Why the Money Stopped Flowing Underground

In February 2026 gold was trading close to its record. Since 2022 exploration budgets had not kept pace. In the previous article we set out the gap: record prices, few major discoveries, and a grassroots share of exploration budgets, across all metals, that has fallen from about half in the late 1990s to 21% in 2025.¹ Here we look at why.

We trace the gap to three forces that reinforce one another: corporate capital allocation, investor caution and long approval timelines. Tighter money from 2022 made investors more cautious still.² Together they leave the search for new gold deposits short of money even when the gold price sets records.

Capital discipline

The commodity price slump of 2011 to 2015 forced the mining industry to change course. The 40 largest miners wrote down about US$199 billion of assets between 2010 and 2015.³ Boards replaced chief executives and made capital discipline the rule.

The strategy worked on its own terms. Balance sheets improved. Free cash flow margins expanded.

But capital discipline, applied rigidly over a decade, has a cost that does not show up in quarterly results. When prices rise, the first calls on cash tend to be dividends, buybacks and the mines a company already owns.

Buybacks return capital. They do not drill holes.

This is not, in itself, misallocation. Shareholder returns, sustaining capital, development and exploration serve different purposes. Major producers did increase their gold exploration budgets in 2025, though with a strong emphasis on ground around producing assets.⁴ The question is whether a capital plan leaves room to test new ideas, and whether that room survives a drill result that overturns the geological model.

The largest producers have also added reserves by buying them, as in Newmont’s purchase of Newcrest and Barrick’s merger with Randgold.⁵ Acquisition redistributes existing ounces without adding new ones.

Investor caution

The second force is generalist investors’ caution towards mining equities.

Some investment mandates exclude extractive industries as a category. Junior exploration companies are the most exposed to any loss of investor interest. Juniors make a large share of discoveries. In Australia, for example, they found 73% of the mineral deposits discovered between 2012 and 2021.⁶ Their business model depends on equity markets. They have no revenue, no operating cash flow and few other sources of funding.

Juniors cut their gold exploration budgets by 21% in 2024, to about $1.8 billion.⁷ Across all metals, junior and intermediate companies raised $10.3 billion in 2024, 12% less than a year earlier.⁸ Fundraising more than doubled in 2025 as prices rose, but much of the new money went to development-stage projects, and money raised is not the same as money spent on exploration.⁹

The companies most likely to make the next discovery are often the ones least able to fund the work.

Memory plays a part too. Many fund managers who allocated to mining at the peak of the last boom took severe losses in the downturn that followed. Even as the price climbed through 2025, much of the new money went to later-stage projects.

Approval timelines

The third force is time. Bringing a mine from discovery to production takes about five years longer than it did for mines opened in 2005 to 2009, and longer exploration, study and approval stages all contribute.¹⁰

This is not an argument against environmental regulation. Responsible development requires rigorous assessment, and the outcome depends on communities as much as on regulators. The issue is the predictability of the process.

Long and uncertain approvals weigh most on greenfield work, because a new discovery has to pass every stage, while an extension can often build on permits already granted. Conditions differ widely between countries, and within them. For an explorer, broad rankings of whole regions are less useful than specific questions: what rights and access the next stage of work requires, what evidence shows they are in place, and what could stop a programme from proceeding.

In our experience of working in underexplored regions of Africa, the task goes beyond the cost of compliance. It means a permanent presence in each country where a company holds ground, respect for how each licensing authority works, and the capacity to meet every filing and reporting requirement on time. These capabilities take years to build and cannot be bought with capital alone.

When most companies make the same rational choice, to extend an existing mine rather than start a new approval process, the collective result is an industry that finds fewer new deposits.

Who fills the gap

These three forces compound. Major producers favour the ground they know. Juniors depend on a market that funds them unevenly. The projects that do advance face timelines of well over a decade.

The longer the gap persists, the fewer new mines are likely to be ready in the 2040s. Most gold produced today comes from deposits found well over a decade ago. On lead times of 16 to 18 years, a deposit found in 2026 would start producing in the early 2040s.

Capital and budgets do move in cycles, and 2025 showed that money returns when prices rise. What has been slower to return is patient funding for early-stage ideas.

If the listed mining industry does not fund enough of that work, the question becomes who will. The characteristics required are specific: patient capital that is not judged quarter by quarter, scientific capability that reduces exploration risk and cost, and a willingness to work in underexplored regions.

These requirements describe the kind of firm we are trying to build, as a complement to the listed mining industry and not a replacement for it. Ownership structure alone proves nothing about exploration quality. What matters is whether the capital can fund learning without losing discipline.

References

1. “World Exploration Trends 2026: what the latest data says about budgets, risk appetite and the project pipeline,” S&P Global Market Intelligence, 10 March 2026; “Budget allocated to grassroots exploration at all-time low,” Mining.com.↩
2. “CES 2023: Monetary tightening weighs down exploration activity,” S&P Global Market Intelligence, 8 November 2023.Added in revision↩
3. Mine 2016, PwC.↩
4. “Gold Exploration Recovers on Record Prices, But a Thinning Pipeline Poses Long-Term Risks,” S&P Global Market Intelligence, 4 June 2026.Added in revision↩
5. “Peak Gold: Is the World Running Out of Gold?” The Oregon Group, October 2025; company annual reports.↩
6. “Outlook for the Australian junior sector,” MinEx Consulting, June 2023.Added in revision↩
7. “CES 2024: Gold exploration budgets down on value-oriented strategies,” S&P Global Market Intelligence, 20 November 2024.↩
8. “Global exploration budgets fall as juniors tighten belts,” Mining.com, 21 February 2025, reporting S&P Global Market Intelligence data.↩
9. “World Exploration Trends 2026: what the latest data says about budgets, risk appetite and the project pipeline,” S&P Global Market Intelligence, 10 March 2026.Added in revision↩
10. “Average lead time almost 18 years for mines started in 2020–23,” S&P Global Market Intelligence, 10 April 2024; 2026 update on permitting and lead times, 8 July 2026.Added in revision↩