10MA Y200801195967 10MA Y200801195652 A ccording to MEG, in 2007, junior mining company exploration budgets rose to US$5.3 billion, or a US$1.6 billion year-over-year increase, and accounted for approximately 53% of the 2007 exploration budget total. In 2006, junior mining companies’ exploration budgets were US$3.7 billion, or 51% of the total exploration expenditures in that year, which was the first year that junior mining companies accounted for more than half of the annual total budget of mining companies globally. Dependent upon the availability of finance, junior mining companies can have extensive exploration budgets. As evidence of this, NR C reported that 25 junior mining companies operating in Canada each had exploration budgets in excess of $10 million, as compared to a total of 26 intermediate mining companies and major mining companies with budgets over that threshold. A ccording to MEG and as illustrated in the charts below, Canada and L atin America continue to be the two largest regions for exploration expenditures, accounting for approximately 43% (or approximately US$4.3 billion) of worldwide exploration expenditures in 2007. Allocations by target have increased across the range of commodities surveyed by MEG. Gold continues to receive the greatest focus with 42% of exploration expenditures spent on gold projects and base metals projects receiving 36% of exploration expenditures. W orldwide Exploration Budgets W orldwide Exploration Budgets by R egion, 2007 by T arget, 2007 Other , 9% PGM, 3% Diamonds, 10% Base Metals, 36% Gold , 42% Canada, 19% Australia, 12% United States, 7% P e r u, 5% South Africa, 4% Me xico, 6% Russia, 6% Brazil, 3% China, 3% Others, 31% Source: MEG. Canadian based businesses continue to play a significant role in minerals exploration and development globally. A ccording to the NR C, in 2007, Canadian domiciled companies undertook $4.5 billion, or 45% of the total global exploration expenditures. A ustralian domiciled companies were the second most active, representing spending of $1.6 billion. R ecent growth in mineral exploration expenditures has resulted, in part, from increased demand for raw materials from emerging economies, including Brazil, R ussia, India and China (collectively referred to as ‘‘BRIC ’’) and the low supply of metals and mineral reserves due to prolonged weakened investment worldwide in exploration attributable to low commodity prices from 1998 to 2002. The combination of the reserves- replacement requirements of major mining companies and intermediate mining companies and a well-funded junior mining company sector are expected to continue to drive exploration spending upward in 2008. The magnitude of the year-on-year increase, however, relies on metal prices and rising exploration costs. Mineral Drilling Services Market Size Data from the NR C suggests that drilling services made up $1.2 billion, or 47%, of the total $2.6 billion of mineral exploration and deposit appraisal expenditures (across all commodities) undertaken in Canada in 2007. In Canada, this related to approximately 6.6 million total metres drilled. The following graph depicts the amount of exploration drilling and deposit drilling undertaken in Canada between 1997 and 2006. 23