Picture: 123RF/王 安琦
Picture: 123RF/王 安琦

Miners and investors are poring over satellite images, tracking drilling rigs and quizzing company executives for clues on whether the sector’s heavyweights are close to a new jackpot discovery.

As Rio Tinto Group searches Australia’s Great Sandy Desert for copper and Anglo American scours a 19,000km² package of land in Brazil, they are among the mining giants stoking excitement over potential reserves that will replenish project pipelines and overturn the industry’s lack of recent success in unearthing deposits.

It is part of a broader global push across the industry that is driving a revival in exploration spending on key metals, forecast to top $11bn after hitting a low of about $9bn in 2016, according to Melbourne-based MinEx Consulting.

To keep tabs on progress, investors in July pressed Anglo CEO Mark Cutifani for details on his company’s campaign, while others are monitoring traffic shuttling in and out of Rio’s expanding project in the Paterson district in Western Australia, and consulting satellite imagery of the region in an attempt to deduce the scale of the company’s activities.

"We have some very interesting targets, but we never say too much about exploration — I don’t want my peers to know what I’m doing," Rio CEO Jean-Sebastien Jacques said in an interview last week. "Though they are looking very carefully, and using even satellite images to try to see what we’re doing."

Australia’s top gold producer Newcrest Mining and iron ore exporter Fortescue Metals Group are among others who have joined the quest for untapped gold and copper in the Paterson region.

The area "is almost untouched from an exploration point of view, because it’s under some sand cover", raising the hope for major discoveries, said Lynda Burnett, MD of Sipa Resources, which is exploring about 10km away from Rio’s camp, and has watched its larger neighbour’s operation swell. "Hopefully Rio might be able to tell us more soon — we’ll just have to be patient."

The recent upturn in exploration is also reviving partnerships between the industry’s heavyweights and smaller, specialist companies, a strategy that "came to a screaming halt" at the start of the decade after the global financial crisis, said Burnett, previously an exploration executive with Newmont Mining.

"Exploration is certainly a key activity for us," Fortescue CEO Elizabeth Gaines said in a Tuesday speech in Kalgoorlie, Western Australia. The iron ore producer is searching for copper to lithium in projects spanning two continents.

Small investments in exploration carry less risk than acquisitions with big price tags, and in the case of copper — where deals have proven hard to find — offer an alternative route to growth, according to Camille Simeon, an investment manager at Aberdeen Standard Investments, which holds Rio and BHP shares. "It can be a sensible approach, rather than buying something."

South32 has been among companies to lead the way on striking new pacts, Burnett said. It has made investments, or joint-venture agreements, with about six companies that have given it an interest in almost 20 prospects from Alaska to Peru, according to a May presentation. In June, the producer agreed a $1.3bn deal to acquire one of the partners, Arizona Mining.

"This approach has given us diversity of options and a cost efficiency that is hard to beat," South32’s head of corporate development, Simon Collins, said in an e-mailed statement.

Rio also has forged a raft of alliances in recent months, looking for copper and gold in Serbia and joining projects in the Paterson province with Alloy Resources and Antipa Minerals. Newcrest has widened its exploration work to take in eight countries.

"What we might see — over the next 12-18 months — is a bit more of that in the exploration space," Justin Osborne, executive director for exploration and growth at Gold Road Resources, told reporters on Sunday at the Gruyere project in Western Australia. The developer and its partner Gold Fields aim to begin production by the middle of 2019 from the country’s the most significant gold find since 2005.

The partnerships also allow cash-strapped explorers — which can have difficulty accessing funds — to keep projects going, and retain at least some exposure when any eventual breakthrough is made.

"The likelihood of you jagging the money hole in the first three years is actually quite low, these things can take time to develop," Sipa’s Burnett said. "That’s really the junior’s role — we all want to make a discovery on the first drill hole, but it’s often hole 100 that does it."