While the gold sector in Western Australia has long led the way in exploration spending, iron ore exploration expenditure has jumped significantly in recent years to be to almost level pegging.
While the gold sector in Western Australia has long led the way in exploration spending, iron ore exploration expenditure has jumped significantly in recent years to be to almost level pegging.
With strong activity in the Pilbara and Mid West regions, iron ore exploration in WA rose 74 per cent to $272.1 million in 2006-07, according to the Australian Bureau of Statistics.
That puts iron ore expenditure just shy of gold, which increased just 15 per cent to $276 million in the last financial year.
The numbers go a long way towards confirming the iron ore sector’s status as being the driving force of the state’s resources boom.
Giants BHP Billiton and Rio Tinto may dominate the WA iron ore industry, but a number of WA-based junior and mid-cap explorers are committing millions of dollars to exploration with the aim of tapping into the lucrative global steel market.
Leading the charge in exploration expenditure are West Perth neighbours Murchison Metals Ltd and Atlas Iron Ltd, with each spending about $12 million on exploration in 2006-07.
Murchison Metals started mining at its Jack Hills iron ore project in the Mid West in late 2006, producing 1.5 million tonnes of iron ore per year, with its first shipment of iron ore in February 2007.
The project is expected to expand to 2mt/year in 2008.
The company undertook resource definition drilling program at Jack Hills, with the ultimate goal of identifying reserves to support the development of the Stage 2 expansion of the project.
As part of the expansion, the company is working towards developing new rail and port infrastructure to support Jack Hills and other regional mines, entering into an agreement with Mitsubishi Development Pty Ltd in June this year to establish a jointly owned infrastructure business.
Exploration activities also commenced at Weld Range West, located south of Jack Hills, during the year.
Atlas Iron Ltd upped its exploration from $4 million the previous financial year, undertaking a significant exploration program at its Pardoo direct shipping ore and magnetite project, and Abydos DSO project, in the Pilbara.
In August, the company raised $85 million in a share issue to fund development and exploration. Its exploration program is worth nearly $35 million.
Atlas Iron was forced to delay its Pardoo project by six months, after the Environmental Protection Authority indicated it would need to do a public environmental review.
Golden West Resources Ltd, which owns the Wiluna West iron ore project, spent close to $12 million on exploration this financial year, according to managing director Gary Hutchinson.
Mr Hutchinson said the company, which originally floated as a gold company, was focused on iron ore exploration because of its comparative price advantage over gold.
“We located iron within 100 metres of the gold deposit, so we will have gold there when we come to mine it,” he said. “Comparing iron with gold prices, it’s [gold] not worthwhile chasing.”
Other big spenders in the iron ore sector were Como-based Aquila Resources Ltd, which spent just under $10 million in exploration last year, and Cape Lambert, which spent about $6 million.
Western Australia made up 95 per cent of the country’s exploration in iron ore in 2006-07, down from 96 per cent in 2005-06 and 98 per cent on 2004-05.
South Australia has experienced a significant jump in iron ore exploration expenditure, up from $900,000 in 2005-06 to $10.1 million in 2006-07.
•The writer has a financial interest in Atlas Iron.
