Where's the money going? The commodities attracting the most attention in exploration
Where mining exploration dollars flowed in 2023 and why it offers clues on future supply shortages
With almost $14 billion USD pouring into mining exploration in 2023, it’s clear the race is on to uncover the next big deposits that could fuel the global energy transition and feed the growing demand for commodities. But which commodities are attracting the most attention, and what does it mean for investors?
With a shorter week on the market and June selling in full swing, the Equities Club team wanted to do a bit of a deep dive into this mining exploration data. We broke it down by commodity, and highlighted the ASX-listed companies we think deserve a spot on your watchlist.
Understanding the long-term trends in exploration spending can be key to identifying future supply shortages and potential price spikes, helping investors get ahead of the curve and potentially reap the rewards when supply shocks hit.
As we’ve said before, supply shortages equal increased prices, and those who benefit most are often shareholders of companies exploring for those commodities when the shock hits.
Our comprehensive research has identified the top 10 most sought-after minerals and helped us pinpoint the ASX-listed companies we think you should keep an eye on.
Gold - $5.9 Billion USD
Gold, the king of metals, has reigned supreme in the exploration world for over two decades now, and by some margin. Almost half of all exploration dollars spent wordwide go into gold - which isn't surprising when you consider it’s becoming more challenging to find and more costly to produce.
In 2023, over 1,300 companies were searching for gold. And with the price of gold soaring to record highs in 2024, we expect to see no slowing down in the number of companies spending big money searching for it.
On our watch list: ASX: STK
With a recent acquisition of a large undeveloped gold resource in Serbia, Strickland Metals is sitting on a project with the potential to grow into one of the largest undeveloped gold deposits globally.
Copper - $3.1 Billion USD
Copper exploration is gaining momentum, with interest in the sector growing significantly in 2023 and showing no signs of slowing down – especially after hitting all-time highs in early 2024.
Despite over 700 companies investing in copper exploration in 2023, no major discoveries were made, and copper resource announcements are at their lowest since 2019. However, we remain optimistic about the future of copper exploration, expecting the investment in this sector to continue to surge as the price of copper escalates.
Lithium - $830 million USD
Lithium, the driving force behind the electric vehicle revolution, has been the talk of the town (and the ASX) for a while now.
A wave of exploration companies have entered the market and spent heavily on discovering lithium.
But with lithium prices cooling off recently, we anticipate a potential slowdown in exploration over the next few years. This could lead to a future supply deficit, sending prices upwards, meaning investors may be able to predict a future supply shock and take advantage of it.
Our investment: ASX: LNR
Lanthanein Resources is Equities Club's first investment and is drilling its targets in Q3 this year; located next to a $2 billion operating lithium mine surrounded by mineralised pegmatites, we look forward to the first drilling on LNR's tenement.
Our first pick: Five reasons we're backing this lithium explorer
Today marks a milestone for Equities Club: our inaugural investment. After countless hours kicking the tyres of hundreds of small-cap companies – scrutinising valuations, projects, pipelines, and the current market for all commodities – we’re thrilled to unveil our first investment:
Nickel - $732 million USD
Despite some fluctuations in nickel production, exploration continued to remain strong through 2023. With value still being attributed to sulphide deposits (the cheaper mineral to process) in tier-one locations like Australia and Canada, we expect exploration to remain strong in the coming years. Producing assets in tier-one locations are reaching the end-of-life in the coming years, meaning more will be focused on uncovering the subsequent big discovery.
Silver - $556 million USD
The silver market is flashing some bullish signals. We're seeing a growing deficit, prices are climbing steadily, and silver's role in the energy transition (think solar panels) is only going to boost demand.
Even though exploration spending on silver dipped a bit in 2023 (down over 10% from 2022), we reckon that's just a temporary blip. The long-term outlook for silver exploration is looking pretty bright.
On our watch list: ASX: SS1
Sun Silver recently listed on the ASX with their large Silver resource based in Nevada. We look forward to watching SS1 continue to drill and develop its resource in the near term.
Silver signals: Is the bull run about to begin?
Is silver gearing up for a major bull run? The silver market is currently experiencing a significant deficit. In 2024, the global silver deficit is expected to jump 17% to a hefty 215.3 million ounces. This growing imbalance between supply and demand is primarily fuelled by surging demand from industries like solar energy, coupled with increasingly tight…
Zinc - $412 million USD
Zinc, often the overlooked member of the base metals family, has seen a bit of a slump in exploration spending. Exploration spend is less than half of what it was back in 2012.
However, like many base metals and the energy transition, zinc plays a crucial role in many applications, including wind turbines. With the demand for renewable energy ever increasing, we think that exploration spending may have bottomed out.
Uranium - $247 million USD
Haven’t we seen a comeback in the demand for uranium and nuclear energy. Governments globally are now looking at nuclear as a clean alternative to renewable energy. The Equities Club team witnessed this at a Singapore energy conference in March this year and the hype hasn’t stopped.
This renewed interest has translated into a major uptick in uranium exploration spending, which has doubled over the past four years. And we reckon this is just the beginning – in our teams’ eyes it will only continue to increase.
Rare Earths - $140 million USD
Rare Earth exploration has surged by 50% year-on-year for the past two years, a clear indication that many governments are recognising the need to diversify away from Chinese supply, which currently dominates over 90% of rare earths globally.
As the rare earth market matures, we expect to see continued growth in exploration, driven by the increasing demand for electric vehicles and wind turbines. This is definitely a space to watch if you're looking for diversification opportunities.
On our watch list: ASX: LYN
Lycaon Resources, nestled in the red-hot West Arunta region, is a rare earth explorer that's caught our eye. This area is buzzing with exploration activity, and Lycaon could be well-positioned to reap the rewards.
The hottest region in Australia right now
Western Australia keeps delivering world-class mining discoveries that ignite a frenzy in one of its regions. These discoveries are revolutionary for the regions where they are found, turning penny stocks into blue chips and transforming the lives of those who invested early.
Platinum - $131 million USD
The platinum market is currently in deficit, which is why we've witnessed a staggering 250% increase in platinum exploration over the past four years. Despite the presence of producing assets in less favourable jurisdictions, the search for platinum in tier-one locations is expected to continue in the coming years. While we don't expect this exploration frenzy to continue indefinitely, we do anticipate a steady increase in the medium term. This could make platinum a solid choice for investors looking for a bit of stability in their portfolio.
Cobalt - $74 million USD
Cobalt exploration has taken a back seat in recent years, with many companies struggling to compete with the massive, high-grade large resources found in the Democratic Republic of Congo (DRC)
The cobalt price has also cooled down significantly since its 2018 peak, further dampening enthusiasm for exploration. Any small price spikes are quickly met with increased supply from the DRC, making it tough for Western explorers to gain a foothold.
The Big Picture
The global mining industry‘s investment in precious metals will only to grow as we see global economic uncertainty. For countries to hit their net zero targets as part of the energy transition, more will have to be spent on exploration.
So, where should you put your money? As always, our advice is simple: do your research, understand the market trends, and position yourself to take advantage of future demand. Remember, fortune favours the brave – but informed decisions are always the best kind.
Interesting, thanks for sharing.