...."Budgets are tracking significantly lower as cost structure optimization becomes key management mantra. The sharp correction in a broad range of non-ferrous metal prices has moved the focus from production growth to cost control, with reductions driven by cuts to i) exploration, ii) G&A and iii) sustaining capex. Global non-ferrous exploration spend in 2014 as a consequence is estimated to decline 26% year-over-year and 48% from 2012 levels based on a survey of 1,961 companies. Junior exploration activity is expected to constitute 32% of spending, with budgets estimated to be down 29% year-over-year vs 26% for the seniors and intermediates. Resource addition in the gold sector fails to match pace of production. SNL estimates that 217 major gold discoveries yielding 1.66Bnoz have been made since 1990, however this has fallen short of aggregate production of 1.84Bnoz (~2Bnoz reserves) over the same period. This trend in conjunction with mined grades tracking higher than reserve grades for the N.A. Tier I's on average since 2006 lead us to believe that cost escalation driven by a lower grade profile at existing operations could put pressure on grass roots exploration spending as companies address declining reserve bases by focusing on brownfields exploration.".....An extract from a publication by Bill Koenig yesterday.