WA Government Re-Commits to Exploration Incentive Scheme
IN THE LOBBY: The Western Australia Government announced its intention to continue funding the $10 million a year Exploration Incentive Scheme.
One of the more successful initiatives of the previous government, the EIS provides refunds to exploration companies to cover up to 50 per cent of the costs entailed for selected drilling projects.
The scheme has been welcome by the junior exploration sector, particularly by companies looking to drill out greenfields areas.
The Exploration Incentive Scheme has contributed to at least 25 new discoveries including the Nova nickel project (Fraser Range) and Gruyere gold project (eastern Goldfields).
The decision to continue the scheme received plaudits from the industry.
“The Western Australian Government’s commitment to continue the exploration incentive scheme is good news for mineral exploration,” Association of Mining and Exploration Companies (AMEC) chief executive officer Simon Bennison said.
“The EIS is needed to help mineral exploration companies undertake greenfields mineral exploration, which often takes place in remote parts of WA.”
According to AMEC, independent research into the Western Australian scheme has demonstrated the value of the program with each $1 million invested leading to an estimated long run cumulative increase of exploration expenditure of $19.8million.
A separate evaluation of the trendsetting South Australian PACE initiative (Plan for Accelerating Exploration) between 2004 and 2013 showed that an investment in precompetitive geoscientific data and collaborative drilling programmes provided returns on investment of over 20:1.
The WA government also spruiked the scheme’s benefits saying that for every $1 million invested by the government, towards major new projects, the scheme generates $10.3 million in exploration activities and creates 48 jobs over 18 years.
The Department of Mines, Industry Regulation and Safety said it received a 40 per cent increase in the number of mineral exploration (Program of Work) applications during the March and June quarters of 2017, compared to the last half of 2016.
“I’m thrilled to announce the Exploration Incentive Scheme will continue following an increase in mineral exploration activities; this is encouraging news for the Western Australian mining industry,” Mines and Petroleum Minister Bill Johnston said.
“Western Australia’s mineral industry is in its best shape since 2012 – in the first half of 2017, there were 15 mineral initial public offerings on the ASX, four more than 2016.
“The surge of investor interest in gold and battery metals, lithium, graphite and cobalt, is helping Western Australia to emerge more rapidly from the equity funding doldrums.”
The statistic most worth noting in all this is that around 80 per cent of Australia’s current mineral production is from mines discovered before 1980.
The reality is, of course, that these mines are not an infinite supply and eventually will have to be replaced.
With the average turnaround from initial exploration, discovery, development and mining being around ten years the discovery of new deposits is imperative.
“The vast majority of Australian greenfields mineral exploration is done by small, ASX-listed mineral exploration companies reliant on retail investors,” Bennison continued.
“Increasing the attractiveness of mineral exploration companies to these investors will lead to an increase in Australian greenfields mineral exploration.
“While the co-funded drilling component of the EIS will help companies with their innovative drilling programs there remains an urgent need to rollover the Federal Government’s Exploration Development Incentive program and an extension to a more flexible tax incentive program.
“To discover the mines of tomorrow, the industry needs greater investment.”