International mineral development a banker's view

"Mineral deposits are where you find them; they have no allegiance to territorial boundaries. Over the past decade much of the new investment in mining has been outside of continental North America, let alone Canada. The larger Canadian Banks have pursued this offshore business through their multi-national organizations; this reflects both the increasingly international orientation of today's business environment, and to a degree, the competitive advantage of these offshore developments.The current oversupply situation in mineral markets and the increasing maturity of the Developed World Economy reduces the need for new mining projects relative to growth' in GNP. Those that are brought on stream in the future due to their competitive advantage, will continue to be pursued by lenders and equity investors alike. IntroductionProspects facing those who search for mineral wealth were described rather well more than 200 years ago by a Scottish professor of moral philosophy, who also happens to be the father of modern economics.In search for new mines, Adam Smith wrote in The Wealth of Nations, ""there seems to be no certain limits either to the possible success or to the possible disappointment of human industry"".How true that statement remains today, where we are seeing economic cyclical problems compounded by basic fundamental structural change within the mining industry.Despite the enormous advances in earth sciences during the past two centuries, the rewards of mineral exploration still remain uncertain. Even though a promising orebody is found, ultimate profitability may still depend on the vagaries of the marketplace, where large and unanticipated changes in supply, demand and prices can play havoc with the best of calculations.The Canadian mining industry has had its share of disappointment during the past few years, with savage competition, shrinking demand, declining prices, and disappearing profits. But it has also had some share of success, such as at Hernlo, which now seems certain to provide some of the lowest cost gold production in the world"