Has the Gold Exploration Industry Declined? A Look at the 70% Drop in Major Discoveries from 2011 to 2020 Compared to the Previous Decade

#1 · February 12, 2024, 10:16 pm

Quote from chief_editor on February 12, 2024, 10:16 pm

Credit: Nova Gold

Gold fever may still be raging for investors, with bullion prices glittering near all-time highs. But behind the shine, old Father Time is catching up on an aging industry struggling to replace shrinking reserves. The heydays of prospectors stumbling onto glittering bonanzas with just a pickaxe and pan are long gone. Finders now keepers has turned into seekers can’t be choosers.

Let’s dig into the data - from 2001 to 2010, a whopping 222 new major gold deposits containing over 2 million ounces were discovered worldwide. This gold-rush decade read like an adventure novel - dramatic stories of fortune seekers finally hitting the jackpot after years of toil. A tiny Canadian exploration outfit going public in 2004 called Underworld Resources discovered a 6 million oz bonanza the next year, enriching early investors 100-fold when kinross Gold snapped it up for $140 million in 2010. Such instant lotto tickets fueled gold fever dreams.

But alas, the passage of time has not been kind to the golden goose’s nest egg. From 2011 to 2020, new major discoveries plummeted 70% - a mere 67 deposits found versus 222 the decade earlier. All that glitters is not gold - what happened to the mother lode?

Quite simply, most low hanging fruit in easy to access spots has already been picked clean. Daniel Major, CEO of exploration firm Gatacca Resources, tells it straight: “We’ve gotten through all the easy parts, we’ve picked all the low hanging fruit and it’s harder to find the big deposits now. The search space is shrinking.” The remaining slices of fertile territory holding hints of gold tend to be more geologically complex - think buried deep under barren deserts or frozen Arctic wastelands.

Let’s spotlight the cautionary tale of Canada’s Goldcorp Inc. and their trouble-plagued Musselwhite mine built beneath a Northern Ontario lake back in 1997. Early on, extracted ore grades averaged a stout 12 grams of gold per ton of rock - enabling hefty production for years from initial rich repositories. But within a decade reserves substantially depleted, forcing increased reliance on lower grade supplies of just 5 grams per ton. This required more crushed rock processed and higher costs to sustain output. Attempts to locate supplementary deposits ran into technical challenges with complex geology and costs ballooned. Finally in 2018 Goldcorp sold out, unable to solve the diminishing returns dilemma.

The Musselwhite microcosm reflects the broader industry’s reckoning with aging mines and declining grades. Major sites that delivered the golden eggs in the 70s, 80s or 90s must stretch the scarce remnants while praying for an exploration miracle. In Australia, Newcrest Mining’s 1 million oz a year Cadia mine has warned their open pit portion will exhaust in two years. Across the globe in Ghana, AngloGold Ashanti is chasing mineral clouds hoping to replenish their mainstay but shrinking Obuasi mine active since 1897 - before even gas powered cars hit the streets!

John Reade, former World Gold Council Chief Market Strategist, has warned publicly about this brewing storm over shrinking global gold reserves. Production can’t keep relying on diminishing mines or even cutoffs with 2 grams per ton will cease to pay off. But few glimmering saviors appear visible on the horizon. Many analysts feel we are living on borrowed time before serious shortfalls hit.

What are alterative options once the existing gold preserves run empty? The solution likely requires embracing deposits boasting huge scale rather than sky-high grades. Size can compensate for quality in the cost-volume equation. For example, Lundin Mining is developing the Fruta del Norte project in Ecuador - touting an average grade under 5 grams per ton. Nothing special on paper except for mind-boggling scale - estimated holding 6.7 million ounces gold!

Innovation will also be imperative to make the most of ever more challenging terrain and geology. Newmont Mining is trialing exciting Continuous Surface Mining technology at their Suriname mine. Think of a massive rolling machine continuously chewing and spitting rock without explosion disruption - opening access to abundant previously ignored low-grade deposits. And finer grinding processes can help capture elusive specs in complex ores.

At the end of the day, the golden ages fueled by cherry-picking easy bonanzas are fading. But all is not lost for savvy miners willing to adjust strategy. Perhaps instead of fixating on glittering El Dorado visions, the industry needs to get down to brass tacks optimizing every scrap. And mobilizing the latest tech to leave no stone unturned - or unsqueezed! Necessity has always remained the mother of invention. With ingenuity and patience, viable veins may keep on giving.

Credit: Nova Gold

Gold fever may still be raging for investors, with bullion prices glittering near all-time highs. But behind the shine, old Father Time is catching up on an aging industry struggling to replace shrinking reserves. The heydays of prospectors stumbling onto glittering bonanzas with just a pickaxe and pan are long gone. Finders now keepers has turned into seekers can’t be choosers.

Let’s dig into the data - from 2001 to 2010, a whopping 222 new major gold deposits containing over 2 million ounces were discovered worldwide. This gold-rush decade read like an adventure novel - dramatic stories of fortune seekers finally hitting the jackpot after years of toil. A tiny Canadian exploration outfit going public in 2004 called Underworld Resources discovered a 6 million oz bonanza the next year, enriching early investors 100-fold when kinross Gold snapped it up for $140 million in 2010. Such instant lotto tickets fueled gold fever dreams.

But alas, the passage of time has not been kind to the golden goose’s nest egg. From 2011 to 2020, new major discoveries plummeted 70% - a mere 67 deposits found versus 222 the decade earlier. All that glitters is not gold - what happened to the mother lode?

Quite simply, most low hanging fruit in easy to access spots has already been picked clean. Daniel Major, CEO of exploration firm Gatacca Resources, tells it straight: “We’ve gotten through all the easy parts, we’ve picked all the low hanging fruit and it’s harder to find the big deposits now. The search space is shrinking.” The remaining slices of fertile territory holding hints of gold tend to be more geologically complex - think buried deep under barren deserts or frozen Arctic wastelands.

Let’s spotlight the cautionary tale of Canada’s Goldcorp Inc. and their trouble-plagued Musselwhite mine built beneath a Northern Ontario lake back in 1997. Early on, extracted ore grades averaged a stout 12 grams of gold per ton of rock - enabling hefty production for years from initial rich repositories. But within a decade reserves substantially depleted, forcing increased reliance on lower grade supplies of just 5 grams per ton. This required more crushed rock processed and higher costs to sustain output. Attempts to locate supplementary deposits ran into technical challenges with complex geology and costs ballooned. Finally in 2018 Goldcorp sold out, unable to solve the diminishing returns dilemma.

The Musselwhite microcosm reflects the broader industry’s reckoning with aging mines and declining grades. Major sites that delivered the golden eggs in the 70s, 80s or 90s must stretch the scarce remnants while praying for an exploration miracle. In Australia, Newcrest Mining’s 1 million oz a year Cadia mine has warned their open pit portion will exhaust in two years. Across the globe in Ghana, AngloGold Ashanti is chasing mineral clouds hoping to replenish their mainstay but shrinking Obuasi mine active since 1897 - before even gas powered cars hit the streets!

John Reade, former World Gold Council Chief Market Strategist, has warned publicly about this brewing storm over shrinking global gold reserves. Production can’t keep relying on diminishing mines or even cutoffs with 2 grams per ton will cease to pay off. But few glimmering saviors appear visible on the horizon. Many analysts feel we are living on borrowed time before serious shortfalls hit.

What are alterative options once the existing gold preserves run empty? The solution likely requires embracing deposits boasting huge scale rather than sky-high grades. Size can compensate for quality in the cost-volume equation. For example, Lundin Mining is developing the Fruta del Norte project in Ecuador - touting an average grade under 5 grams per ton. Nothing special on paper except for mind-boggling scale - estimated holding 6.7 million ounces gold!

Innovation will also be imperative to make the most of ever more challenging terrain and geology. Newmont Mining is trialing exciting Continuous Surface Mining technology at their Suriname mine. Think of a massive rolling machine continuously chewing and spitting rock without explosion disruption - opening access to abundant previously ignored low-grade deposits. And finer grinding processes can help capture elusive specs in complex ores.

At the end of the day, the golden ages fueled by cherry-picking easy bonanzas are fading. But all is not lost for savvy miners willing to adjust strategy. Perhaps instead of fixating on glittering El Dorado visions, the industry needs to get down to brass tacks optimizing every scrap. And mobilizing the latest tech to leave no stone unturned - or unsqueezed! Necessity has always remained the mother of invention. With ingenuity and patience, viable veins may keep on giving.