The state’s bullish appetite for gold appears to be waning as exploration spending continues to flat line against surges on commodities such as iron ore, nickel, and uranium.
While price increases for most minerals propelled WA non-gold exploration spending to a near-record of $256 million last year, a 20 per cent increase in the US gold price over the past two years has done little to stimulate gold exploration.
According to the WA Department of Industry and Resources, gold exploration spending rose by just $16 million last year from a 15-year low of $267 million in 2003.
As a percentage of the state’s exploration budget, gold exploration has dwindled to almost 50 per cent – its lowest level in almost two decades.
Chamber of Minerals and Energy of WA chief executive Tim Shanahan said current stagnant gold exploration levels would be felt in about a decade.
“If Boddington [gold mine] proceeds, within five years, 60 per cent of the gold produced in WA will be by just four mines,” he said.
While he conceded there had been a modest increase in non-gold exploration and an invigoration of WA’s nickel sector, Mr Shanahan said because gold was more accessible to junior companies, gold exploration was indicative of wider problems.
“Gold is a litmus test in relation to exploration in WA,” he said.
Although exploration was cyclical, Mr Shanahan said, Australia had failed to adequately respond to current low levels of consolidation and globalisation in the mining sector. As a result other jurisdictions, such as Canada, had recovered better, he said.
Hogan and Partners Stockbrokers head of research Tony Lofthouse said despite the high US gold price, expectations of gold stocks had fundamentally changed.
“Ten metres at 3 grams is a respectable drill intersection and today people just go ‘ho hum’,” he said.
“They forget that 10 years ago results like that would have made a stock run like mad.”
But there remains support for gold.
Renowned WA prospector and shareholder in gold explorer Legend Mining, Mark Creasy, is urging Legend to increase its current monthly $800,000 exploration spend.
Mr Creasy expected things to pick up in 2006 with a gold price rise across all currencies.
