The mining and minerals sector continues to be an important focus of government and investor attention. As the world navigates political uncertainty and trade instability, companies are budgeting and forecasting for 2026. In an environment where metal price forecasts are critical inputs for resource modelling and capital allocation, it will be interesting to see where the long-term price assumptions are set for base and precious metals. Increased scrutiny from regulators on resource valuations means companies will have to justify their price assumptions to the auditors and their independent experts. In a rising price environment, valuation modelling and decisions regarding the reversal of previous impairments will be the focus of the accounting groups for reporting.

The focus for shareholders will be the record cash flows companies are generating, along with the signals companies convey regarding the uses of those cash flows. Investors will want to hear phrases such as “increased dividends,” “return of capital” and “share buybacks” in earnings releases and on investor calls. Management and boards will want to ensure that cash flows are used to pay down debt levels, sustain efficient operations and for investment in capital and development projects.

One of the themes of this issue is mineral exploration. Budgets for exploration activities are notoriously the first to get cut in a down cycle, while exploration departments are awarded more funds when times are good. The math is clear: the investment return on a greenfield or brownfield exploration discovery far exceeds the return from purchasing production or development assets. The issues management teams are pondering at this point in the cycle are who is best poised to perform exploration and how best to grow shareholder value in the near and medium term with exploration activities.

There is no doubt that the industry must invest significantly in exploration, given the supply and demand imbalance forecasted for critical minerals and metals to meet growing clean energy demands and decarbonization requirements. There is also no doubt that the benefits from production related to successful exploration activities may take decades to accrue, with permitting risks ranking high among the reasons for the long timelines.

Exploration models have historically cycled through strategies incorporating large in-house teams, joint ventures and investments in junior companies with an exploration or development focus. With the increased attention on the importance of critical minerals and metals, the industry is hopefully poised to benefit from streamlined regulations, which may entice increased exploration activities on the ground.