After rising for six straight years to an all-time high of $14.4 billion in 2008, nonferrous exploration budgets dropped 42% in 2009 as the global economic crisis and declining prices for almost all commodities took their toll on the industry. Metals prices—the primary driver of exploration spending—have improved markedly since bottoming in early 2009. In response, major, inter- mediate and junior companies have all increased their aggregate exploration allocations in 2010. Improvement in availability of equity financings for jun- iors over the past 12-18 months has allowed this group to account for the largest share of the overall increase in exploration spending.

According to MEG, most companies saw year-on-year increases in alloca- tions; however, the industry’s overall appetite for risk has not returned to lev- els prior to the economic downturn. The threat of resource nationalism contin- ues to adversely affect exploration lev- els in certain countries considered to be higher risk, while other countries with elevated risk profiles showed only modest increases.

In addition, early-stage exploration, which tends to be cut first when risk rises (or tolerance for risk declines), has all but dried up in many of these countries, with explorers focused on advanced projects and mines that are harder to abandon.

MEG said its 2010 exploration esti- mate is based on information from more than 3,200 companies, of which more than 2,200 had exploration budgets in 2010. These 2,200 companies (each budgeting at least $100,000) have together budgeted $11.51 billion for nonferrous exploration in 2010, esti- mated to cover about 95% of commer- cially oriented nonferrous exploration budgets. Including estimates for all budgets that MEG could not obtain, the 2010 worldwide total exceeds $12.1 billion.