Overview of Exploration in the Asia Pacific Regionminexconsulting.com/wp-content/uploads/2019/04/... · Number of discoveries by location Mineral discoveries in Asia: 1975-2017 0

MinEx Consulting Strategic advice on mineral economics & exploration

Overview of Exploration in the Asia Pacific Region– the rising importance of China

Richard SchoddeManaging Director, MinEx Consulting

Adjunct Professor, Centre for Exploration Targeting , UWA

Mines & Money Conference5th April 2018, Hong Kong


Overview

1. Countries covered in the analysis

2. Trends in exploration spend

3. Number of discoveries made – How many were found and what metal?

4. Location of deposits – Where were they found?

5. Location of discoveries made in last decade

6. Quality and value of the discoveries – focus on finding Tier 1 & 2deposits, and does exploration make money?

7. Overview of China’s mining sector – it’s much bigger than you think !

8. Conclusions

2


1. COUNTRIES COVERED INTHE ANALYSIS

There are 50 countries in Asia and it spans across 1/3rd of the World

3


AsiaAsia covers 33.4% of

the World’s# land areaAsia covers 33.4% of

the World’s# land area

# Excluding Antarctica

China’s share is 7%

4


6 Regions in Asia

South East Asia- 11 Countries

Middle East- 14 countries

Uzbekistan

Central Asia- Afghanistan - Kyrgyzstan- Armenia - Tajikistan- Azerbijan - Turkmenistan- Georgia - Uzbekistan- Pakistan

Far East Asia- Mongolia- Russia (east of the Urals)

Indian Sub-Continent- Bangladesh - Nepal- Bhutan - Pakistan- India - Sri Lanka- Maldives

East Asia- CHINA - Korea (N)- Japan - Korea (S)- Taiwan

5


2. TRENDS IN EXPLORATION SPENDExploration expenditures have increased dramatically

6


Exploration Expenditures by regions within Asia : 1975-2017

$0

$2

$4

$6

$8

1975 1985 1995 2005 2015

China

East Asia (excl China)

NE Asia

SE Asia

Indian Sub-Continent

Central Asia

Middle East

2017 US$ Billion Exploration expenditures increaseddramatically in the mid-2000s

… mainly driven by China

Exploration expenditures increaseddramatically in the mid-2000s

… mainly driven by China

$0.43bin 2002

$6.62bin 2012

$2.52bin 2017

Over the last decadeAsia accounted for

29% of globalexpenditures

Over the last decadeAsia accounted for

29% of globalexpenditures

Expendituresin 2017

Expendituresin 2017

Middle East $0.12bCentral Asia $0.16bIndian Sub-C $0.10b

East Asia (ex China) $0.01b

SE Asia $0.17bNE Asia $0.32b

China $1.64b

Source: Estimates by MinEx Consulting © April 2018 based on datafrom the OECD (for uranium), MOLAR (for China) andSNL Metals & Mining data, an offering of S&P Global Market Intelligence

Note: Excludes Bulk Minerals (i.e. bauxite, coal and iron ore)

China’s share was 18%

7


Exploration Expenditures by commodity within Asia : 1975-2017

$0

$2

$4

$6

$8

1975 1985 1995 2005 2015

Other

Uranium

Base Metals

Gold

2017 US$ Billion

Over the last decade 70% ofthe expenditures were on

gold and base metals

Over the last decade 70% ofthe expenditures were on

gold and base metals

Expendituresin 2017

Expendituresin 2017

Gold $0.84b

Base Metals $0.97b

Uranium $0.21b

Other $0.53b

Source: Estimates by MinEx Consulting © April 2018 based on datafrom the OECD (for uranium), MOLAR (for China) andSNL Metals & Mining data, an offering of S&P Global Market Intelligence

Note: Excludes Bulk Minerals (i.e. bauxite, coal and iron ore)

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3. NUMBER OF DISCOVERIES MADE

Since 1975, 1047 significant deposits were found in Asia,including 241 in the last decade

9


Number of discoveries by sizeMineral discoveries in Asia: 1975-2017

0

10

20

30

40

50

1975 1985 1995 2005 2015

Moderate

Major

Giant

Number

Source: MinEx Consulting © April 2018

85

372

539

Note: Excludes Bulk Mineral discoveries (i.e. bauxite, coal and iron ore)“Moderate” >100koz Au, >10kt Ni, >100Kt Cu equiv, 250kt Zn+Pb, >5kt U3O8

“Major” >1Moz Au, >100kt Ni, >1Mt Cu equiv, 2.5Mt Zn+Pb, >25kt U3O8

“Giant” >6Moz Au, >1Mt Ni, >5Mt Cu equiv, 12Mt Zn+Pb, >125kt U3O8

996

Caution:Incomplete datain recent years

Need to factor inunreported discoveries

for recent years

Need to factor inunreported discoveries

for recent years

10


Number of discoveries by sizeMineral discoveries in Asia: 1975-2017

0

10

20

30

40

50

1975 1985 1995 2005 2015

Est Unreported

Moderate

Major

Giant

Number


85

1057

372

539

Giant-sized discoveries are rare …with an average of only 2 per yearGiant-sized discoveries are rare …

with an average of only 2 per year 61

Note: Excludes Bulk Mineral discoveries (i.e. bauxite, coal and iron ore)“Moderate” >100koz Au, >10kt Ni, >100Kt Cu equiv, 250kt Zn+Pb, >5kt U3O8

“Major” >1Moz Au, >100kt Ni, >1Mt Cu equiv, 2.5Mt Zn+Pb, >25kt U3O8

“Giant” >6Moz Au, >1Mt Ni, >5Mt Cu equiv, 12Mt Zn+Pb, >125kt U3O8

11

includes MinEx’sestimate of unreported

discoveries

includes MinEx’sestimate of unreported

discoveries


Number of discoveries by commodityMineral discoveries in Asia: 1975-2017

0

10

20

30

40

50

1975 1985 1995 2005 2015

Est Unreported

Other

Uranium

Zinc/Lead

Nickel

Copper

Gold 526

1057

173

44

Gold and Copperaccount for 70% of

all reported discoveriesin the last 41 years

Gold and Copperaccount for 70% of

all reported discoveriesin the last 41 years

76

57

120

61

Note: Based on Moderate-, Major- and Giant-sized depositsExcludes Bulk Minerals (such as bauxite, coal and iron ore)Excludes satellite deposits in existing camps

Number


12


Number of discoveries by locationMineral discoveries in Asia: 1975-2017

0

10

20

30

40

50

1975 1985 1995 2005 2015

Est Unreported

China


North East Asia

South East Asia


Central Asia

Middle East

76

1057

35

142

152

6

486

61

China accounted for 49%of all discoveries in AsiaChina accounted for 49%of all discoveries in Asia

China accounted for 14% ofall discoveries in the World

99

Number

Source: MinEx Consulting © April 2018Note: Based on Moderate-, Major- and Giant-sized depositsExcludes Bulk Minerals (such as bauxite, coal and iron ore)Excludes satellite deposits in existing camps

13


Number of discoveries by locationMineral discoveries in Asia: 1975-2017

0%

20%

40%

60%

80%

100%

1975 1980 1985 1990 1995 2000 2005 2010 2015

China


North East Asia

South East Asia


Central Asia

Middle East

Number

Source: MinEx Consulting © April 2018Note: Based on Moderate-, Major- and Giant-sized depositsExcludes Bulk Minerals (such as bauxite, coal and iron ore)Excludes satellite deposits in existing camps

China’s importance hasgrown over time

China’s importance hasgrown over time

Over the last decade (2007-2016) Chinaaccounted for 57% of all discoveries inAsia and 18% all discoveries in the World

But Central and SE Asiahave declined over timeBut Central and SE Asia

have declined over time

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4. LOCATION OF DEPOSITSOver a quarter of the World’s mineral deposits are in Asia

15


Asia – known deposits : All Years There are 2213significant# mineral

deposits in Asia

There are 2213significant# mineral

deposits in Asia

# Significant defined as “>=Moderate” i.e. Pre-mined resources >100koz Au, >10kt Ni,>100kt Cu equiv, 250kt Zn+Pb, >5kt U3O8. . Analysis excludes Bulk Mineral deposits.

Bubble size refers toModerate, Major andGiant deposits

Accounts for 27% of theWorld. China’s share is 11%


Asia (50 Countries)

Au Cu Ni Zn/Pb U Other TOTAL

No. 1100 395 90 181 119 328 2213

Metal 3009Moz

767Mt

97Mt

609Mt

3561kt U3O8

xx

16


China : All Years

China

Caution: National boundariesare approximate only


Au Cu Ni Zn/Pb U Other TOTAL

No. 440 145 21 109 19 146 880

Metal 586Moz

171Mt

10Mt

264Mt

287kt U3O8

xx

17


Asia versus the WorldNumber of significant deposits and contained metal (on a pre-mined resource basis)

Land Area Au Cu Ni Zn/Pb U3O8 Other TOTAL

Number of Deposits

World (including Asia) 135 M km2 # 4164 1329 415 535 380 1330 8153

Asia 45 M km2

(33%)1100(26%)

395(30%)

90(22%)

181(34%)

119(31%)

328(25%)

2213(27%)

China 10 M km2

(7%)440(11%)

145(11%)

21(5%)

109(20%)

19(5%)

146(11%)

880(11%)

Contained Metal

World (including Asia) 12,874 Moz 3,942 Mt 339 Mt 1,886 Mt 15,521 kt

Asia 3,009 Moz(23%)

767 Mt(20%)

97 Mt(29%)

609 Mt(33%)

3,561 kt(23%)

China 586 Moz(5%)

171 Mt(4%)

10 Mt(3%)

264 Mt(14%)

287 kt(2%)

# Excludes 14 million km2 for Antarctica

While China has lotsof deposits, they tend

to be small in size

While China has lotsof deposits, they tend

to be small in size


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5. LOCATION OF DISCOVERIESMADE IN LAST DECADE

Over the last decade (2007-16) a total of 226 significant deposits were found in Asia

19


Asia Discoveries : 2007-2016226 known

discoveries in Asia226 known

discoveries in Asia

Base on >= Moderate-sized deposits >100koz Au, >10kt Ni, >100kt Cu equiv, 250kt Zn+Pb, >5kt U3O8

Bubble size refers toModerate, Major andGiant deposits

132 of these were in China

Not counting estimated 53unreported discoveries


20


Asia Discoveries: 2007-2016 : Giant Deposits only22 discoverieswere Giants

22 discoverieswere Giants

“Giant” defined as >6Moz Au, >1Mt Ni, >5Mt Cu equiv, 12Mt Zn+Pb, >125kt U3O8

13 were in China

XilingHaiyu

Tiegelongnan

Poyi

Xiarihamu

Huoshaoyun

Zhaxikang Huayuan Fenghuang

Jongju [REE]

Shuangjianzishan [Ag]

Jinzhaishaping [Mo]

Zhuxi [W]

Caosiyao [Mo]

Un-named [Graphite}

Malmyzh

Verkhne-Munskoye [Diamonds]

Severo-Olenskaya [Diamonds]

Banswara District Minami-Torishima [REE]

Hu’uBrambang

Tujuh Bukit


21


Asia Discoveries: 2007-2016 : by Tier A total of 5 Tier-1deposits, 14 Tier-2 and

83 Tier-3 depositswere found in Asia

A total of 5 Tier-1deposits, 14 Tier-2 and

83 Tier-3 depositswere found in Asia

Bubble size refers to Tier-1, Tier-2 and Tier-3 deposits.See Slide 26 for definitions of the different Tiers


22


Asia Discoveries: 2007-2016 : Tier-1 onlyAll 5 of the Tier-1

deposits were in ChinaAll 5 of the Tier-1

deposits were in China

See Slide 38 for a definition of a Tier-1 deposit

2012: Huoshaoyun [Zn]67 Mt @ 23.9% Zn + 5.6% Pb

Pre-2016: Xiling [Au]85 Mt @ 4.5 g/t Au= 12.3 Moz

2011: Haiyu [Au]67 Mt @ 7 g/t Au = 15.1 Moz

2011: Zhuxi [W]280 Mt @ 0.50%W +0.8% Cu + 11.7 g/t Ag

2007: Shuangjianzishan [Ag]181 Mt @ 144 g/t Ag + 1.82% Zn + 0.61% Pb

The total for theWorld was 15

23


6. QUALITY AND VALUE OFDEPOSITS FOUND

How many Tier 1, 2 and 3 deposits were found in Asia? What are theyworth? And was it enough to cover the cost of exploring for them?

24


Number of discoveries by qualityTier 1, 2 and 3 discoveries in Asia: 1975-2016

0

10

20

30

40

50

1975 1985 1995 2005 2015

Unclassified

Tier 3

Tier 2

Tier 1

Number

20

992

74

382

Tier-1 discoveries are rare … withonly 5 found in Asia in the last

decade. All of them were in China

Tier-1 discoveries are rare … withonly 5 found in Asia in the last

decade. All of them were in China516

Note: Excludes Bulk Mineral discoveries (i.e. bauxite, coal and iron ore)

Note: Excludes an estimated61 unreported discoveriesmade since 2007

Huoshaoyun(Zn: 2012)

Xiling(Au: 2016)

On average, every decade findfive Tier-1 and 15-20 Tier-2 deposits

Zhuxi(W: 2011)Haiyu(Au: 2011)

Shuangjianzishan(Ag: 2011)


25


Most of the wealth created are in Tier 1 and 2 discoveriesEstimated value of 996 discoveries found in Asia between 1975-2016

0%

20%

40%

60%

80%

100%

Number ofDeposits

NPV

Tier 1

27%

4%

36%

Note: Limited to deposits >=“Moderate “ in sizeNPV values refer to the Net Present Value at the Decision-to-Build stageEV = Expected Value, which is the weighted average value of the NPV rangeValues are based on long run commodity prices as prevailing at Jan 2013

Caution: Values are indicative / approximate-only

‘Tier 1 deposits’ are Company making" mines.They are large, long life and low cost. … ie >20Years ,>200 ktpa Cu or >250koz pa Au, andBottom Quartile costs. Have an NPV of>$1000m, and EV of ~$2000m in 2013 Dollars

‘Tier 3 deposits’ are small / marginal depositsWhile they can be profitable they often only getdeveloped at the top of the business cycle . Atthey don’t meet more than one of the Tier 1 or 2criteria. NPV of $0 to $200m, EV of ~$100m

Definitions

Example: Oyu Tolgoi [Copper]

Example: Chatree [Gold]

Example: Dornod [Uranium]

Tier 2

Tier 3

Unclassified

Tier 1

Tier 2

Tier 3

‘Unclassified deposits’ are small depositsthat are less than “Major “in size and/or ofminimal value. EV of (say) ~$10m

Example: Red Rabbit [Gold]

32%

Unclassified

2%

38%

52%

7%

‘‘Tier 2 deposits’ are “Significant” deposits -but are not quite as large or long life or asprofitable as Tier 1 deposits . They have anNPV of $200-1000m and EV of ~$500m


26


Estimated value of discoveriesTier 1, 2 and 3 discoveries in Asia: 1965-2016

$0

$2

$4

$6

$8

$10

1975 1985 1995 2005 2015

Unclassified

Tier 3

Tier 2

Tier 1

2017 US$m

$44b

$121b

$39b

$32b

$5b

Note: Excludes Bulk Mineral discoveries (i.e. bauxite, coal and iron ore)Caution: Values are indicative / approximate-only

1975-2016

Caution:No adjustment made forunreported discoveries


27


Estimated value of discoveriesTier 1, 2 and 3 discoveries in Asia: 1965-2016

$0

$2

$4

$6

$8

$10

1975 1985 1995 2005 2015

Unclassified

Tier 3

Tier 2

Tier 1

2017 US$m

$44b

$121b

$39b

$32b

$5b

Note: Excludes Bulk Mineral discoveries (i.e. bauxite, coal and iron ore)Caution: Values are indicative / approximate-only

1975-2016

Caution:No adjustment made forunreported discoveries

ExplorationSpend

$70b

Over the last 41 years, US$70b was spenton exploration, delivering US$121b of value

… ie a “Bang per Buck” of 1.73

Over the last 41 years, US$70b was spenton exploration, delivering US$121b of value

… ie a “Bang per Buck” of 1.73

Over the last decade the “Bangper Buck” dropped to 0.57

… but this should improve overtime – as costs come down andmore discoveries are reported


28


The returns vary widely across the RegionSpend & performance by Countries within Asia: 2007-2016

Region Exploration Spend(2017 $b)

No ofDiscoveries #

Tier 1+2Discoveries

Estimated Value(2017 $b)

Value /Spend

Middle East $1.96 4% 22 10% 0 0% $0.8 3% 0.42

Central Asia $2.75 6% 9 4% 0 0% $0.2 1% 0.09

Indian S-C $1.15 3% 3 1% 0 0% $0.1 <1% 0.09

SE Asia $4.77 10% 17 8% 2 11% $1.4 6% 0.30

NE Asia $7.15 16% 41 18% 1 5% $2.9 11% 0.40

East Asia $27.87 61% 134 59% 16 84% $20.5 79% 0.70

(China) $27.77 61% 132 58% 15 79% $20.0 77% 0.72

----- ------ ------ ------- ------ ------- ------- ------- -------

TOTAL Asia $45.65 100% 217 100% 19 100% $26.0 100% 0.57

Note: Analysis excludes bulk minerals, and excludes satellite deposits found within existing campsDiscoveries refer to Moderate-, Major- and Giant-sized deposits.The Estimated Value is approximate only, and ignores the value of unreported discoveries

Over the last decade the best performing region was East Asia (i.e. China)Over the last decade the best performing region was East Asia (i.e. China)

As more discoveries are drilled-out & reported, these returns

should improve over time

As more discoveries are drilled-out & reported, these returns

should improve over time Source: MinEx Consulting © April 2018

29


7. CHINA’S EXPLORATION & MINING SECTORIt’s the biggest in the World !

30


Overview of China’s mining sector in 2016

• Is the No.1 producer in the World of 40 commodities• Total sales revenue of $214 billion

- This is larger than the combined total for Australia ($112b) and Canada ($42b)

• More than 10,000 operating mines (though most are small)- ~1500 mines in Australia and 1200 in Canada

• Employed 6 million workers (half in coal mining)- 154,000 workers in Australia

• 2691 registered exploration enterprises – most of which are SOEs and privatecompanies. Only 71 publicly listed companies- 600 junior companies in Australia and 2200 in Canada

• Spent $2317m on domestic mineral exploration (including $475m for bulk minerals)- This is larger than the combined total for Australia ($1057m) and Canada ($1230m)

• Drilled 9.13 million metres- Combined total of 10.71 million metres for Australia and Canada

It’s the biggest in the World !It’s the biggest in the World !


8. CONCLUSIONS

32


Conclusions: [1/3]

1. Countries covered in the analysis

- Asia covers 33% of the earth’s surface and spans 50 countries across 6 regions.-

2. Trends in exploration spend

- Expenditures have grown substantially since the early 2000s.

- In 2017, $2.52b was spent on exploration in Asia, including $1.64b in China

- Over the last decade, Asia accounted for 29% of global exploration expenditures on non-bulk minerals

- Most of this was in China (18% of World’s total). In 2016 China spent more than Australia andCanada combined.

- The two main targets are gold and copper.

3. Number of discoveries made

- There are over 8150 significant deposits in the World. 2213 (27%) are in Asia. This includes 880(11%) deposits in China.

- Over the last decade (2007-2016) 750 new deposits were found in the World. 226 of these were inAsia, including 132 in China (18% of the World’s total).

33


Conclusions: [2/3]

3. Continued …

- Over the last decade 69 Giant deposits were found in the World. 22 ofthese were in Asia, including 13 in China (19%).

- 15 Tier-1 deposits were found in the World. 5 of these were in Asia – allof which were in China (33%).

Discovery Performance … value proposition for Exploration- 70% of the value created by industry comes from finding Tier-1 and Tier-2

deposits (which make up only 9% of the total by number).

- Over the last decade, US$45.7b was spent on exploration in Asia, deliveringUS$26.0b of value … a “Bang per Buck” of 0.57. Over the same time periodthe World average was 0.56

- Bang per Buck” varied widely between Regions- Central Asia (0.09), Indian Sub-Continent (0.09), South East Asia (0.30),

Middle East (0.42), North East Asia (0.40) and East Asia (0.70).

- China (which is part of East Asia) achieved a “Bang per Buck” of 0.72

34

As more discoveries are drilled-out & reported,these returns will improve over time

As more discoveries are drilled-out & reported,these returns will improve over time


Conclusions: [3/3]

Asia is an important contributor to the World’s mineral endowment and new discoveries. 27% of the World’sknown deposits are in Asia.

China is central to all of this … over the last decade it accounted for 18% of the total explorationexpenditures, found 18% of the deposits and (more importantly) accounted for 5 of the 15 Tier-1 discoveries

China’s mining industry is the biggest in the World – and is hungry for more metal.

In short, the future of the World’s mining industry depends greatly on whether China can continue todeliver significant new discoveries.

The Great Wall, orthe Golden Road?

35


Contact details

Richard SchoddeManaging DirectorMinEx ConsultingMelbourne, Australia

Email: [email protected]: MinExConsulting.com

Copies of this and other similarpresentations can be downloaded

from my website

Copies of this and other similarpresentations can be downloaded

from my website

36

Documents

Overview of Exploration in the Asia Pacific Regionminexconsulting.com/wp-content/uploads/2019/04/... · Number of discoveries by location Mineral discoveries in Asia: 1975-2017 0