A major annual analysis of major gold discoveries yielded 278 deposits containing 2.16-B oz of gold discovered over the Y’s 1990-2018 frame, an increase from the 1.94-B oz in 263 deposits in the Y 2018 analysis.
The discovery list increased by 15 deposits and 215.1-M oz of gold is heartening, by far most of the increases came from discoveries initially made in the 1990’s, reflecting how the focal point of exploration over the past 10 yr frame only now translates into these discoveries surpassing the discovery threshold.
Note: just 1 deposit was added to the major discoveries list in the past 10 years.
The discoveries dataset prepared by S&P Global Market Intelligence includes all deposits containing either over 1M oz of gold in reserves and past production or 2-M oz of gold in reserves, resources and past production, of which gold accounts for at least 30% of the nominal value of all contained metals.
The year of discovery corresponds to the year in which the initial drill program identified mineralization that eventually led to the definition of reserves and resources that meet or surpass major industry discovery threshold criteria. As assets increase above that threshold, they are assessed and added to the discovery dataset. If they fall below they are eliminated.
There is long documentation the declining number of major new deposits being discovered. This trend continues, with the 34 deposits discovered over the past 10 yrs containing just 213.3-M oz, or only 10% of the gold discovered over the nearly 30 yrs of the studied period.
Analysts believe that the sharp decline is indeed reflective of the lack of new significant deposits being found, and explored for, a portion of the shortfall is a natural situation in which the additional exploration required to expand the known endowment of recently found deposits beyond our major discovery threshold has not yet been conducted.
To account for this, we estimated the amount of gold in discoveries expected to meet our criteria in the future. While this has resulted in the amount of discovered gold increasing substantially in some years, the total for the past decade will struggle to reach 300-M oz over the coming years. By comparison, Y 1990 itself saw 223.9-M oz of gold in 8 deposits, boosted by several massive discoveries, including the Pebble and Donlin deposits in Alaska.
A Key factor contributing to the lack of major discoveries in the past 10 yrs is a shift in focus within the exploration sector. As documented in our Corporate Exploration Strategies annual series, the industry has made a marked shift in focus, with the share of gold exploration budgets devoted to grassroots exploration falling by more than half since the 1990’s. Both pure explorers and producers have shifted their spending, with juniors increasingly focused on expanding known deposits, while producers have increasingly focused on exploration at their existing operations. Although some new major discoveries have been found at late-stage projects and existing mining camps, the potential to find new major discoveries at such projects is lower than at riskier, early-stage prospects.
Together, the 3 relatively mature mining districts Australia, Canada and the US account for 25% of the discovered deposits and 39% of the contained gold over the 29-yr frame. While the bulk of the discovered gold is located at assets identified in the 1990’s and early 2000’s, these assets remain a source of recent discoveries as well, accounting for almost 33% of the gold found over the past 10 yrs.
The exception is Australia, where discovery rates have fallen drastically. A total of 195.9-M oz of gold was proven up or produced at deposits discovered in Australia from Y’s 1990 to 2008, a full 10% of the global total. From Y’s 2009 to 2018 only 10.6-M oz was discovered, or 5% of the global total. In comparison, the US share has declined from 278.1-M oz in Y’s 1990-2008, or 14.3% of the total, to 21.5-M oz, or 10%, and Canada’s share has increased from 204.5-M oz, or 11% of the total, to 31.8-M oz, or 15% of the gold discovered in the 18 yr frame.
As the US and Australia have faded over recent years, other countries have risen. Ecuador, which accounts for only 2.2% of the global total over the entire period 1990-2018, hosts 11% of the gold discovered in the past decade, although all of it is at SolGold PLC’s Cascabel project in Ecuador. Similarly, Russia’s share of gold has jumped from 3.2% over the full period to 9% in the past 10 years, most of which is at Nord Gold SE’s Gross deposit.
Large, high-grade deposits still being found
The average deposit found since Y 1990 contains 7.8-M oz of gold and a grade of 2.3 g/t, with very little variability in time frame. Over the past decade, the average gold in reserves, resources and production was 6.3 Moz with an average grade of 2.65 g/t, while the preceding 19-year period averaged 8-M oz and 2.38 g/t. It is not surprising that older deposits are larger as they have had a longer time to grow.
Of course, not every country has the same prospectivity for large, high-grade deposits. South Africa, Argentina, Colombia and the US tend toward significantly higher-grade deposits, with averages of 5.85 g/t, 3.98 g/t, 3.83 g/t and 3.72 g/t, respectively, since Y 1990. Conversely, Serbia, Macedonia and Kazakhstan’s average gold grades were less than 0.5 g/t.
Over half of gold discovered in past decade is in 10 largest assets
Of the 213.3-M oz contained in the 34 discoveries made over the past 10 years, over 50%, 122.3-M oz, is contained in the 10 largest deposits. The biggest is SolGold’s Cascabel copper-gold deposit in Ecuador, which was discovered in Y 2013. Exploration ramped up in Y 2018 at Cascabel with about 10,000 meters of drilling being conducted per month, resulting in the Alpala deposit increasing to 23.2-M oz from the 12.3-M oz announced in December 2017. Drilling is ongoing, with almost 190,000 meters already completed by April 2019. A preliminary economic assessment of the project, completed in mid-2019, forecasts annual production of 150,000 tonnes of copper and 245,000 oz of gold, with a required capital cost of between $2.4 billion and $2.8-B.
Zhaojin Mining Industry Co. Ltd.’s Haiyu gold project in China’s Shandong province is the past decade’s 2nd-largest discovery with almost 16.4-M oz in reserves and resources.
Barrick Gold Corp.’s (NYSE:GOLD) Goldrush discovery in Nevada made in Y 2011, is 3rd with 14.9-M oz in reserves and resources. It is 1 of the highest-grade deposits covered at 9.42 g/t gold. Barrick aims to begin production at Goldrush in Y 2021 or Y 2022 and to produce 500,000 oz per year of gold in dore over a 21-year mine life.
Iamgold Corp. is continuing to advance engineering and permitting work at the Cote Lake project in Ontario, despite deferring construction in January, citing market conditions. Iamgold acquired the project in Y 2012 through its acquisition of Trelawney Mining & Exploration Inc., which discovered the deposit with Condor Gold PLC in Y 2009. Although the deposit has nearly 3X’d in size from the initial resource announced in Y 2011, it is among the lower-grade assets in our discovery list at 0.8 g/t gold.
Gold prices edged higher Monday, helped by a weaker USD and escalating trade tension between the United States and China. We are Bullish gold in here.
Have a terrific week.