Australian mineral explorers overwhelmingly targeted existing deposits for drilling campaigns in 2022-23, rather than seeking completely new prospects, according to the annual exploration spending data from the Australian Bureau of Statistics.
While many investors may have been disappointed by this shift (as there's nothing like a new discovery to boost share prices), extending existing finds or mines has become the more cost-effective strategy in light of rising costs over the past three years due to the pandemic, followed by the post-Ukraine boom and subsequent decline.
Cost consciousness now appears to be the guiding principle in the resources sector, from operations to exploration, as there is nothing more economical than brownfields drilling in known mineralized areas.
What is encouraging is that spending on exploration remained robust despite the challenging year, partly aided by fluctuations in the weaker Australian dollar (which is expected to provide further assistance in the current financial year).
The lower Australian dollar notably boosted gold, with the local current price exceeding $A3,000 per ounce for extended periods in the closing months of 2022-23 (reaching $A3,009 an ounce early Friday morning).
This meant that gold once again stood out as the top performer in terms of investment, although it experienced a slight decrease. Meanwhile, spending on the search for battery and renewable metals increased for another year.
The ABS data for the 2022-23 financial year revealed that Australian resource exploration reached an all-time high, driven by record-breaking mineral exploration, especially in proximity to existing mines and deposits.
In the 2022-23 seasonally adjusted figures, mineral and energy exploration spending reached a historic $1.039 billion, marking a 1.1% increase year-on-year as of June 30. There was a 5.6% decline in spending on new oil and gas wells, despite last year's price surge following the Russian invasion of Ukraine.
In original terms (without seasonal or price adjustments), exploration spending surged by 19.4% from 2021-22 to $1.070 billion. This included a 21.3% increase in spending on exploration of existing deposits, totaling a record $751.6 million, along with a 15.3% rise in exploration spending to $318.3 million.
Total drilling increased by 16.8% (or 407.8 kilometers) to 2,840.5 kilometers. This comprised a 12.3% rise in drilling on existing deposits to 2,047 kilometers and a 30.15% jump in exploration drilling on new deposits, exceeding 793 kilometers.
Gold remained the most sought-after mineral during the year, with a spending of $315 million, which represented a significant decrease from the $412 million spent in 2021-22.
The "selected minerals" group, which includes copper, silver, lead & zinc, nickel & cobalt, witnessed record spending, totaling just over $282 million, up 20% from $242 million in 2021-22.
Spending on "all other minerals" (mineral sands, uranium, diamonds, and other minerals like lithium) surged by over 50% to more than $206 million from $131 million in the year to June 2022.
Iron ore exploration spending amounted to $186 million in the year to June, down from $201 million in 2021-22, while coal exploration rose to $80.1 million in 2022-23 from $60.1 million the previous year.
Western Australia once again dominated exploration spending among states, with a total of $648.5 million in 2022-23, although it decreased from $674 million in 2021-22.
Petroleum exploration spending saw a 3.7% decline to $234 million, with a 1.9% dip in onshore spending to $152 million and a 7% drop in offshore exploration spending to $82.2 million.
