Over the course of gold’s secular bull the demand for this precious metal has skyrocketed. And as a result gold’s primary supply source, mine production, has been forced to respond. Thankfully with the price of gold soaring to all-time highs, there’s been no shortage of mining companies hitting the hills to look for the next deposit.
As a result of more and more miners looking for gold, more and more gold is being found. And thanks to an industry-wide boost in capex to develop these finds, this bull’s exploration cycle has recently started to bear its fruit. This fruit is production growth for three years running, including a 2011 tally that came in at an all-time high.
In peeling away the layers of this production growth, it is no doubt interesting to see where in the world gold’s mined supply is coming from. And thanks to detailed country-level production data provided by various government geological agencies and private consultancies, we’ve been able to see exactly how global gold-mining trends have played out.
Interestingly from a production standpoint our current gold bull has a radically-different look than those in the past. We’ve seen powerhouse countries of yore take huge falls from mining grace, while other countries that had not been known for their gold mining have grabbed this bull by the horns to turn out huge production increases.
As investors global gold-mining trends are something that we should keenly be aware of. But while geographical production data is useful, it is also useful to attempt to understand where the next generation of gold mines is likely to come from. And one of the best ways to do this is to find out where in the world the junior explorers are spinning their drills.
By definition junior explorers are companies that are either searching for gold deposits, or are in the process of proving up the economics of the ones they’ve found. With their exploration-focused models they don’t contribute to supply. But while these juniors aren’t spinning out cash flow, their spinning at the drill bit is a crucial part of the global supply chain.
Unfortunately broad exploration data is extremely hard to come by. Unlike production data, there just isn’t a public formal tracking mechanism that collectively shows where in the world the juniors are concentrating their efforts. Fortunately at Zeal we’ve diligently tracked juniors for the better part of gold’s bull. And we’ve built up a massive database that among many data fields shows where each junior’s projects are located. This allows us to collectively see where this sector is doing its work.
In general we focus on juniors that have their primary stock listings in the US or Canada. And since these markets tend to be the world’s premier destinations for resource companies looking to raise capital, their constituents offer a fair representation of global exploration trends. Per our latest research cycle, we’ve accumulated data on nearly 700 junior gold explorers that operate thousands of projects all over the world. And as you can see in the map below, the concentration of projects is not as one would expect.
Highlighted on this map are the world’s ten largest gold producers, which account for about two-thirds of total mine production. And displayed next to these countries is the percentage of junior explorers that own projects within their borders. Also displayed on this map is a project percentage breakdown by respective continent, inclusive of all projects within that continent. And by our count, the juniors are currently exploring in 73 different countries.
With the world’s top-ten producers spread across five different continents, it is clear that gold mining is a global affair. But what immediately sticks out is the perceived inactivity in the world’s most-productive continent. Asia is host to four of the world’s top-ten producers, with just these four accounting for a whopping 28% of 2011’s 2700 metric tons produced. Yet in terms of junior exploration, this part of the world isn’t seeing much play.