Gold miners shift exploration focus to brownfield projects – SNL

JOHANNESBURG (miningweekly.com) – Major gold producers have significantly shifted their focus to mine-site exploration at the expense of grassroots exploration over the past decade, says professional services firm SNL Metals & Mining.

An analysis of the data compiled in SNL's recently released profiles of the world's top 20 gold producers reveals that, from 2006 to 2015, the share of the producers’ total gold exploration budgets devoted to near-mine work rose from 44% to 54%, while the share allocated to greenfield programmes decreased from 40% to 22%.

In dollar terms, mine-site exploration's lead over grassroots exploration jumped from $36-million in 2006 to $470-million in 2015.

The increased focus on mine-site work is owing to the major producers spending more at and near their mines to replace or increase reserves depleted by mining and to develop new reserves more quickly at lower cost by using existing infrastructure.

According to the series of reports, JSE-listed Gold Fields is a good example of this trend.

Despite having spent roughly $600-million on early-stage exploration since the founding of the modern Gold Fields in 1998, and despite the discovery of two multimillion-ounce deposits, Gold Fields has not taken a single project from discovery to production, demonstrating how elusive greenfield exploration success can be.

As a result, the company has made a strategic shift from capital- and time-intensive exploration-led growth, to a programme of brownfield exploration and opportunistic, value-accretive acquisitions.

In late 2013, Gold Fields eliminated its growth and international projects division and announced a drastic cutback of its greenfield exploration projects portfolio.

Responsibility for exploration was devolved to the group's operating regions, with a focus on near-mine activities.

The company's grassroots exploration budgets went from more than $92-million in 2012 to zero in 2015. In contrast, Gold Fields has been very successful with near-mine exploration, particularly at its orogenic-style orebodies in Australia and at Damang, in Ghana.