For big mining companies like Rio Tinto and BHP Billiton, the future lifeblood is a combination of their exploration and corporate work: finding things on their own, being approached by other companies with deals, or doing acquisitions.
Rio bought growth with Alcan last year and is now fighting off an attempt by BHP Billiton to do that to itself.
Rio says the bid doesn’t value it properly.
In its 2007 annual report, Rio spoke confidently of the work done by its exploration teams, which cost the company over half a billion dollars, or well over double the spending in only 2005.
The best development seems to have been at its Bingham Canyon mine in the US where one, perhaps two major finds could have been made.
"At the Bingham Canyon (US) copper mine, a substantial molybdenum deposit was identified located beneath the copper orebody.
Adding to this discovery, which is still being delineated by deep drilling, was the recognition of new porphyry copper mineralisation beneath the southern pit wall.
"These two new zones of mineralisation point to further discovery potential."
Rio said two greenfield discoveries, the Chapudi thermal coal deposit in South Africa and the Kintyre uranium deposit in Western Australia, were transferred from the exploration unit to product group evaluation teams for further work.
"Kintyre is now being offered for sale," Rio explained.
"One Tier 1 brownfield (made near an existing operation) discovery, the Caliwingina North channel iron deposit, was transferred to Pilbara Iron," Rio also said..
"Order of magnitude studies continued at the Bunder project (diamonds, India) and commenced at the Chilubane and Mutamba (ilmenite, Mozambique), Jarandol and Jadar (borates, Serbia) deposits.
"All are scheduled for completion in early to mid 2008.
"Negotiations continued with the Government of Indonesia on the Contract of Work for the Sulawesi nickel project.
"Significant progress at early stage RTX projects in Australia (zircon), Brazil (bauxite), Canada (potash), Colombia (bauxite) and the US (nickel) is expected to lead to commencement of new order of magnitude studies in the second half of 2008.
"Several other projects are showing early signs of encouragement and could be fast tracked into this stage.
"Exploration by the La Granja (Peru) evaluation team returned significant encouragement with the discovery of four new bodies of porphyry copper mineralisation.
"On Freeport Block A in West Papua (Indonesia), drilling encountered a new zone of copper-gold skarn mineralisation at the Gap target located between the Grasberg and Ertsberg intrusions. Delineation drilling will be conducted from an exploration drift in 2008.
"On the Heruga concession of Entrée Gold near Oyu Tolgoi (Mongolia), operator Ivanhoe Mines announced discovery of the Heruga porphyry copper-gold deposit. Drill intersections included 454 metres at 0.50 per cent copper, 1.43 grams per tonne of gold, and 0.02 per cent molybdenum.
"Near the Eagle deposit (US), drilling by the evaluation team intersected high grade nickel-copper sulphide mineralisation at three satellite prospects. Delineation drilling is planned for 2008.
"At Energy Resources of Australia, the exploration and evaluation program focused on infill drilling to support the previously announced mine extension, as well as the prefeasibility study into a further mine expansion. In 2008, attention will return to defining the Ranger 3 Deeps deposit," Rio said in the report.
The company revealed that net cash expenditure on exploration in 2007 was $US576 million, an increase of $US231 million over 2006.
"This primarily reflects the large number of high quality projects in the exploration and evaluation pipeline, net of US$197 million cash proceeds from the sale of the Peñasquito royalty, shares in Anatolia Minerals, the Southdown iron ore deposit and various other interests during 2007. The pre-tax charge to underlying earnings of US$321 million is net of US$253 million of total proceeds from the divestments mentioned above."
Rio said that net cash expenditure on exploration in 2006 was $US345 million, up $US81 million over 2005.
That means in the space of three years, Rio has more than doubled its exploration spending.
That’s a reflection of the intensity of the resources boom and the need to keep expanding the search area in terms of geography and minerals.
