The global risk exploration investment announced by Canada Metal Economic Group (MEG) is in step with the change of gold price. The peak of the last round was 1996, when the gold price reached the peak of $430 per ounce, and the exploration investment climbed to $5.2 billion that year. With the decline of gold price, exploration investment has declined simultaneously. 1On March 26th, 1997, the fraud case of Bre-X Company in the century exploration of Busang gold mine in Indonesia was exposed, investors lost confidence in the primary exploration company, and the commercial mineral exploration market entered a downturn. In 2002, it fell all the way to the bottom, and the exploration investment was only/kloc-0.9 billion US dollars. In the second half of 2003, with the increase of gold price, the commercial mineral exploration market in the Soviet Union began to recover. In 2003, exploration investment began to rise, and in 2008, it climbed to a historical high of $6543.8+$04.4 billion. It fell to $8.5 billion in 2009 and rose to 1, 2 1 billion in 2065 (Figure 8- 1).
The periodic change of exploration investment has its inherent reasons. Because a mine has a long period from exploration, feasibility study, mine construction to mine production, it generally takes more than 10 years. When the demand of mineral products market is strong, the exploration investment is stimulated to increase, and then a number of new mineral deposits are discovered and put into production, resulting in the relative oversupply of mineral products market, while the exploration investment shows a downward trend. Because the life of mines is limited, the production capacity of a number of mines disappears, and when the relative supply of mineral products is in short supply again, the exploration investment will rise again and change periodically.
Figure 8- Changes of global risk exploration investment from 1 1996 to 20 10.
Source: MEG website
The characteristics of this cycle are different from the past. The first is the subprime mortgage crisis in the United States. It refers to a financial storm in the United States, which was caused by the bankruptcy of subprime mortgage institutions, the forced closure of investment funds and the violent shock of the stock market. The crisis that led to the lack of liquidity in major global financial markets triggered a global economic recession. Second, in the financial crisis, the role of gold, silver, platinum and diamonds in maintaining value is more prominent, and the prices of some mineral products deviate from their values, showing a trend of financialization, such as iron ore. Third, newly industrialized countries, such as BRIC countries and Cimao countries, performed well in the financial crisis, especially China, which had a huge demand for raw materials, leading to an increase in the price of mineral products. In 2009 alone, the comprehensive price index of six basic metals increased by 3 1.30% over the previous year. The manager of a primary exploration company said to the author, "What's the first feeling when a lion wakes up?"? That is hunger. This is an opportunity for global mineral exploration. " China is called the "hungry dragon" of mineral raw materials by international mining industry.
The above factors have had an important impact on the peak period and cycle form of this round of commercial mineral exploration, so this round of exploration cycle is different from the past. The performance in the exploration investment market is: after a sharp decline in the second half of 2008, exploration investment quickly recovered lost ground in the middle of 2009, and the exploration market rebounded in a "V" shape. It is expected that this round of mineral exploration summit will last longer.
From the third quarter of 2008, in the first few months of the financial crisis, due to the dual effects of the financial crisis and the mining cycle law, the situation of the mineral exploration market is as follows: the first-class exploration companies were hit hard and the marginal grade deposits were ignored; Enterprises that have just entered the industry and obtained mining rights at high prices are facing a crisis; The exploration project is in an emergency, and the prospecting right holder loses the best transfer price of the exploration right. On average, the market value of first-class exploration companies has shrunk more than that of other mining companies, and its market value is only equivalent to110 ~1/5 before the crisis. At the beginning of 2009, a large number of primary exploration companies appeared, with a market value of only about one million dollars and a share price of only a few cents. For example, international KRLResources Company issued 66.53 million shares with a share price of 0. 0 1 Canadian dollar, with a market value of only 660,000 Canadian dollars. The company has 10 gold and base metal exploration rights in Quebec, British Columbia, Saskatchewan and Yukon, Canada, and has prospecting potential. Under the influence of financial crisis and mining cycle rate, the company's business is almost at a standstill. Similarly, there are a large number of primary exploration companies. Due to financing difficulties and the exhaustion of exploration cash, many primary exploration companies closed their offices and stopped their exploration business. Another strange phenomenon is that the company's cash is greater than the company's market value.
Since mid-2009, the mineral exploration market has rebounded rapidly. By the second half of 20 10, most of them have returned to the market value before the financial crisis. Figure 8-2 takes KMK Company as an example, which represents the same trend of primary exploration companies from the third quarter of 2008 to the third quarter of 2009.
Figure 8-2 KMK's V-shaped rebound
Source: stockwatch website.
This "V" rebound only lasted 10 months. From July 2008 to May 2009, the bottom period was only 3-4 months. This fleeting time is an excellent opportunity for the first-class exploration companies to raise funds privately, and it is also a rare bargain-hunting feast for overseas mineral exploration. You can control the listed first-class exploration companies, or control the high-quality mineral rights at a very low cost. It can be said that only a few geological prospecting units and exploration investors in China have seized the opportunity.
If we seize the short window in the first half of 2009, we will get very rich returns. For example, in March 2009, China National Color Technology conducted private financing at a price of 0. 05 Canadian dollars, and purchased 32 million shares of Canaco Resources Inc, a major Canadian exploration company. By the end of 20 10, the market value of the company has appreciated by 100 times. WISCO also seized the opportunity to invest in Adriana Resources Inc, another primary exploration company in Canada, and achieved good results.
The number of participants in the Annual Conference of Explorers and Developers in Canada (PDAC) fluctuates with the change of mineral exploration market. The organizing committee of PDAC announced the number of PDAC participants from 200/KLOC-0 to 2009. During the mining recession in 200 1-2003, the number of participants was relatively small, with only 6,700 in 2006 54 38+0; In 2002, 7,000 people; In 2003, 8,000 people; There were 9,200 people in 2004. With the recovery of the exploration market, the number of participants continues to rise. In 2005, there were 12000 people. 2006 1.45 million; 2007 1.76 million; In 2008, there were 20 162 people. In 2008, the number of participants exceeded the 20,000 mark, and this upward trend was entirely related to the continuous increase in investment in mineral exploration during this period. With the outbreak of global financial crisis and the coming of mining recession cycle, the number of PDAC participants decreased to 18 079 in 2009; 20 10, the number of PDAC participants increased; By 20 1 1, 277 14 people attended the meeting due to the "V" rebound of the mining market, and the participants came from 120 countries, which was a record high. Outside Canada, the countries with the largest number of participants are the United States, Australia, Britain and China.