FUTURE EMPLOYMENT TRENDS:
A SMALL COMPANY PERSPECTIVE

DAVID HARLEY

GUNSON RESOURCES LIMITED

1 THE GLOBAL MINERAL EXPLORATION SCENE

2 RECENT MARKET HISTORY

3 FUTURE TRENDS

4 CONCLUSIONS

MARKET PARADIGMS - 1996

1 Asian economic expansion will drive greatly increased consumption of metals

2 Mining companies are a good investment - good growth/income.

3 The Gawler Craton is a new frontier with an effective new exploration technique (calcrete sampling).

MARKET PARADIGMS 1998-1999

1 Asian economic expansion derailed.

2 Mining companies are a lousy investment (old economy, poor returns).

3 Gold has had it.

4 There is not much gold in the Gawler Craton because no one has found anything economic.

WHAT WENT WRONG?

1 Asian crisis caused by hot money moving in then out, poor corporate governance, corruption.

2 Mining companies expanded supply (bottom quartile syndrome - mega projects to lower unit costs).

3 Exploration spending a major casualty 

* 1995 TO 2000

FUTURE TRENDS - THE GOOD NEWS

1 Metal consumption catching up with production

2 Mining companies now focused on returns to shareholders not market share or unit production costs.

3 Third world out of fashion (indonesia, africa, philippines).

4 Discerning investors becoming interested again. The punters may follow

FUTURE TRENDS - THE BAD NEWS

1 Reluctance to invest in exploration. 

Big companies will not increase spending to old levels eg codelco 'spend more on increasing demand, less on exploration - we are businessmen first, miners second - developing new supply will be a hindrance if demand does not increase". 

2 Liquidity of small exploration stocks. 

3 Long lead times to adequate returns. 

4 Lack of discoveries (chicken and egg effect). 

CONCLUSIONS

1 Employment prospects will improve - steadily

2 An increasing proportion of exploration expenditure will be by junior companies (outsourcing factor). 

3 Job security much lower than in earlier decades.