Metals exploration spending set to jump in 2010--MEG

* MEG sees global exploration spending up 30-40 pct in 2010

* Vast majority of spending will still be focused on gold

* 2010 exploration spending jump to be driven by juniors

By Euan Rocha

SANTIAGO, April 6 (Reuters) - Exploration spending by miners worldwide will jump sharply this year as metals prices rally and financing improves, reversing last year's slump, and a growing share will be spent on gold, according to a senior analyst at the Metals Economics Group (MEG).

In a global study of 2009 spending it released last month, MEG found that companies had slashed their exploration budgets by more than 40 percent to $7.32 billion last year, the biggest one-year decline in two decades, as prices collapsed and junior miners cut spending as financing 614ed up.

But the junior league is expected to lead the recovery this year as commodities rebound. Gold XAU= at $1,125 an ounce remains well above its historical average, while copper MCU3 vaulted to a 20-month peak above $8,000 a tonne on Tuesday.

"Unless we get a major drop in metals prices by mid-year, we are expecting a 30 to 40 percent increase in (exploration) spending this year, from 2009 levels," said Jason Goulden, vice president of research at MEG, an industry consultancy group.

The group's 2009 study accounted for more than 95 percent of worldwide non-ferrous exploration spending in 2009, it said.

GOLD DOMINATES

Gold has traditionally accounted for the vast majority of global exploration spending in the mining sector and looks set to retain the title in 2010.

Roughly 48 percent of global exploration spending went toward gold in 2009. Goulden expects this trend to continue this year.

"Given the strength of the gold price ... we expect that gold will pick up a little more share this year. Whether it reaches 50 (percent), or the low 50 (percent) range is still uncertain," said Goulden.

Base metals typically account for the second largest chunk of exploration spending, with 36 percent of the outlay going toward this segment in 2009. The majority of the spending on the base metals side is focused on copper exploration.

JUNIORS REBOUND

Exploration companies that are almost entirely dependent on equity financings to fund their growth were the hardest hit amid the downturn and slashed spending in a bid to survive the recession.

However, a recovery in the price of metals led to a slew of equity financings at the end of 2009 and this is likely to allow juniors to restart explorations activities that had earlier been halted.

Juniors typically account for the majority of global exploration spending every year, but were outshone by the mining majors in 2009.

Goulden expects the juniors will once again account for the majority of global exploration spending in 2010.

"Last year the juniors accounted for the largest share of the overall decline in exploration spending, but we expect that to swing in the opposite direction this year," he said. (Reporting by Euan Rocha; Editing by John Picinich)