Major gold discoveries plummet in the past decade

Gold may have been making headlines for high prices and being a safe haven for investors, but S&P Global Market Intelligence has reported a decade of underperformance for gold discoveries.

The S&P Global annual analysis of major gold discoveries identified 278 deposits containing 2.19 billion ounces of gold reserves discovered from 1990 to 2019.

According to S&P Global’s list there have been no major discoveries in the past three years and only 25 in the past decade.

“The lack of new discoveries is the result of exploration focussing on older discoveries and later-stage assets,” S&P Global principal research analyst Kevin Murphy said.

“While there are still plenty of gold assets to be developed, the lack of new major deposits being discovered means that the project pipeline is increasingly short of large, high-quality assets needed to replace ageing major gold mines.”

The 25 deposits discovered over the past decade contain only 154.3 million ounces, or 7 per cent of all gold contained in discoveries since 1990.

According to S&P Global, the share of gold exploration budgets devoted to grassroots exploration have been halved since the 1990s

Explorers and producers have shifted away from the riskier grassroots exploration in favour of exploring known deposits around already operating mines, which lowers the potential to find major new discoveries.

The minimal grassroots exploration that is being conducted is still focussed on areas with known deposits or mineralisation.

Despite this sharp decline being reflective of a lack of significant new deposits, Murphy believes a portion of the recent shortfall reflects the remaining exploration effort required to expand the known endowment of newly found deposits beyond major discovery threshold.

“To account for this, we estimated gold in discoveries expected to meet our criteria in the future,” he said.

“While this has resulted in the amount of discovered gold increasing in some years, the total for the past decade might only rise to about 266 million ounces once subsequent exploration efforts are completed.”

With the coronavirus impacting mining companies’ operations and budgets, Murphy doesn’t expect to bounce back from this trend in a hurry.

“We do not expect the trend to reverse in the near term,” he concluded.

“We expect quite the opposite in 2020 as COVID-19 impacts exploration plans by companies of all sizes.”

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