Gold exploration budget hit all-time high in 2012, but future doesn't look rosy

Gold exploration budgets increased drastically since 1999, reaching an all-time high of more than $6 billion in 2012, but the total amount of precious metal found in major discoveries fell short of replacing global production, shows a report by SNL Metals Economics Group.

While it is too early to judge the success of recent exploration, says the report, data for 1990-2012 reveals that miners' annual discovery-oriented gold exploration budget more than doubled between 1990 and 1997 from $930 million to about $2.2 billion.

According to the document, exploration budgets fell in 1998 along with gold prices to recover by 2003, jumping an average of 31% annually until last year.

But as the global mining slowdown hit the industry late last year, resources companies have decided to cut expenses and are refocusing spending on mines already in production, rather than on exploration efforts.

Perhaps that is why SNL is not bullish about the short-term outlook of exploration activities. In fact, the group says that only half the total resources discovered since 1990 has been converted into reserves or put into production to date.

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