Exploration 1985

Several factors contributed to continued declines in mineral-exploration activity in the US in 1985. Low metal prices and, what appears to be worldwide chronic excess capacity in copper, molybdenum, lead, and uranium, have resulted in mineral-exploration expenditures remaining anemic. Economic recovery could result in a healthier mining industry and more cash flow to fund exploration. This is because general economic activity and US mining industry activity have historically been closely linked. However, as the worldwide economic recovery has expanded, the mining sector has continued its downward slide. New cuts in industry exploration budgets in 1985 shocked those who thought the exploration situation could not become worse. Some personnel and equipment had been redirected from base metals exploration to precious metals in the past few years. Last year, continued reductions in exploration sent many professionals out of the mining industry. Recent staff reductions or consolidations of operations were made by Noranda, Chevron, Molycorp, and other exploration companies. The latest data from the Society of Economic Geologists (SEG) summary of exploration statistics show that professional staff at year end in major US exploration companies (domestic and foreign operations) fell from 2355 in 1981 to 1868 in 1983 and 1277 in 1984. By the end of 1985, two economic trends were established that could improve the future profitability of mining and hence exploration. First, the price of crude oil began a decline. If sharply reduced energy prices increase worldwide economic expansion, the substantial excess capacity in some of the base metals industries could disappear, and prices could improve. Furthermore, if energy price declines reduce mining and processing costs significantly, metals may recapture some lost markets. The decline in oil revenues has already encouraged some oil-producing countries, such as Venezuela, to look toward development of mineral resources to earn foreign exchange for debt repayment. Second, the decline of the dollar by 21% during 1985 could also help US producers meet foreign competition. During 1985, industry restructuring continued as many oil companies sold off mining subsidiaries and minerals properties. Gold, silver in new discoveries Precious metals continued to dominate the announcement of new discoveries and exploration projects in 1985. A review of domestic exploration and development activities reported in several industry journals shows that 60% to 80% of these projects were directed primarily at precious metals, particularly gold. Base metals exploration activities frequently involved polymetallic deposits with gold or silver values. Because much of this exploration was done on identified targets (on-property exploration), the decrease in wildcat or grassroots (off-property) exploration may be more substantial than indicated by reductions in total exploration activity. Significant gold discoveries in 1985 included several in Nevada, among them the Genesis property of Newmont (near the Carlin mine), Goldfields' discovery of the Chimney deposit in Humboldt Co., and Freeport's discovery of two mineralized sites near Jerritt Canyon. Gold exploration continued to be focused in the western US and Alaska, but gold production starts at the Haile mine in South Carolina, and the Ropes mine in Michigan as well as Amselco's feasibility studies on deposits near Ridgeway, SC, are evidence that gold exploration is not limited to the West. The dominance of gold projects in exploration is not limited to the US, as demonstrated by gold dis¬coveries and exploration projects in Australia, Brazil, Canada, the Caribbean region, China, Guinea, Ivory Coast, South Africa, the South Pacific islands, and Thailand. From the standpoint of US metal miners, it is perplexing that worldwide exploration and development is also taking place in copper, zinc, tungsten, and other metals with depressed prices. During 1985, the US Geological Survey's efforts to map the sea floor of the Exclusive Economic Zone shifted from the Pacific Coast to the deep water areas of the Gulf of Mexico and to areas off the coast of Puerto Rico and the Virgin Islands. An atlas containing sea-floor maps of the west coast area was published as US Geological Survey Miscellaneous Investigations Series Map 1-1792. Results of the 1985 surveys are expected to be published by January 1987. Exploration trends - Statistical evidence Data from the SEG showed continued decline in the US mining industry's exploration expenditures through 1984. The share of US companies' domestic exploration expenditures directed toward base and precious metals has increased from 51% to 84% from 1980 to 1983 and to 86% in 1984. US mining companies spent about $0.67 of each exploration dollar in 1984 in the US. However, this represents an increase from earlier years. The 1983 data also show that firms spending more than $5 million on exploration accounted for 77% of exploration expenditures. Since 1981, the Bureau of Land Management (BLM) has been assembling data on claims and an-