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Minería y exploración en Perú: situación y perspectivas
M. Cardozo Febrero 05, 2015
Jueves Minero Instituto de Ingenieros de Minas del Perú
• Metal prices • Cost and margin • Production • Exploration • Mineral discoveries • Junior financing
Content
Metal Prices
$1238 $1379 $1238 $1142 $1265
Since November 2014, oil price drops offsetting US Dollar influence
military and political concerns about Russia and Ukraine in the first half of 2014.
US economic recovery leds to US Dollar strenghtening
$16.24
$15.71
Precios del Oro y la Plata
$18.25
$17.25
Copper Spot Price
Copper Storage 60 days
6 months
1 year
5 years
Zinc Spot Price
Zinc LME
Storage 60 days
6 months
1 year
5 years
Recent and Forecast Commodity Prices
Cash Price (26-Dec-14) 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E
Aluminum ($0.93 / lb) $0.99 $1.09 $0.92 $0.84 $0.87 $0.93 $0.98 $1.03 $1.13 Copper ($2.89 / lb) $3.43 $4.00 $3.61 $3.33 $3.13 $3.12 $3.18 $3.25 $3.28 Lead ($0.84 / lb) $0.97 $1.09 $0.94 $0.97 $0.98 $1.00 $1.01 $1.00 $0.99 Nickel ($6.93 / lb) $9.91 $10.38 $7.95 $6.81 $7.93 $8.83 $9.08 $9.18 $9.36 Zinc ($0.98 / lb) $0.98 $1.00 $0.88 $0.87 $0.98 $1.07 $1.14 $1.17 $1.16 Gold ($1196 / oz) $1,226 $1,571 $1,668 $1,411 $1,279 $1,275 $1,296 $1,275 $1,282 Palladium ($815 / oz) $528 $733 $643 $725 $825 $864 $879 $878 $919 Platinum ($1212 / oz) $1,611 $1,719 $1,549 $1,485 $1,460 $1,450 $1,509 $1,528 $1,526 Silver ($16.09 / oz) $20.24 $35.29 $31.13 $23.82 $19.91 $19.70 $20.26 $20.34 $20.24 Uranium ($36.25 / lb) $45.97 $56.32 $48.97 $40.42 $34.51 $44.39 $51.20 $59.51 $64.71
Base metal prices are LME cash prices quoted in US$ per lb. Precious metal prices are London spot prices quoted in US$ per oz.
William Matlack Scarsdale Equities LLC
Kitco, Dec 29th, 2014
Metal prices
• ¿Se terminó el ciclo de los altos precios de los metales?
• ¿Quién maneja los precios…oferta vs. demanda o percepción/especulación?
Volatile metal prices
Cost and margin
En 2013, de acuerdo con datos de la Comisión Chilena del Cobre (Cochilco), producir una libra de cobre en el país (Chile) costó US$2,50, por sobre el promedio mundial (US$2,38). Las cifras están medidas en dólares de cada año y corresponden al costo C3, que incluye costo directo de caja más depreciación más intereses y costos indirectos y deduce el crédito por venta de subproductos.
La tendencia al alza en costos en la minería chilena, no ha logrado detenerse del todo, según grafica un reciente informe internacional sobre esta industria en Latinoamérica, preparado por Scotiabank GBM. En su última estimación del cash cost C1 para el segundo trimestre –sobre costos de producción, que incluye remuneraciones, materiales, energía, servicios de terceros, gastos de refinación y ventas y créditos por subproductos–, el conjunto de mineras del país (Chile) aumentaron en 12% este indicador, pasando de US$ 1,68 la libra de cobre el tercer trimestre del año pasado, a US$ 1,88. Este nivel es mayor al que tienen en general los yacimientos de cobre en el mundo, que se estiman estarán ubicadas en US$ 1,73 la libra para el segundo trimestre. Pero deja a las operaciones nacionales (chilenas) muy lejanas al promedio en Perú, que llega a US$ 1,27, según el documento. De todos modos, Peru no ha estado exento de esta tendencia alcista. Entre los dos periodos analizados por el banco de inversión, su cash cost creció 23%, mientras a nivel mundial fue de sólo un 7%.
Notas tomadas de artículos diversos de Mining Press de Junio 2014
Las compañías mineras de oro siguen vigilando muy de cerca el aumento de los costes de producción, más concretamente en aquellas minas que llevan años de explotación y cuyas reservas más cercanas a la superficie se van agotando. En el Informe de SNL Metals & Mining denominado “Estrategias para el Cambio de las Reservas de Oro”, se hace notar como el principal de los problemas el aumento de los costes medios de producción desde 560 dólares por onza en los 2000 hasta 2.300 dólares por onza en la actualidad. Las expectativas de crecimiento de los costes son aún mayores para 2014. El análisis se basa en una muestra de 192 minas de oro con una capacidad de producción de 50.000 onzas anuales.
De forma sistemática, la media de tres años de los costes de capital de las minas está por encima de los precios internacionales del oro. Desde 2006, los mineros se embarcaron en proyectos que en muchos casos eran faraónicos y que, al final, han tenido que abandonar por falta de rentabilidad. Al calor de la subida de los precios, las mineras diversificaron sus negocios afrontando subidas importantes en los costes de extracción. Para 2014, se espera un incremento del coste medio hasta 2.400 dólares por onza mientras que para 2015, este coste bajaría hasta los 1.900 dólares por onza. Con respecto a los costes operativos directamente relacionados con la producción, desde 2004 se han incrementado en términos reales un 190% pasando a ser de 702 dólares por onza en 2013.
• ¿Estamos manejando adecuadamente los costos?
• ¿Hay un problema de productividad?
• ¿Cut-off y ley promedio apropiados?
• ¿Capex excesivos?
Costs increasing…margins reducing
Production
-
2
4
6
8
1990 1994 1998 2002 2006 2010 2014
Gold Ounces (millions)
Copper Tons (millions)
Moving from the “gold rush” into a “copper boom”
1st PRODUCER OF GOLD IN LATIN AMERICA
AND 6th IN THE WORLD
3rd LARGEST WORLD’s PRODUCER OF COPPER
WILL SOON RECOVER ITS 2nd POSITION
WILL DRASTICALLY REDUCE DIFFERENCE WITH CHILE
0
1
2
3
4
5
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
Mill
ions
of t
ons o
f cop
per
Peruvian Gold Production by Deposit Types
-
1
2
3
4
5
6
7
8
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Moz
Alluvial Gold Other IOCG SkarnPorphyry Mesothermal veins LS Epithermal HS Epithermal
6.77.3
6.6
3.7
actual forecast
Milli
on O
unce
s of
Gol
d Peruvian Gold Production by Deposit Types
-
1
2
3
4
5
6
7
8
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Moz
Alluvial Gold Other IOCGSkarn Porphyry Mesothermal veinsLS Epithermal HS Epithermal
6.7 6.5
4.1
5.5
actual forecast
-
1
2
3
4
5
6
7
8
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Milli
ons
Oz
Gol
d
Alluvial Gold Other Mesothermal veinsSkarn Porphyry LS EpithermalHS Epithermal
6.7
5.9
5.35.5
5.2
forecast
(Estimated in May 2012)
actual
Peruvian Gold Production by Deposit Types Peruvian Gold Production by Deposit Types
(Estimated in May 2014)
M. Cardozo et al, 2006
M. Cardozo et al, 2012 J. Acosta et al, 2014
M. Cardozo et al, 2008
Producción de Oro en el Perú
From: Acosta et al, May 2014
Estimate by May 2014
Improbable drop, traditional mines can sustain up to 160-170 MM oz/year
Copper Mines and Projects in Peru
La Granja
El Galeno Minas Conga
Río Blanco
Toromocho
Los Chancas Las Bambas
Quechua Mina Justa
Quellaveco
Tía María
Antamina
Cerro Verde Toquepala
Cuajone
Tintaya
Zafranal
Projects
1-10 10-50
50-200 200-500
Actual and Planned Annual Production
Metric Tons of Fine Copper X 1000
Mines
Cerro Corona
Michiquillay
Actu
al/P
lann
ed A
nnua
l Pro
duct
ion
Met
ric T
ons o
f Fi
ne C
oppe
r X
1000
0
100
200
300
400
500
600 Magistral
Source: Copper in Peru: Facts and challenges, J. Acosta, A. Bustamante & Miguel Cardozo, Perumin 2013
Peruvian Copper Production 1998-2025 M
etric
Tons
of
Fine
Cop
per
(Mill
ions
)
0.0
1.0
2.0
3.0
4.0
5.0
6.0 Río Blanco Cañariaco
Michiquillay Haquira Zafranal
Los Calatos
+Cuajone
Met
ric To
ns o
f Fi
ne C
oppe
r (M
illio
ns)
actual forecast
Miocene Porphyry Belt
Eocene-Oligogocene Porphyry Belt
Paleocene-Eocene Porphyry Belt
Other type of deposits
Tía María Mina Justa Constancia
La Granja Minas Conga Los Chancas
El Galeno Magistral
Quellaveco +Cerro Verde
2.5
4.9
4.1
3.4
4.2
1.5
Toromocho Las Bambas
Quechua +Toquepala
2.2
Estimate by July 2014
Peru Copper Production and Yearly Growth Rates (actual until 2013 + forecast until 2021)
Estimate by July 2015
Gold and Silver Content of Porphyry Deposits PORPHYRY BELT PROJECT Au g/t Ag g/t Mo %
Cerro Corona 1.00Minas Conga 0.71 2.05
Galeno 0.12 2.50 0.014Michiquillay 0.05-0.10 2.00-4.00 0.01-0.02
La Granja 0.04 3.70Magistral 0.060Cañariaco 0.06 1.6La Arena 0.27 0.70 0.004
Toromocho 6.90Antamina 10.3 0.021
Las Bambas 0.08 4.74 0.018Cotabambas 0.23 2.74 0.001Antapaccay 0.13 1.51 0.010Los Chancas 0.04 0.040
Antilla 0.009Haquira 0.04 1.79 0.001
Constancia 0.05 3.60 0.011Los Calatos 0.021
Cuajone 0.03 3.10 0.020Toquepala 0.03 2.30 0.020Quellaveco 2.19 0.023Cerro Verde 1.46 0.010
Miocene N-Peru
Eocene-Oligocene Apurimac
Miocene Central Peru
Paleocene SW-Peru
Projected yearly production from pophyries/skarns of the 3 main copper
porphyry belts by 2021 ?
Gold (millions of
ounces)
Silver (millions of
ounces)
Molybdenum (thousands of
tons)
1.6 40 40 -50
% of total gold and silver by 2021 ? 30% 25% 100%
Historic Cumulative Copper Production in Peru
Metallogenic belts
5 MMT 18%
2 MMT 7%
16 MMT 57%
Antamina 4.1 MMT
Toquepala 6.7 MMT
Tintaya 2.0 MMT Miocene porphyry belt
Eocene-oligocene porphyry belt Paleocene porphyry belt
Total Production in Peru 28 MMT (100%)
Production from main porphyry belts 23 MMT (82%)
Other Cu belts: 2 MMT (7%) Other non-Cu belts: 3 MMT (11%)
Source: Copper in Peru: Facts and challenges, J. Acosta, A. Bustamante & Miguel Cardozo, Perumin 2013
Copper Resources and Reserves in the Main Porphyry Belts
in Peru
85 MMT 39%
44 MMT 20%
63 MMT 29%
Total reported resources in Peru 218 MMT (100%)
Resources from porphyry belts 192 MMT (88%)
Other Cu belts: 11 MMT (5%) Other non-Cu belts: 15 MMT (7%)
Metallogenic belts Miocene porphyry belt
Eocene-oligocene porphyry belt Paleocene porphyry belt
Source: Copper in Peru: Facts and challenges, J. Acosta, A. Bustamante & Miguel Cardozo, Perumin 2013
• Gold production decreasing. Extracted resources are not being replace. Very few significant discoveries lately
• Silver will increase production levels if copper porphyries are developed • Zinc and lead will continue increasing moderately. New projects
required to accelerate development • Porphyry copper producers contribute significantly to Au, Ag and Mo
production • Copper potential is one of the largest in the world • Copper developments are being delayed due to social and political
issues • Uncertainty increasing, can we really get up to 5 million tonnes of Cu
production in the next 8-10 years? • Chile taking advantage: Long-term view and policy, sustained technical
and commercial/market research • Peru + Chile could produce 57% (>13 tons) of world’s copper
Mineral Production
Peru and Chile Copper Production to 2021 (actual + forecast)
Peru + Chile 13m
57%
Source: Copper in Peru: Facts and challenges, J. Acosta, A. Bustamante & Miguel Cardozo, Perumin 2013
Exploration
© SNL Metals Economics Group, 2012
Worldwide Exploration vs. Relative Metals Price
© SNL Metals Economics Group, 2012
Worldwide Exploration Budgets by Target (as percent of annual total)
© SNL Metals Economics Group, 2012
Worldwide Base Metals Exploration by Target (as percent of annual total)
© SNL Metals Economics Group, 2012
Worldwide Exploration by Stage (as percent of annual total) Own projection
(dashed lines) Not quantitative, rough tendencies
Exploration expenditures: World by Commodity : 1975-2013 Major increase in
spend on Bulk Minerals
Percentage of total spend Other - Bulk 1% 100%
Coal Iron Ore 80%
Other – Non Bulk 60%
40% Gold continues to be the main
target 20%
0% 1975 1980 1985 1990 1995 2000 2005 2010
Sources: MinEx Consulting estimates © September 2014, based on data from ABS, NRCan, MLR (China), OECD and SNL MEG
MinEx Consulting
Strategic advice on mineral economics & exploration 5
11%
14%
Diamonds 12% 2%
Base Metals 4% (Cu, Ni, Zn, Pb)
24%
Gold 33%
Inversión en exploración a nivel mundial
Exploration expenditures: by Region : 1975-2013
World China spends more on exploration than any other country in
the World Percentage of total spend
100% 2% 7%
17% 2%
15%
80%
60% 6%
22% 40%
6%
11% 20%
12% 0% Can+USA+Aust
market share has halved in the last 2
decades
1975 1980 1985 1990 1995 2000 2005 2010
Sources: MinEx Consulting estimates © September 2014, based on data from ABS, NRCan, MLR (China), OECD and SNL MEG
Note: Includes spend on Bulk Minerals “Rest of World” refers to, Mongolia, Middle East and South West Asia (including India and Pakistan)
MinEx Consulting
Strategic advice on mineral economics & exploration 6
Rest of World FSU + E Europe China Western Europe Africa Pacific / SE Asia Latin America USA Canada Australia
120
293 257 357
570
720
588 591
757
1,025
683
559
0
200
400
600
800
1,000
1,200
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
6
6 5 3
5 6
6 5 4
6
7 7
4.9% 7.7% 4.9% 4.5% 5.0% 5.0% 7.0% 4.9% 4.2% 4.8% 4.5% 4.9%
Peru
Exploration Investment
Worldwide
% of Worldwide Investment
Peru WW Ranking
Investment US$ Million
2,440 3,790
5,290
7,930
11,330
14,474
8,400
12,100
18,158
21,500
15,200
11,400
-
5,000
10,000
15,000
20,000
25,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Investment US$ Million
Annual Exploration Budgets by Target 2010 2011 2012 2013 2014Copper 211.7 316.2 351.5 303.7 252.4Gold 196.8 238.2 445.3 205.5 147.3Other 87.3 115.7 146.1 115.5 109.2Zinc-Lead 95.3 87.1 82.4 58.2 50Total 591.1 757.2 1,025.30 682.9 558.9
Annual Exploration Budgets by Stage 2010 2011 2012 2013 2014Grassroots 214.9 216.8 237.1 234.7 188.4Late Stage & Feasibility 263.2 411.2 567.8 285.4 186Minesite 113 129.2 220.4 162.8 184.5Total 591.1 757.2 1,025.30 682.9 558.9
Annual Exploration Budgets by Company Type 2010 2011 2012 2013 2014Major 226.3 399.3 628.1 303.7 370.7Intermediate 130.7 83.9 105.3 205.5 55.6Junior 234.1 274 291.9 173.7 132.6Total 591.1 757.2 1,025.30 682.9 558.9
Annual Exploration Budgets by Target 2010 2011 2012 2013 2014Copper 35.8% 53.5% 59.5% 51.4% 42.7%Gold 33.3% 40.3% 75.3% 34.8% 24.9%Other 14.8% 19.6% 24.7% 19.5% 18.5%Zinc-Lead 16.1% 14.7% 13.9% 9.8% 8.5%Total 591.1 757.2 1,025.30 682.9 558.9
Annual Exploration Budgets by Stage 2010 2011 2012 2013 2014Grassroots 36.4% 36.7% 40.1% 39.7% 31.9%Late Stage & Feasibility 44.5% 69.6% 96.1% 48.3% 31.5%Minesite 19.1% 21.9% 37.3% 27.5% 31.2%Total 591.1 757.2 1,025.30 682.9 558.9
Annual Exploration Budgets by Company Type 2010 2011 2012 2013 2014Major 38.3% 67.6% 106.3% 51.4% 62.7%Intermediate 22.1% 14.2% 17.8% 34.8% 9.4%Junior 39.6% 46.4% 49.4% 29.4% 22.4%Total 591.1 757.2 1,025.30 682.9 558.9
Inversión en exploración en el Perú
Isac Burstein, Top Mining Junior, Nov 2004, Basado en cifras de SNL Metals Economics Group
Peru enjoys a very dynamic exploration community and efficient mining cadastre
Mineral Discoveries
Number of significant discoveries Non-Bulk discoveries World: 1975-2013
made Number of Discoveries
150
100
50
0 1975 1980 1985 1990 1995 2000 2005 2010 2015
Note: Excludes satellite deposits within existing Camps. Also excludes Bulk Mineral discoveries. Giant >6 Moz Au, >125 kt U3O8, >1 Mt Ni, >5 Mt Cu equiv Major >1 Moz Au, >25 kt U3O8, > 100 kt Ni, >1 Mt Cu equiv Moderate >0.1 Moz Au, >5 kt U3O8, >10 kt Ni, >0.1 Mt Cu-equiv Source: MinEx Consulting © September 2014
MinEx Consulting
Strategic advice on mineral economics & exploration 8
Moderate Discoveries Major Discoveries Giant Discoveries
Number of significant discoveries made Non-Bulk discoveries World: 1975-2013
Number of Discoveries On average 60-70
150 made each year in
Need to adjust for the fact that it takes time to report a discovery and 100
drill it out
50
0 1975 1980 1985 1990 1995 2000 2005 2010 2015
Note: Excludes satellite deposits within existing Camps. Also excludes Bulk Mineral discoveries. Source: MinEx Consulting © September 2014
MinEx Consulting
Strategic advice on mineral economics & exploration 9
discoveries are the World
Estimated Unreported Discoveries Moderate Discoveries Major Discoveries Giant Discoveries
Number of discoveries made by Commodity Moderate+Major+Giant discoveries in the World: 1975-2013
Number of Discoveries
150 288 130 701
1366
12% 5%
28% 55%
100 2485 100%
50
Over half of the discoveries were
GOLD 0 1975 1980 1985 1990 1995 2000 2005 2010 2015
Note: Excludes satellite deposits within existing Camps. Also excludes Bulk Mineral discoveries. Source: MinEx Consulting © September 2014
MinEx Consulting
Strategic advice on mineral economics & exploration 10
Estimated Other Uranium Base Metals Gold
Number of discoveries made by Company Type Moderate+Major+Giant discoveries in the Western World: 1975-2013
Number of Discoveries 150
100
50
0 1975 1980 1985 1990 1995 2000 2005 2010 2015
Note: Figures are adjusted for shared discoveries Western World only. Excludes discoveries made in FSU, Eastern Europe and China Excludes satellite deposits within existing Camps. Also excludes Bulk Mineral discoveries.
Source: MinEx Consulting © September 2014
MinEx Consulting
Strategic advice on mineral economics & exploration 11
Estimated Unknown Other State Owned Co Prospectors Junior Companies Moderate Producers Major Companies
Percentage of discoveries made by Company Type Moderate+Major+Giant discoveries in the Western World: 1975-2013
Number of Discoveries
100% Junior Companies now
account for 50-60% of all discoveries in the
Western World 80%
60%
40%
20%
0% 1975 1980 1985 1990 1995 2000 2005 2010 2015
Note: Figures are adjusted for shared discoveries Western World only. Excludes discoveries made in the FSU, Eastern Europe and China Excludes satellite deposits within existing Camps. Also excludes Bulk Mineral discoveries.
Source: MinEx Consulting © September 2014
MinEx Consulting
Strategic advice on mineral economics & exploration 12
Other State Owned Co Prospectors Junior Companies Moderate Producers Major Companies
Until recently discovery rate moved in-line with exploration expenditures
Non-Bulk exploration spend and discoveries World: 1975-2013 Huge increase in spend, but no corresponding Number 2013 US$ Billion
$30 150
ation
100 $20 Number of Discovery performance has been affected by
higher input costs (labour, drilling and
admin). 50 $10
Is partly offset by shift to Brownfield Exploration
(but this delivers smaller- sized discoveries) 0 $0
1975 1980 1985 1990 1995 2000 2005 2010 2015
Note: Based on Moderate, Major and Giant discoveries. Excludes satellite deposits within existing Camps. Source: MinEx Consulting © September 2014 Also excludes Bulk Mineral discoveries and expenditures.
MinEx Consulting
Strategic advice on mineral economics & exploration 14
increase in the number of discoveries Explor
Spend
Discoveri
es
Est
Average Cost per discovery (2013 US$m)
GOLD UnUniitt didiscscoovvereryy
ccoosststs Weighted Average for ~$150m hahavvee dodoubublleded iinn thethe
2000-2009 = $77m Weighted Average for llasastt dedeccadeade
1980-89 = $44m
Estimated
IfIf yyoourur eexplxploorraatiotionn ~$180m bubudgdgeett iiss $5$5mm thenthen
BASE METALS thethe ooddddss ooff mmakiakingng aa ((mmoodedesst)t) didiscscoovvereryy
Weighted Average for Weighted Average for 2000-2009 = $64m iinn aa ggiivvenen yyeaearr araree
1980-89 = $23m llessess thanthan 11 iinn 3030
Estimated Exploration is a high-
activity
Discovery costs are rising Unit cost per for a moderate-sized Gold or Base Metal discovery in the World
Source: MinEx Consulting © September 2014
Note: Discoveries are for deposits >0.1 Moz Au or >0.1 Mt Cu-eq Data from 2005 onwards have been adjusted for unreported deposits
MinEx Consulting
Strategic advice on mineral economics & exploration 15
Significant Saskatchewan (Uranium)
discoveries in the World: 2004-2013
Carparthian Belt Alaska/Yukon Northern
Ontario China & Far East Russia
SW USA/ Mexico
West Africa Central Africa Latin America
Base Au Metal U O Australia Other 3 8
Giant Major
Moderate Ten current “Hot Spots”
N = 605 605 deposits found in the last
decade Note: Excludes Bulk Mineral discoveries. Note: “Moderate” >100koz Au, >10kt Ni, >100Kt Cu equiv, 250kt Zn+Pb, >5kt U3O8
“Major” >1Moz Au, >100kt Ni, >1Mt Cu equiv, 2.5Mt Zn+Pb, >25kt U3O8 “Giant” >6Moz Au, >1Mt Ni, >5Mt Cu equiv, 12Mt Zn+Pb, >125kt U3O8 Source: MinEx Consulting © September 2014
MinEx Consulting
Strategic advice on mineral economics & exploration 21
Junior Financing
Cash Reserves and Expenditures have dropped dramatically MEDIAN Australian Junior Exploration Company : 1998-June 2014
During a downturn, “in-field” exploration &
development expenditures are cut the
most
2013 A$ Million pa
Cash Reserves
Cash Reserves are at an
all-time low Exploration & Development
Admin costs tend
to be “fixed”
Administration
Net Other
Note: Survey based on a sample of 125 junior exploration companies listed on the ASX between 1998-2014 “Net Other” includes production and other costs less interest income, mine revenue, Government Assistance and R&D tax credits
Quarterly spend data has been multiplied by 4x to produce an annualised spend rate
Source: MinEx Consulting © September 2014 based on Quarterly Reports to the ASX
MinEx Consulting
Strategic advice on mineral economics & exploration 23
The lack of cash is of main concern to those junior companies with low market caps
Compnaies can always raise cash by issuing new shares ….. but that’s Cash Reserves (A$ Million) difficult if the market cap
is low
There are some companies where Mkt Cap < Cash !!
Market Cap (A$ Million) as at 14 Sept 2014 Note: Cash reserves (as at March-June 2014) for 1980 publicly listed Junior Explorers.
Excludes companies with annual revenues >A$1m. Based on ExRate of A$1.00 = C$1.00 = US$0.90
Source: MinEx Consulting © September 2014
MinEx Consulting
Strategic advice on mineral economics & exploration 25
Junior Explorers with very small market-caps are at most risk of failing
Cumulative Number 100%
Other Exchanges TSX/TSE ASX
80%
60% Mkt Cap ASX TSX Other
40% Depending on the
20%
0% $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20
Market Cap (A$ Million) as at 14 Sept 2014
Note: Based on an analysis for 1980 publicly listed Junior Explorers - 1258 on the TSE/TSX, 589 on the ASX and 133 on other exchanges (such as the CSE, NYSE, AIM, NEC, NZE,OTC and NEC and Pink Sheets). Based on ExRate of A$1.00 = C$1.00 = US$0.90
Source: MinEx Consulting © September 2014
MinEx Consulting
Strategic advice on mineral economics & exploration 26
Other Exchange
Mkt <A$0 .5m 1% 12% 20%
jurisdiction 5-30% of Juniors are at risk of
<A$1m 5% 26% 30% <$A$2m 17% 42% 48%
going under
Mining & Exploration Challenges
• Urgently adopt a long-term approach to the mining industry • Mining will still be for several decades a solid base for the economic
development of the country • Guarantee the implementation of future copper producers in Peru • Increase investment in mineral exploration to expand reserves and resources
and discovery of new deposits. • Promoting mineral exploration is essential to increase both metal production
and long-term resources • Ensure that initial exploration projects can become mining operations • Both financial and technical incentives are required • Excessive social-environmental barriers have to be removed to allow the
development of a modern, competitive, responsible and sustainable mining industry
• Despite of the effort of the government and the MINEM to reduce unnecessary environmental bureaucracy, other environmental instances have not changed their anti-mining attitude
• Companies, INGEMMET and academia urgently need to joint efforts for a sound scientific and technical development of the mining industry
• Technical improvements are needed to promote exploration: – INGEMMET offers 1:100,000 and 1:50,000 scale regional maps covering the
whole of the country and most of the territory is also covered by drainage geochemical sampling.
– Regional geophysical surveys (magnetic and radiometric) are insufficient. – As exploration matures, the need to improve, innovate and implement new
geophysical exploration methods will increase. – Radiometric age data is extensive, but still needs to be expanded. – Isotopic studies useful to distinguish most productive mineralized systems and
to identify mineralization sources are still very limited. – Studies of magmatic arcs related to mineralized systems are insufficient.
Mining & Exploration Challenges