No Discovery Means No Supply…the Clock Is Ticking

This article from Mining.Com caught my attention yesterday:

‘BHP earns right to take 75% stake in Cobre’s Botswana projects’

You can read the full piece here.

To summarise, BHP has signed a deal that gives it access to 75% of Australia’s Cobre’s Kitlanya projects in Botswana.

In exchange, BHP will hand over $25 million to Cobre to fund exploration activities.

Cobre is just one of several tiny explorers hand-picked by BHP to participate in its ‘Xplor Program.’

While that sounds more like a trivial middle-school science competition, ‘Xplor’ is actually the backbone of BHP’s future supply strategy.

This is the world’s largest mineral producer, so what happens here impacts all of us.

So, are we in safe hands with the Xplor Program?

Mining Memo’s Take

It’s a common misconception that most discoveries come from the junior mining sector.

Traditionally, this was up to major mining firms like BHP, Rio Tinto, Anglo, and Glencore.

These players have led the bulk of the world’s biggest discoveries.

But the days of the big miners ploughing hundreds of millions into exploration are fading rapidly.

So, too, is their focus on holding large teams of highly specialised geologists that could be deployed worldwide, hunting for the next major prize.

The major’s commitment to exploration is just a whimper of what it once was.

And that’s the challenge here…

Given that the majors have rescinded their responsibility to find new deposits, uninterrupted supply of what we take for granted… raw materials like copper, aluminium, and zinc… is no longer guaranteed.

The basic building blocks for construction, manufacturing and virtually every aspect of our material world.

How does our modern world cope if the mineral supply falters?

No one considers this possible because it’s NEVER happened.

However, as the deal with Cobre shows, for the first time, ‘big mining’ has abandoned its role in the low-probability business of trying to find new ore deposits.

They’ve shovelled that responsibility onto micro-juniors.

If you’re a BHP shareholder, you might think that’s a wise strategy…preserve capital and let the juniors bear the bulk of that risk.

But don’t think for a second that drip-feeding a select handful of capital-starved juniors will enable the majors to re-supply their declining operations.

History shows that uncovering multi-decade mines requires vast capital and a pool of technical experts.

Micro-juniors cannot access the cash or personnel to make these mega-discoveries.

What’s happening right now is unprecedented.

The world’s largest miners have abandoned discovery efforts, and that will affect everyone.

Look around you; we live in a material world; everything around us comes from mining.

Next week, I’ll explain why this problem will become far more visible in the years ahead as existing operations run dry without new mines to take over.

Plus, I’ll share the methods you can use as an investor to find opportunities to capitalise on this problem.

Until then,

Regards,

James Cooper,
Editor, Mining: Phase One and Diggers and Drillers

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

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