Exploration is the backbone of the mining industry. It remains a mystery, therefore, that during good times, exploration takes the back seat.

Exploration drilling is the backbone of the global mining industry. Image credit: Dando Drilling International

Exploration drilling is the backbone of the global mining industry. Image credit: Dando Drilling International

When margins are high, majors spend money on all sorts of vanity projects or acquisitions, while investors become obsessed with ventures into cannabis, for example.

Funding for exploration projects around the world has gradually dried up over the past five years. Ask any junior exploration outfit what the biggest challenge is when playing the exploration game, and they would without thinking twice reply that access to capital is the one big constraint. Majors, of course, have the money, but they argue that exploration is not that  important, and instead of investing in finding new ore bodies, go on the hunt for brownfield operations, which does not always guarantee a significant increase in resources and reserves, but does, on the other hand, extend the life of mine, and provides the operator with the necessary infrastructure already in place. But whatever the arguments, the fact remains that exploration should be top of mind for anybody with an interest in the mining industry.

The Covid-19 impact on exploration and mining will be significant. Putting exploration projects on ice is tempting, but does it ensure the sustainability of a mine? As we are all aware, demand for most commodities has hit rock bottom and for many it does not make sense to pump money into drilling programmes when profits are negligible. However, it will be of great benefit in the long term.

Although the exploration sector in the rest of the world has taken a big hit, most African projects, for now, have continued in some sort of way. The biggest problem was that expats got stranded either in-country or flew back home and could not return when travel restrictions were implemented. However, the time was not lost, and many exploration companies used the time off to capture data, correlate findings and delineate new targets. And surprisingly, 80% of those that African Mining interviewed, were bullish about exploration projects, especially in the gold sector.

With predictions of the gold price breaching USD2000 per ounce and some saying gold could break through the USD3000 per ounce level, that is no surprise. The prolific gold fields of West Africa became a favourite playground for gold explorers even before the virus, and at lower prices. So, expect a flurry of exploration in the region as soon as lockdown restrictions are eased slightly. The west African craton is prolific and covers huge swaths of land. Several companies have already established themselves in Liberia and Guinea, and we expect some sort of good results from there in the future. Sierra Leone has just completed geophysical surveys, and there are some interesting gold deposits waiting to be unearthed. Although not spectacular in comparison to the prime gold mining regions of the world, it could become interesting in Sierra Leone as exploration companies start moving into unchartered territory. Let us look forward to a prosperous post-Covid-19 world.