Gold exploration spending was predominant; critical metals had significant growth
Gold exploration was predominant in 2021, as it was in 2020. Exploration expenditure increased by 93% as market variability drove demand for the metal and prices rose to more than $1,800/oz throughout the year.
The Northwest region, which contains the informally designated “Golden Triangle,” continued to attract exploration activity and remained the most prominent centre for gold exploration spending, experiencing a 123% increase as investors capitalized on high commodity prices and available funding for project expansions. The North Central and South Central regions saw significant increases in gold expenditure due to the concentration of gold-primary precious metal projects in these regions, as well as large projects such as Cariboo and Lawyers.
Critical metal expenditure was up in 2021. This increase is consistent with global exploration trends, as demand for critical metals has increased in line with economic growth and recovery in global markets. Copper exploration saw the largest increase, with prices continuing to rally to new highs toward the end of 2021. With the continued post-pandemic recovery and reopening of global economies and record-high commodity prices, we expect demand for critical metals to continue to increase into 2022.
A continued movement towards late-stage exploration
Recent years have seen a shift away from early-stage exploration towards advanced-stage projects as BC exploration experienced a lifecycle reset. Companies elected to focus more resources on maximizing the value of proven assets and operating sites rather than on riskier, grassroots prospects. However, spending in the early stages of the exploration cycle — geophysics, geochemistry, trenching and early drilling stages — did see an increase of 25% from $109m in 2020 to $136m in 2021.
Grassroots and early-stage exploration accounted for 24% of total exploration in 2021, compared to 33% in 2020 and 44% in 2018, as exploration spending continued its trend towards the advanced and mine evaluation stages. A significant increase in metres drilled, favourable commodity prices contributing to the reopening of previously shut mines and large investments in numerous advanced-stage projects contributed to the shift towards later-stage exploration.
As the global economy continues its recovery from 2020, the exploration economy is likely to follow suit. The direction in which focus will be turned remains to be seen, as ongoing geopolitical turbulence and less-than-favourable macroeconomic conditions, exhibited by rising inflation, may continue to contribute to more volatility in the commodities markets.
However, the demand for critical metals such as copper is likely to increase as the push towards a greener world remains a priority, while gold could maintain its high value. In either case, BC has the resources and expertise to capitalize on future demand.