African mineral exploration poised to drop amid lack of funding sources

February 4
9:01 AM 2014

Africa's mineral exploration projects are likely to drop by 15% to 20% in 2014 as the industry runs out of funding sources amid the difficult economic situation, according to David Cox, the senior sales executive of SNL Metals Economics Group. This is what Cox told investors during the 20th Investing in African Mining Indaba held in Cape Town yesterday, according to Independent Online.

Cox explained: "It is clear there is an inverse relationship between juniors and majors; the juniors are driven by access to equity and when those markets are favourable, their profits double, and when they don't they decline."

Mining majors have cut their exploration budgets by 40%, and intermediate firms reduced their budget by 50% last year, Cox observed. Moreover, juniors now preferred to handle projects they could advance amid the lack of funding sources, the report detailed.

African exploration had plunged from 2004 to 2010. However, it had climbed again in the past two years because of the gold exploration activity in West Africa and on the Copper Belt, the report stated.

The top three exploration sites on the African continent are the Democratic Repubilc of Congo (DRC), Burkina Faso, and South Africa. DRC attracts around 15% of the total exploration funding in Africa, Independent Online reported.

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