According to Richard Davis, of BlackRocks resources division in London. Posting here because of the suggestion that majors will begin to buy juniors again. Since the production shortfall is even more pronounced in uranium I think it works for us with both resources. Of course, we haven't found ANYTHING yet : (

Gold reserves are being exhausted. Barrick Gold, one of the world’s biggest gold producers, estimates that around 15 million ounces of new discoveries were made last year by the gold mining industry. This compares to production of 80 million ounces.

According to Barrick’s analysis, global mine production will fall 10-15 per cent in the next 5 years. This poor success rate in exploration is not due to under funding. Indeed, budgets today are at record levels.

The key issue is that all the big, easy-to-find orebodies have already been found. There is no short term solution to the problem. The average time taken from discovery to production is around 10 years.

This is why M&A activity has been and will continue to be a feature of the equity market. The most efficient way to increase reserves and production is by buying another company. This gives instantaneous growth to reserves, production and sometimes earnings per share. The alternative is to grow organically through the drill bit which could take years and may even be completely fruitless.