Follow the money and you discover a class difference in the resources industry not unlike that which dominates the Australian landscape.
Follow the money and you discover a class difference in the resources industry not unlike that which dominates the Australian landscape.
Diggers and Dealers resonated with talk of the contrasting conditions of miners and pure explorers.
The talk was of the relative ease with which companies with a mineable deposit could find funding. It has been a long time since a share placement for a soon-to-be producer has fallen over.
This contrasted with the difficulty those companies undertaking early stage greenfields exploration had raising capital.
The exceptions were those explorers with uranium deposits in Australian states amenable to uranium mining.
At Diggers and Dealers they included Arafura Resources, which is drilling the Nolans Bore project in the Northern Territory, where the Commonwealth Government only two weeks ago assumed control of legislative mining processes, and more particularly Southern Cross Resources, which owns the Honeymoon project in South Australia.
A Perth-based venture capitalist at the conference talked of money drying up in London for the Australian exploration sector, where funds two years ago had poured cash into explorers in anticipation of the resources boom.
Since then, investors had turned to more defensive shares, such as miners offering dividends and steady income and with exposure to booming commodity prices.
The funds’ investors had made their money and moved on, and now it was usually only hedge funds involved in such high-risk investment as exploration offering only the promise of capital gains.
An exploration company boss who presented at Diggers and Dealers explained his funding dilemma.
Exploration is a long-term activity, he said, and only one in a thousand prospects ends up in being a commercial operation.
Typically, it took seven years for a discovery to become a mine. Olympic Dam took 13 years.
“People have gravitated to lower risk investments,” he said.
The exploration sector mimics the underclass of Australia’s economy – a class into which few private groups, let alone governments, are willing to invest but which has its patrons who loudly call attention to their plight.
Diggers and Dealers has been a forum that has proudly discouraged the attendance of politicians over the years, but which this year actively promoted the efforts of the Labor-led South Australian government in supporting exploration.
Forum organisers made available to media, and whoever else was interested, sample bags containing promotional information about SA’s Plan for Accelerating Exploration.
The project has gained great support among resources industry figures, who believe the WA should be doing the same.
PACE promises to fund 50 per cent of an explorer’s drilling costs if their exploration proposal is approved.
The project claims minerals exploration doubled in consecutive March quarters to 2005.
It has funded exploration to the tune of $3 million so far.
Victorian Minister for Energy Industry and Resources, Theo Theophanous, also came to Kalgoorlie to claim his state was open for exploration business.
“The next step should be that the federal and the other state and territory governments should also do something concrete regarding mineral exploration other than to just hold another inquiry,” Diggers and Dealers chairman Brian Hurley said.
