Majors big spenders while juniors struggle to survive

According to information contained in the group’s eighth annual survey of worldwide exploration programs, 1989 spending by major mining companies will be higher than for the past several years, while junior companies will continue struggling just to raise the dollars needed to maintain their property portfolios.

Over-all, less money will be spent on exploration in 1989 than in 1988, and a slightly higher percentage will be directed toward base metals, the study says.

Senior companies, most of whom are realizing record profits from their base metal mines, will spend some $543 million in Canada this year, the survey estimates.

That figure was based on 50 companies with Canadian exploration budgets ranging from a high of $84 million for the Noranda Group to a cutoff point of $2 million.

According to the report, total exploration spending in Canada should lie between $660-$780 million this year, depending on the juniors’ ability to raise money.

Some sources estimate as little as $225 million in flow-through dollars will be available to Canadian companies this year, compared with more than $900 million in 1988 and $1.1 billion in 1987.

The study accounted for more than $1.4 billion being spent on exploration worldwide by senior companies. Canada, with up to $780 million likely to be spent this year, remains the country of choice for most senior companies looking for new deposits.

Meanwhile, Australian exploration programs are suffering from the illiquid stock market for juniors, a weak gold price and the spectre of a new tax on gold mining in 1991. The Australian Mining Industry Council estimates an exploration spending decline of 13% in fiscal 1989 to $525 million(US), and industry observers expect the decline to intensify into fiscal 1990.

The United States, with new gold discoveries and without negative tax-law changes, is expected to show at least a 12% increase in 1989 exploration spending to $400-$450 million.

Chile, which is experiencing a rebirth of foreign investment in exploration and mine development, had projects totalling $327 million presented to the Chilean government for the first quarter of 1989, compared with $85 million for all of 1988. Elsewhere in Latin America, Uruguay, Costa Rica and Guyana are also receiving increased interest.

The following table summarizes the larger exploration programs worldwide: Top exploration spenders in 1989 0604,0100,0402 Exploration Budget ($ million(US) Company 1989) RTZ Group 120.0 BP Canada 7.6 Noranda Group 168.0

includes Minnova/

Kerr Addison 17.0 Hemlo Gold 24.0 Cons Goldfields 96.2 Anglo American 72.1 includes Hudson Bay 6.3 Placer Dome 50.4 Falconbridge 48.0 Western Mining 46.4 Inco Ltd 45.0 BHP Group 43.4 Freeport-McMoRan 43.3 Battle Mountain 36.0 Homestake 32.0 Cominco 24.4 AMAX Group 23.0 Bond Int’l Gold 22.0 Chevron 20.0 Asarco Inc 19.2 Cambior 18.5 Phelps Dodge 12.1 Corona Corp 16.8

A further eleven companies report budgets in the $10-$15 million range with expenditures totaling about $130 million. The largest of these budgets include those for Total Energold (TSE), Outokumpu, the Northgate Group (TSE), FMC Gold and LAC Minerals (TSE). Another 75 companies are spending between $1-$10 million each.

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