S&P Corporate Exploration Strategies 2023

Corporate Exploration Strategies Kevin Murphy, Research Director
Paul Manalo, Research Analyst

Eillen Grace Dela Cruz, Senior Specialist
2023 Metals & Mining Research

S&P Global Commodity Insights
Oct. 25, 2023
S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.
Copyright © 2023 S&P Global Market Intelligence Inc. All rights reserved.
Comprehensive end-to-end intelligence on the mining sector
98,000+ 10,000+ 15 35,000+

public and private mining news articles published commodity cost curves mining properties and
companies, including in the past 12 months across precious metals, 6,000+ operating mines
3,700+ publicly listed base metals and bulks
3,000+ 30+ 70,000+ 2,300+

companies surveyed or years of exploration budget drillholes documented capital offerings
collated in 2023 for their data, the most extensive in 2022 from 1,820 completed by mining
exploration budgets dataset in the industry active projects companies in 2022
Benchmark Exploration Data / Commodity Price Forecasts / M&A and Finance / Reported Production and Financials
Mining Industry Database | Mining News and Research
Permission to reprint or distribute any content from this presentation requires the prior written approval of S&P Global Market Intelligence.
Not for distribution to the public. Copyright © 2023 by S&P Global Market Intelligence. All rights reserved. 3
Speakers
Kevin Murphy Paul Manalo Eillen Grace Dela Cruz

Research Director Research Analyst Senior Specialist
S&P Global Commodity Insights S&P Global Commodity Insights S&P Global Commodity Insights
Agenda
1 Global exploration trends: targets, geography, stage of development
2 Industry Monitor: financing, drilling, Pipeline Activity Index
3 Case study: Copper

World exploration trends, 1997–2023
Macroeconomic and geopolitical headwinds weigh down on exploration activity in 2023
Aggregate nonferrous exploration budget total Number of companies with budgets
24 3,000
$12.8B
Aggregate nonferrous exploration budget (US$B)
21
2,500
budgeted for 2023
Number of companies with budgets

18
15
2,000
3% lower
12 1,500 budgets down YOY
9
6
1,000
2,235
500 companies with budgets
3
0 0
Data as of Oct. 24, 2023.

Source: S&P Global Market Intelligence.
Permission to reprint or distribute any content from this presentation requires the prior written approval of S&P Global Commodity Insights.
Not for distribution to the public. Copyright © 2023 by S&P Global Commodity Insights. All rights reserved 6
Exploration budget vs spending, 1997–2022
Overspending dips as metals prices fall from highs and capital markets become tougher
15
10.1
10 8.9 8.8
6.7 7.0 6.8
6.3 6.1
5.4 5.4
Ratio of actual spending to budget (%)
5.0
5
2.7
1.7
-0.3 -0.7
-3.0 -3.3
-5
-4.9
-6.4
-8.2 -8.0 -7.6
-10
-9.7
-10.9
-12.0
-15
-14.6
-20
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Exploration budget by commodity target
Gold budget falls to 3-year low; copper, nickel, and lithium increase for third straight year
25,000
Gold Base metals Battery metals REE Silver Uranium Others
Gold Base metals Battery metals REE Uranium Silver Others
20,000
Exploration budget ($M)
15,000 4
6
2023
2
1
5
6
2022
7 12
4
10,000 4
10
2010
7
1 46
47
1 54
30 30
5,000
33
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Base metals = copper, nickel, zinc-lead; Battery metals = lithium, cobalt; REE = rare earth elements; Others = diamonds, molybdenum, potash, graphite, vanadium etc.
Exploration budget by commodity target
Gold weighs down total; base and battery metals cushion the dip
↓ 16%
decrease in gold budget
↑12%
increase in copper budget
↑78%
increase in lithium budget
↑19%
increase in nickel budget
Exploration budget by geography
Latin America remains favored region for exploration Australia, Canada drag global exploration
200
Chile
150
Cote d'Ivoire
Argentina
Colombia
Pakistan
100
Guinea
Zambia
Guyana
Canada -8.9%
50
Budget change YOY ($M)

Australia -5.4%
0
Rest of world -3.5%
Nicaragua
Burkina Faso
-50
Ecuador
Peru
Africa -3.4%
Mali
Russia
-100
US 1.4%
-150
Australia
Pacific 8.8%
-200
Latin America 2.3%
-250
Canada
-300

Exploration budget by company type
Majors' budget highest in a decade; other types fall YOY Juniors' share dips for the first time in 5 years
2021 2022 2023

Major Intermediate Junior Government/Other
7,000
100
1.2% 90
6,000
-4.5% 80
Share of global budget (%)

5,000
70
60
4,000
50
3,000 40
30
2,000
20
-8.0%
1,000 10
-15.5%
0
0
Major Intermediate Junior Government/Other

Exploration budget by stage of development
Late-stage exploration bucks the trend Share of early-stage falls drops to record-low
Grassroots Late-stage Minesite 2021 2022 2023

100 6,000
90
5,000 3.8% -3.7%

80
Share of global budget (%)
70

4,000
60
50 -9.8%
3,000
40
30 2,000
20
1,000
10
0
0
Grassroots Late-stage Minesite

Exploration in focus: gold
2021 2022 2023
Canada
$5.92 billion Latin America
↓ 16% YOY Australia
US
2010 2023
Africa
2021 2022 2023 Rest of world
3,000 Pacific
0 200 400 600 800 1000 1200 1400 1600 1800

2,500
Budget ($M)
Gold exploration budget ($M)
2022 2023
2,000
1,500 12%
10%
1,000 1%
Major 1%
44%
Junior 49%
500
Intermediate
45%
Gov't/others 38%
0
Grassroots Late stage & feasibility Minesite

29
Cu
Exploration in focus: copper Copper
63.546
2021 2022 2023
Latin America
$3.12 billion US
↑ 12% YOY Australia
Rest of world
2010 2023
Canada
Africa
2021 2022 2023
1200 Pacific
0 250 500 750 1000 1250 1500

1000 Budget ($M)
Copper exploration budget ($M)
2022 2023
800
5% 4%
600 6%
7%
400 Major
Junior 57%
31%
200 Intermediate 32%
Gov't/others 58%
0

3
Li
Exploration in focus: lithium Lithium
6.94
2021 2022 2023
Latin America
$830 million Australia
↑77% YOY
Canada
US
2010 2023 Rest of world
Africa
2021 2022 2023
Pacific
450
0 50 100 150 200 250
Lithium exploration budget ($M)
Budget ($M)
300
2022 2023
10%
Junior 6% 14%
150
Major
4% 0.1%
14%
Gov't/Other
Intermediate
0 70%
82%
28
Ni
Exploration in focus: nickel Nickel
58.693
2021 2022 2023
Canada
$732 million Australia
↑ 19% YOY
Rest of world
Latin America
2010 2023 Pacific
US
2021 2022 2023 Africa
400
0 50 100 150 200 250 300
Budget ($M)
Nickel exploration budget ($M)
300
2022 2023
200
Major 4%
2% 3% 1%
100 Junior 50%
44%
Gov't/others 42%
54%
Intermediate
0

Market health view on exploration sector, 2019–23
Pipeline Activity Index falls to lowest since late-2020
Aggregate market capitalization Exploration Price Index (EPI) Pipeline Activity Index (PAI)
↓ 23%
200 3,000
180
2,500
mining industry market cap down since
160 March 2022
Aggregate market capitalization ($B)

140
2,000
↓ 9%
Indexes (May 2008 =100)
120
100 1,500
EPI fall since the record high in March
2022
80
↓ 42%
1,000
60
40
500
PAI in September 2023 nearly half of
20 recent high in March 2021
0 0
2019 2020 2021 2022 2023

Junior and intermediate financings, 2018–23
Tighter capital markets pull down fundraisings of juniors and intermediates
Gold financings Base/other metals financings
Specialty commodities financings Number of financings completed
8,000 1,000
$8 billion
900
Funds raised Jan–Sept is the lowest
7,000
since 2019
800
6,000
Amount raised ($M)
Number of financings
700
5,000
600 ↓ 26%
4,000 500 Lower gold and base/other metals
400 funds raised
3,000
300
2,000
↑ 46%
200
1,000
100
Higher specialty commodity
0 0
M J S D M J S D M J S D M J S D M J S D M J S financings
2018 2019 2020 2021 2022 2023

Drilling overview, 2020–23
Year-to-date drilling lower year over year from gold activity slowdown
Copper Lead-zinc Nickel
41,086
Gold Silver PGM
Minor base metals Specialty commodities Exploration Price Index
Total drillholes reported
450 10,000 Drilled holes YTD

400 9,000 23% lower than in 2022
8,000
Number of distinct projets drilled/
350
Number of reported drillholes

Exploration Price Index
7,000
↓ 36%
300
6,000
250
200
5,000
Fewer gold drilled holes YOY
4,000
150
3,000
100
↑ 63%
2,000
50 1,000
0 0 More specialty commodity drilled

S D M J S D M J S
holes YOY
2021 2022 2023

Copper case study — Exploration
5,000
4,500
$3.12B
4,000 budgeted in 2023, 12% higher YOY
3,500
3,000
743
2,500 companies with a copper budget in
2,000
2023
1,500
1,000
34% lower
budget in 2023 than in 2012
500
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Global copper reserves and resources
Producing assets Non-producing assets

3,500
3,200 Mt
3,000 global copper in R&R
2,500
Contained copper (Mt)
2,000
554 Mt
added to global R&R since 2012
1,500
1,000
329 Mt
500
added to producing assets
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Data as of Sept. 5, 2023.

Permission to reprint or distribute any content from this presentation requires the prior written approval of S&P Global Commodity Insights. 24
Not for distribution to the public. Copyright © 2023 by S&P Global Commodity Insights. All rights reserved
Copper discoveries still trending down despite higher budgets and prices
Copper in reserves, resources & past production* Copper in recent initial resources Copper exploration budget
160 5,000
4.1Mt
4,500
140
4,000
Copper in major discoveries (Mt)
120 discovered copper, 2018–22

3,500
100
3,000
Budget ($M)
80 2,500
0.3%
2,000
60
1,500
40 share of discovered Cu in
1,000
the last 5 years to all Cu discoveries
20
500 since 1990
0 0
Data as of Aug. 1, 2023.

Lots of copper is being added so everything is fine… right?
Discovery, exploration and studies End of FS to start of construction Construction to production

• Most copper is at existing mines.
– Limit to how large a mine can get.

Gold mines 11.4 1.8 2.2
– Going deeper is expensive and has a

greater GHG footprint.
– Focusing more production into a limited

group of assets carries operational risk.
Copper mines 13.4 1.9 3.2
• Bulk of copper being added at non-

producing mines have been undeveloped
for decades. 0 2 4 6 8 10 12 14 16 18 20
Number of years
FS = feasibility studies
Data as of May 10, 2022.
Source: S&P Global Market Intelligence
Refined copper market balance to shift back to deficit in 2027
Refined production Refined consumption 800
33
31 600
Refined production and consumption (Mt)
29
400
Refined balance (000 t)

27
25
200
23
21 0
19
-200
17
15
-400
2021 2022e 2023f 2024f 2025f 2026f 2027f
e = estimate; f = forecast.
Data as of Sept. 5, 2023.
World exploration 2024 outlook
Risk-off remains
Aggregate nonferrous exploration budget total
24
21
Exploration budgets expected to fall or
be flat at best in 2024
Aggregate nonferrous exploration budget ($B)
18
15 Producers
Will remain the driving force in
12
exploration
9
Juniors
6
Tougher capital markets restrict junior
3 activities
0 Decarbonization
Exploration of green metals expected
to lead growth
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Corporate Exploration Strategies Kevin Murphy, Research Director

Paul Manalo, Research Analyst

2023 Metals & Mining Research

Oct. 25, 2023

98,000+ 10,000+ 15 35,000+

3,000+ 30+ 70,000+ 2,300+

Kevin Murphy Paul Manalo Eillen Grace Dela Cruz

1 Global exploration trends: targets, geography, stage of development

2 Industry Monitor: financing, drilling, Pipeline Activity Index

3 Case study: Copper

Aggregate nonferrous exploration budget total Number of companies with budgets

Number of companies with budgets

Data as of Oct. 24, 2023.

Gold Base metals Battery metals REE Uranium Silver Others

Data as of Oct. 24, 2023.

Budget change YOY ($M)

Data as of Oct. 9, 2023.

2021 2022 2023

Share of global budget (%)

Data as of Oct. 9, 2023.

Grassroots Late-stage Minesite 2021 2022 2023

5,000 3.8% -3.7%

Exploration budget ($M)

Data as of Oct. 24, 2023.

$5.92 billion Latin America

↓ 16% YOY Australia

2021 2022 2023 Rest of world

0 200 400 600 800 1000 1200 1400 1600 1800

Data as of Oct. 9, 2023.

2021 2022 2023

↑ 12% YOY Australia

0 250 500 750 1000 1250 1500

Data as of Oct. 9, 2023.

2021 2022 2023

$830 million Australia

2010 2023 Rest of world

2021 2022 2023

$732 million Australia

2010 2023 Pacific

Data as of Oct. 24, 2023.

Aggregate market capitalization ($B)

2019 2020 2021 2022 2023

Specialty commodities financings Number of financings completed

Data as of Oct. 9, 2023.

Copper Lead-zinc Nickel

450 10,000 Drilled holes YTD

Number of reported drillholes

0 0 More specialty commodity drilled

Data as of Oct. 17, 2023.

Grassroots Late stage & feasibility Minesite

Data as of Oct. 24, 2023.

Producing assets Non-producing assets

Data as of Sept. 5, 2023.

120 discovered copper, 2018–22

Data as of Aug. 1, 2023.

Discovery, exploration and studies End of FS to start of construction Construction to production

– Limit to how large a mine can get.

– Going deeper is expensive and has a

– Focusing more production into a limited

• Bulk of copper being added at non-

Refined balance (000 t)

To learn more about our global metals and mining solutions,

You can also visit:

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