Reserves

$0

$2

$4

$6

$8

$10

0% 20% 40% 60% 80% 100%

36

$0.0

$0.2

$0.4

$0.6

$0.8

$1.0

0% 20% 40% 60% 80% 100%

Cash Reserves (C$ Million)

Note: Based on an analysis of the cash reserves (as reported in Sept-Dec 2014) for 1956 publicly listed Junior Explorers- 1231 on the TSE/TSX/TNX, 623 on the ASX and 102 on other exchanges (such as the CSE, NYSE, AIM, NEC,

NZE, OTC and NEC and Pink Sheets). Based on ExRate of C$1.00 = A$1.055 = US$0.909

ExpandedScale

Cash ASX TSX/TSE/TNX

Other

<C$0.2m 18% 53% 71%

<C$0.5m 35% 65% 79%

<C$1.0m 53% 74% 83%

ASX TSX/TSE/TNX Other Exchanges

ASX

TSX/TSE/TNX

Other Exchanges

Source: MinEx Consulting © February 2015


The lack of cash is of most concern to thosejunior companies with low market caps

Cash Reserves (C$ Million)

Note: Cash reserves (as at Sept-Dec 2014) for 1980 publicly listed Junior Explorers.Based on Based on ExRate of C$1.00 = A$1.055 = US$0.909

Companies can always raise cash byissuing new shares ….. but that’s

difficult if the market cap is low

Companies can always raise cash byissuing new shares ….. but that’s

difficult if the market cap is low

Market Cap (C$ Million) as at 2 Feb 2015

There are somecompanies whereMkt Cap < Cash !!

There are somecompanies whereMkt Cap < Cash !!

Source: MinEx Consulting © February 2015


0%

20%

40%

60%

80%

100%

$0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20

Junior Explorers with very small market-capsare at most risk of failing

38

Mkt Cap ASX TSX/TSE/TNX

Other

<C$0.5m 3% 18% 28%

<C$1m 8% 33% 44%

<C$2m 24% 46% 61%

ASX

TSX/TSE/TNXOther Exchanges

Market Cap (C$ Million) as at 2 Feb 2015

Cumulative Number

Depending on how longthe “deep freeze” lasts20 - 40% of Canadian

Juniors may close down

Depending on how longthe “deep freeze” lasts20 - 40% of Canadian

Juniors may close down

Note: Based on an analysis of the cash reserves (as reported in Sept-Dec 2014) for 1956 publicly listed Junior Explorers- 1231 on the TSE/TSX/TNX, 623 on the ASX and 102 on other exchanges (such as the CSE, NYSE, AIM, NEC,

NZE, OTC and NEC and Pink Sheets). Based on ExRate of C$1.00 = A$1.055 = US$0.909 Source: MinEx Consulting © February 2015


9. CONCLUSIONS

The industry is facing a number of challenges and opportunities

39


Conclusions: Performance & Outlook [1/4]

1. Trends in exploration spend- Exploration is incredibly volatile. Expenditures can fall by 40-60% over

the business cycle. Spend in Canada is currently down 49% from thepeak in 2011

- Canada’s share of global spend has halved in the last 30 years

- Gold is still the main target

2. Number of discoveries- On average 5-10 significant discoveries are made each year in Canada

- In the last decade 71% of all discoveries were made by Junior Explorers

3. Quality of the discoveries made- On average, industry finds three Tier 1, seven Tier 2 and forty Tier 3

deposits per decade in Canada. This rate is fairly constant – but we arespending more to find them

- 80% of the value generated comes from the Tier 1 & 2 discoveries

40


4. Location of discoveries- Over the last decade 336 Tier 1, 2 & 3 deposits were found in the World.

14% of these were in Canada

- There are currently 10 “hot spots” for exploration around the World. Threeof these are in Canada … in Northern Ontario, Yukon and Saskatchewan

5. Depth of cover- Over the last 60 years there has been a clear trend towards discovering

deposits under deeper cover in Canada

- Current average depth is 125 metres, versus a global average of 78 metres.Half of all deposits found in Africa outcrop

41



6. The Value Proposition for exploration- Over the last decade US$27b was spent on exploration in Canada,

delivering US$19b of value … this give a “Bang per Buck” of 0.77

- Canada was better than the global average (0.67) but not as good asAfrica (1.19) or Australia (0.97)

- In Canada, over the last decade:

- Junior companies were 30% more effective at generating wealth thanSenior companies (with a Bang per Buck of 0.83 versus 0.63)

- Most of the value generated came from brownfield gold discoveries.Greenfield only gave a return of 0.30 (versus 1.86 for brownfield)

- Gold and “Other” gave a much better return (of 1.06 and 1.11) thanbase metals (0.17) or diamond exploration (0.07)

42


Caution: Relative rankings can changeover time and differ between regions

Caution: Relative rankings can changeover time and differ between regions


7. Outlook for exploration- Exploration spend is driven by commodity prices and general market

sentiment (which impacts on junior company’s ability to raise funds)

- Junior companies are currently facing a huge cash squeeze. Half of alljuniors current have <C$200,000 of cash reserves

- Of more concern is the low market cap of many junior companies. .. It is thecollateral for raising fresh funds. One-third of all the TSX/TSE listed juniorshave a market cap < C$1 million. That makes it very difficult to raise money

- Depending on how long the “deep freeze” will last, up to 20-40% ofjunior companies face closure. Notwithstanding this, most will survive

- The response to date has been to cut back on spending and to go intohibernation. That’s not good for discovery

43

Junior Explorers have a key role to play in finding the nextgeneration of Canadian mines. While many are facing tough times,

don’t under-estimate their ability to survive !



Contact details

Richard SchoddeManaging DirectorMinEx ConsultingMelbourne, Australia

Email: [email protected]: MinExConsulting.com

Copies of this and other similarpresentations can be downloaded

from my website

Copies of this and other similarpresentations can be downloaded

from my website

Documents

R Schodde PDAC Conf March 2015 FINALminexconsulting.com/.../R...Conf-March-2015-FINAL.pdf · Years ,>200 ktpa Cu or >250koz pa Au, and Bottom Quartile costs. Have an NPV of >$1000m,