An Attractive Future for Exploration
Home > Mining > View from the Top

An Attractive Future for Exploration

Share it!
Denis Larocque - Major Drilling Group International
President And Ceo


Q: What is your view of the mining landscape and how is this impacting your business?
A: We are entering into an early stage of the mining upcycle. In recent years, mining activity has improved, mostly driven by senior exploration companies. When the cycle peaked in 2012, half of the exploration in the world was conducted by junior miners. In our case, only 10 percent of our revenue came from junior miners in 2Q19. As soon as junior miners gain momentum and financing becomes available, the industry will gain momentum. There is still a long way to go but I am confident we are going to see this improvement in the next few years. Major Drilling is well-positioned to capitalize on this, as we work for all of the senior mining companies around the world and are known for safety, innovation and quality. Our safety standards match the highest standards in the mining industry. We bring innovative approaches to our customers in order to achieve expected results even in the most difficult drilling campaigns.
Q: How have global mineral prices impacted your operations in the recent years?
A: Our business is mainly driven by gold and base metals. In fact, gold has always represented half of the dollars spent in exploration. Hence, half of our revenue comes from gold companies. To date, gold reserves are down by 35 percent in comparison to 2012’s peak due to a lack of exploration activities. Whether gold prices increase or decrease, companies should start investing in exploration because it takes up to 10 to 15 years to bring a mine into production. Today’s reserves are down to levels that have not been seeing since 2005.
From the base metal side, we are looking at copper reserves, which represent the other half of our revenue. These are projected to experience a big deficit in supply very soon given the lack of exploration in the last five years. Even though the economy might be slowing down, industry is still growing. Copper is being consumed in large amounts and reserves have not yet been replenished. If this continues, copper companies will face large shortages in the next five years. With the rise of EVs, other minerals, such as lithium, nickel and cobalt, will be needed as well. Nickel also faces large shortages, resulting in an increase in its price. I believe current copper prices do not reflect the upcoming shortage and once the market realizes this, copper prices will move.
Q: What is the role of Mexico within your global operations?
A: Mexico has always been an important market for us. Our main activities are in Canada and the US, but the Mexican market is always third and fourth on a global scale. This region has more junior miners than other markets, which is a positive sign. In the last upturn, a great deal of money was raised to develop projects in Mexico and I believe this will be replicated soon, especially with gold.
At the moment, the largest demand is in surface and underground exploration drilling. We are also executing percussive drilling services in underground mines. As Mexico supports junior miners, we expect industry growth will be driven by these players in the coming years. The growth that will come will be directed to surface exploration drilling. In this line, our strategy focuses on specialized drilling. This segment can be different from region to region. For instance, in Chile, the focus is on high altitude drilling, while in Mexico it is based on deep hole projects. In the coming years, we want to dominate this segment.

You May Like

Most popular