FH

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Mineral Exploration Trends

Simexmin 2014

Mauricio Ferreira

May 2014

FH

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mexm

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FH

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Price evolution of selected commodities

Last 20 years, april 94=1

Source: Indexmundi

FH

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Mining

A confidence crisis

Market explicit concerns

prices volatility

resource nationalism

social license to operate

costs control

capital discipline

risk management

Source: pwc

FH

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Major miners

Major changes

FH

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Junior miners

Survival

817 juniores with

less than $ 200 k

500 juniores with

market cap < $ 1M

500 juniores with

capital de giro <0

Source: KPMG

FH

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TSX Venture Capital Highlights

Junior Miners

14

23

37

21

11

09 10 11 12 13

Market Cap TSXV Miners, USS$ bi

1287 companies

-70% last 2 years

36

49 52 45

24

09 10 11 12 13

Number of IPO’s

-54% last 2 years

Source: PWC

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Sources: SNL & IFC (modified by FH&G)

Global exploration expenditures

Non-ferrous minerals

2

22

15

??

0

1

2

3

4

5

0

5

10

15

20

25

´94 ´95 ´96 ´97 ´98 ´99 ´00 ´01 ´02 ´03 ´04 ´05 ´06 ´07 ´08 ´09 ´10 ´11 ´12 ´13 ´14

IFC

M

eta

ls P

rice

Index, 1

994=

1

Glo

bal

Explo

ration E

xpenditure

s. U

S$ b

illio

n $15 bi

spent in

2013

30% less than

2012

FH

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151

20

12

43

76

94-98 99-03 04-08 09-13 Total

Glo

bal

Explo

ration E

xpenditure

s. U

S$ b

illio

n

Source: SNL, (modified by FH&G)

Global exploration expenditures

Non-ferrous minerals

$151 bi

79%

50%

last 10

years

last 5

years

last 20

years

FH

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Expenditures & discoveries

Geological success

0

20

40

60

80

100

120

140

160

180

200

0

5

10

15

20

25

´94 ´95 ´96 ´97 ´98 ´99 ´00 ´01 ´02 ´03 ´04 ´05 ´06 ´07 ´08 ´09 ´10 ´11 ´12 ´13

Num

ber

of dis

cove

ries

Glo

bal

explo

ration e

xpenditure

s. U

S$ b

illio

n

Sources: Minex (in McIntosh 2014)

1077 discoveries

$151 bi spent

discoveries

expenditures

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Exploration capital (in)efficiency

2003 a 2012

1

10

100

1 10 100

Dsc

ove

ries

Expect

ed V

alue, U

S$ b

illio

n

Exloration Expenditures, US$ billion

0.46 Row

0.71 Canada

0.60 USA

0.63 SEAsia + Pacific

0.84 LAmerica

1.12 Australia

0.48 WEurope

1.38 Africa

Sources: Minex, (modified by FH&G)

81¢ average return for

every $1 spent globally

in exploration

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0

10

20

30

40

50

60

0

5

10

15

20

25

30

1840 2005

Gold

Gra

des, g

/t

Copper

Gra

des, %

Declining grades

Copper & Gold in Australia

Source: Mudd

FH

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Declining grades

Copper

0

2000

4000

6000

8000

10000

0,5

0,6

0,7

0,8

0,9

1,0

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Copper

Pri

ce, U

S$/t

Copper

Head

Gra

des, %

world average head grade

major producers head grade

copper price

Source:s Crowson, SNL & IFC, (modified by FH&G)

30% decrease

01 to 12

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Increasing discovery depths

Australia

Source: Minex,

FH

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Drilling in Western Australia 1977-2013

19.6

23.2

11.7 3.8

3.4 1.5 0.5 0.8 64.5

0-50 50-100 100-200 200-300 300-500 500-800 800-1000 >1000 Total

Agg

rega

te L

engt

h D

rille

d,

10^6 m

etr

es

Hole Depth, metres

95% shallower

than 500 m

85% shallower

than 200 m

Sources: Minex, (modified by FH&G)

66% shallower

than 100 m

FH

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Models & technology

Risk analysis

Province District Camp Deposit

FH

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FH

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Thank you

FH

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014

Resource nationalism

40 countries considering

increases in government

share of mining revenue

past 3 years

FH

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Global exploration expenditures

Non-ferrous minerals 2013 – US$ 15 billion

ca

13%

us

7% mx

6%

br

3%

pe

5%

cl

6%

au

13% za

3%

cd

2%

ru

5%

ch

4%

eu

4%

w afr

6% e afr

3% pac. is.

6%

fsu

2%

NAmerica

$4.0 bi

26%

SAmerica

$3.0 bi

20%

Africa

$2.1 bi

14%

rsam

6%

Oceania*

$2.9 bi

19%

Eurasia

$2.3 bi

15%

Row

$0.9 bi

6%

Source: SNL, (modified by FH&G)

FH

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20 km

Thank

you