TORONTO, February 21, 2006 — Global mining companies will look to Eastern Europe and former Soviet states in the coming years as they search for new mineral deposits to meet growing worldwide demand. According to PricewaterhouseCoopers (PwC), the profitable cycle in the mining industry is increasing the emphasis on grassroots exploration in under-explored areas. Other areas expected to return significant deposits include Russia itself, Mongolia and China.
“We will see more and more spending on grassroots exploration in the next few years as companies look for very large deposits,” says Paul Murphy, PwC’s Canadian Mining Practice Leader. “Under their previous command and control economies, the tremendous mineral potential in Eastern Europe and former Soviet states was not adequately addressed. As their economies opened up, global interest in these countries has intensified and will continue.”
The goal of grassroots exploration is to confirm the ground is prospective. Companies do not look for a mine right away, but try to pinpoint an area of interest. Several leading mining companies have done this in Mongolia recently. Murphy believes this is a very favourable time for grassroots exploration because many areas of known potential have never been adequately examined. Newer technologies and strong commodity prices have led to significant interest by global mining concerns. Of course, mining companies must always account for political risk when exploring for mineral potential in undeveloped areas.
“The common denominator for these areas is that nobody has applied modern, scientific exploration techniques to the land,” says Murphy. “Applying first-class science will make the difference in grassroots exploration.”
Murphy also points out that in many of the former Soviet states the interest was primarily in copper, not gold. As these economies open up, North American gold companies are now doing grassroots work in these areas of known mineral potential.
“That’s what makes these green fields so enticing,” says Murphy. “These areas are undeveloped. Nobody’s been there before and you have the possibility of making a world-class find."
As well as outstanding mineral potential, Eastern Europe and other former Soviet states have developing local economies, educated workforces and the infrastructure to support new mining projects. “There are some significant known properties awaiting development,” says Murphy. “And this is just what we know about. With up-to-date science applied to promising sites, the potential could be staggering.”
Paul Murphy is an Audit and Assurance Group partner and PwC’s Canadian Mining Practice Leader. Paul has worked almost exclusively in the resource industries for more than 20 years with major international mining, oil and gas companies.
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