Petroleum Exploration Stats Jump as APPEA Prepares for Battle

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THE CONFERENCE CALLER: With the RIU Good Oil Conference just around the corner the Australian Petroleum Production and Exploration Association (APPEA) seems to have resigned itself for a soon-to-be elected Labor Federal Government and is steeling its loins against possible new regulatory battles.

The lobby group shot off a broadside at the Federal Labor Party’s proposal for permanent controls on Australia’s gas exports, declaring these would not lower long-term domestic gas prices.

APPEA’s position is that more regulation and political uncertainty risks deterring investment in new gas supply which, over time, will mean higher prices.

“Like manufacturers, gas producers compete in a tough global market and understand the pressures to stay competitive,” APPEA chief executive Dr Malcolm Roberts said.

“However, trying to regulate prices does not tackle the real problems – the rising cost of producing gas and tightening local supply in Victoria and New South Wales.”

APPEA highlighted the measures proposed by the Labor Party it believes demand further discussion, including:

1) A decision to make the export controls permanent should be informed by the findings of the scheduled review in 2020. Making export controls permanent will compound the already significant level of sovereign risk created by the Australian Domestic Gas Security Mechanism, affecting more than $250 billion invested in Australia by both domestic and foreign investors. It sends an alarming signal to investors considering future investment in Australia.

2) References to a ‘benchmark price’ from the ACCC’s December 2017 report are out-of-date and misleading. The ACCC found, in its most recent (July 2018) report “… domestic price offers have reduced substantially and converged with export parity (LNG netback) prices at Wallumbilla”.

3) More broadly, the ACCC has consistently cautioned that gas prices are influenced by many factors and these factors change over time. These factors include the cost of transportation, the cost of gas production, the “non-price” terms customers request in their gas supply agreement and the role of domestic short-term gas trading markets.

4) It is unclear what “new powers” the ACCC requires. The ACCC is already actively monitoring the gas market and providing regular reports through its Gas Market Inquiry 2017 2020 and has significant powers through the Competition and Consumer Act 2010 to act against any anti-competitive behavior it observes in any market across the Australian economy. and

5) Proposals to strengthen ‘use it or lose’ provisions appear unnecessary and potentially counterproductive. A recent review for the COAG Energy Council found “… no evidence that gas is being withheld (or warehoused) from development and production …” and “… to apply a use it-or-lose-it policy to deliver downstream objectives risks longer term investment distortions and higher prices.”

APPEA believes the only effective way to put downward pressure on gas prices is by creating more supply from more suppliers and that supply needs to be from a local source to avoid customers paying significant shipping costs.
APPEA cited a report from June this year from the Australian Energy Market Operator (AEMO), in which it forecast that it does not expect supply gaps until 2030.

This was supported by similar findings of the Australian Competition and Consumer Commission (ACCC) in its July 2018 Gas Market Inquiry 2017-2020 report.

“The export controls introduced last year were not needed to ensure supply in 2018 and will not be needed in 2019 or into the future,” Roberts said.

“APPEA members are committed to supplying local customers at competitive prices.

“The east coast LNG projects are offering all their uncontracted gas to domestic buyers first.”

According to APPEA, the ACCC reports that three LNG projects in Queensland have contracted to sell 305 petajoules (PJ) of natural gas to domestic customers in 2018 – about half of east coast demand – and are likely to do the same in 2019.

Companies operating from offshore Victoria, South Australia and other Queensland gas projects will be responsible for meeting the rest of demand.

ACCC monitoring of the market shows that prices have fallen sharply over the last twelve months.
“APPEA encourages all governments to focus on lasting solutions,” Roberts continued.

“It is bizarre that Labor in New South Wales and Victoria supports bans on local gas projects while Federal Labor now proposes to penalise the gas industry in states that do support development.

“Restricting exports and killing jobs in Queensland does not lower gas prices in Sydney and Melbourne.

“Unless new gas resources in New South Wales and Victoria are developed, families and businesses in those states will pay more than those in states continuing to develop new supply.”

What’s worth taking note of is that the Petroleum industry is currently enjoying surge in activity that is resulting in some positive statistics.

Latest figures from the Australian Bureau of Statistics (ABS) shows the trend estimate for total petroleum exploration expenditure in the recently-completed June quarter 2018 rose 10.6 per cent ($25.3m) to $262.9 million.

Exploration expenditure on production leases rose 0.6 per cent ($0.3m) and exploration expenditure on all other areas rose 13 per cent ($24.4m).

The seasonally adjusted estimate for total petroleum exploration expenditure rose 84.8 per cent ($149.9m) to $326.6 million for the June quarter.

Although exploration expenditure on production leases fell 4.2 per cent (-$2.2m) the news was all good elsewhere with exploration expenditure on all other areas rising 122.2 per cent ($152.2m).

Western Australia maintained its slot as number one Resources State by being the largest contributor to the increase in the trend estimate (up 19.8 per cent, $26.3m) and the largest contributor to the rise in the seasonally adjusted estimate (up 181.2 per cent, $137.9m).

ONSHORE

The ABS trend estimate for onshore petroleum exploration expenditure rose 7.7 per cent ($6.4m) to $89.3 million during the quarter and expenditure on drilling rose 8 per cent ($4m) along with other onshore petroleum exploration expenditure that rose 7.6 per cent ($2.5m).

The seasonally adjusted estimate for onshore petroleum exploration expenditure rose 29.3 per cent ($22.5m) to $99.4 million with expenditure on drilling up 6.4 per cent ($3.3m) and other onshore petroleum exploration jumping 75 per cent ($19.2m).

OFFSHORE

The trend estimate for offshore petroleum exploration expenditure rose 12.1 per cent ($18.7m) to $173.4 million.

Offshore expenditure on drilling rose 34.6 per cent ($24m) and other offshore petroleum exploration expenditure bucked the trend by falling 6.2 per cent (-$5.3m).

The seasonally adjusted estimate for offshore petroleum exploration expenditure rose 127.7 per cent ($127.4m) to $227.2 million.

Expenditure on drilling rose 472 per cent ($118m) and other offshore petroleum exploration expenditure rose 12.6 per cent ($9.4m).

 

The RIU Good Oil Conference 2018

The Good Oil Conference will bring you up-to-date with the exciting developments taking place in the oil and gas industry.

There will be two days of presentations from the leaders of the country’s emerging oil and gas companies on recent developments and new discoveries plus an outline for the sector’s future.

The conference also affords the opportunity to meet these industry leaders at what has become the most popular conference in Australia for the mid-tier and junior sector of the oil and gas market.

The RIU Good Oil Conference 2018 will be held at the Hyatt Regency Hotel Perth, Western Australia, located at 99 Adelaide Terrace Perth.

To find out more and to register CLICK HERE

 

South Africa Looking to Increase Mining Investment

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THE CONFERENCE CALLER: The reinvigoration of South Africa’s beleaguered mining industry is hoping to attract new investment of more than $11 billion, or around 122 billion rand, over and above current project commitments.

The outlook was posted on the second day of the three day Paydirt 2018 Africa Down Under mining conference in Perth by the chief executive officer of the Minerals Council South Africa, Roger Baxter.

Recognising that the minerals rich country had not reached its full mining potential in the past decade, Baxter said key findings of an industry report last year for change and now backed by government, pointed to a much stronger outlook if implemented successfully.

“The current mining capex for the next four years for South Africa is R145 billion,” Baxter said.

“Potential new capital expenditure under a more certain and conducive environment would add a further R122 billion (A$11 billion plus) to this outcome.

“This is 84 per cent higher than current commitments.

“Our findings last year showed that most companies had held back investment due to South Africa’s then mining policies and uncertain regulatory environment.

“This dampened outlook also included certain minerals, due to adverse economic conditions.

“But our modelling has also shown that if South Africa gets back into the top 25 per cent of favoured mining investment destinations globally, this would create a further 200,000 jobs.

“It would profound positive impacts on South Africa’s minerals supply chain, export earnings, taxation contributions and ultimately, the much desired transformation of South Africa’s mining industry to where it should be, given its mineral wealth.”

The Minerals Council chief said reforms enacted this year were showing green shoots for the industry, and would come to a head with a proposed international investment summit in November this year.

The only thorns among the green shoots included anxieties around talks on land expropriation without compensation and the agreement yet on a satisfactory Mining Charter.

Baxter acknowledged that South Africa’s once internationally renowned mining reputation, had, “been through a tough patch”.

“From 2013 to 2017, real net capital formation in South Africa’s mining sector declined by 50 per cent,” Baxter said.

“The investment pipeline has also been weak – the country attracting just one per cent of total global exploration expenditure last year compared to 14 per cent for each of Australia and Canada.

“Of the South African exploration allocation, only 10 per cent of that was on greenfields activity – meaning a much weaker and limited pipeline of new mining projects being developed.”

Baxter said the Minerals Council believed the economic and transformational potential of mining in South Africa was huge – and an invigorated best practice approach could see mining investment double in just four years.

 

Ghana Keen to Shift Focus to Industrial Metals

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THE CONFERENCE CALLER: One objective of African mining powerhouse, Ghana, is to bring about more sustainable extraction of its mineral wealth.

Although it is starting to deliver on this, the country is determined to diversify into non-traditional mining areas.

Speaking on the second day of the three day Paydirt 2018 Africa Down Under mining conference in Perth, Ghana’s Deputy Minister for Lands and Natural Resources, the Hon. Barbara Oteng-Gyasi, said that for the past two and a half decades, the country had attracted mining sector investment to the order of US$18 billion.

“This has contributed to a trajectory growth in our gold production in the opening half of this year, a provisional 2.4 million ounces compared as against 2.1 million ounces in the first half of 2017,” Ms Oteng-Gyasi said.

“Production of manganese in the same comparable periods rose to 1.9 million tonnes against 1.3 million tonnes previously.

“Such performances are indicative of the success of our strategy to ensure sustainable extraction of Ghana’s mineral resources through more intensive monitoring of mining activity to ensure environmental compliance, improved technical capacity of our small-scale miners, and decentralising government regulatory processes.

“Not surprisingly, our mining sector has contributed strongly to Ghana’s overall provisional growth in GDP with the mining-quarrying sub-sector recording the highest year-on-year quarterly GDP growth rate in the Q1 2018 this year.”

The Deputy Minister also noted the Government was focused on better integrating the mining sector into Ghana’s economy and value-add opportunities, including mining related industrial processes, and wanted to reduce any over-dependence on traditional minerals.

Ghana has historically been a major African producer of gold, manganese, bauxite and diamonds.

The current focus is to build an integrated aluminium industry from bauxite deposits in the country.

However, the move to wider opportunities would now include intensified exploitation of Ghana’s industrial minerals, including solar salt, granites, lithium, and base and clay metals.

 

Diggers & Dealers 2018 Awards

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THE CONFERENCE CALLER: Diggers & Dealers ends up each year with the gala dinner with the Forum’s award winners announced.

 

DIGGER AWARD
Canadian-based Victorian-operating interloper, Kirkland Lake Gold picked up the Digger Award following a year that saw the company increase its mine production by 70 per cent over the 12-month period, while treating 22 per cent ore.

All from a mine that has operated for several years, the Fosterville gold mine.

In 2012 the mine produced some 90,000 ounces at 4.4 grams per tonne.

In 2017 it produced 264,000 ounces at 15.8g/t with 2018 accounting for 141,000 ounces at the higher grade of 20.5g/t.

The success of the mine has been credited with re-igniting interest in gold in Victoria.

DEALER AWARD
The Dealer Award stayed in Western Australia and will grace the trophy cabinet of Kidman Resources.

The lithium producer struck a Joint Venture with Chilean giant SQM by giving up 50 per cent of the company’s Mt Holland lithium project.

When the deal was announced Kidman had a market cap of $183 million.

Today it sits around the $600 million mark, having fallen back from knocking on the door of $1 billion earlier this year.

This was followed by it becoming a Level-2 Lead Agency, granted by the WA government.

Kidman also signed an offtake agreement with electric vehicle manufacturer Tesla.

Investment Showcase Warmly Welcomes Resources Companies

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CONFERENCE CALLER: Delegates at the Gold Coast Investment Showcase provided organisers with a reason to smile with presenting companies enjoying immediate share price gains.

Day one resources industry presenters were greeted extremely well.

Pioneer Resources (ASX: PIO) jumped after managing director David Crook informed those present of the company’s offtake agreement with Cabot Specialty Fluids Ltd, a wholly owned subsidiary of New York-listed Cabot Corporation.

Pioneer Resources struck the deal, which will result in Cabot (NYSE: CBT) buying 100 per cent of the caesium ore to be extracted from the Sinclair Zone caesium deposit – to be known as the Sinclair mine.

The Offtake Agreement includes a US$4.8 million loan facility to fund mining operations at the proposed Sinclair mine, which is part of Pioneer’s 100 per cent-owned Pioneer Dome project near Norseman in Western Australia.

The Sinclair mine will be Australia’s first ever commercial caesium ore producer.

Matsa Resources (ASX: MAT) joined the fun after managing director Paul Poli announced signing a Memorandum of Understanding (MoU) with AngloGold Ashanti Australia.

Poli lauded the benefits of the deal to the company’s gold mining and exploration activities throughout its Lake Carey gold project which includes the Fortitude, Red Dog and Red October gold mines in Western Australia.

Alto Metals (AXS: AME) MD Dermot Ryan informed of completed soil sampling that the company claims located three linear gold-in-soil anomalies along an interpreted ‘splay’ off the Edale Fault near Sandstone in Western Australia.

Ryan described the Edale Fault as a major deep crustal feature forming the eastern boundary of the Sandstone Greenstone belt, and a potential conduit for emplacement of gold-rich fluids.

The company has received assays from 28 samples out of a total of 340 samples collected near the Edale Fault that have returned anomalous results plus-7ppb gold in three discrete linear zones, each between 1,000 metres to 1,500m long.

Calidus Resources (ASX: CAI) managing director Dave Reeves announced confirmation of further high-grade results from the Coronation prospect and depth extensions below the Klondyke Resource at the company’s Warrawoona gold project, located 25kms south of Marble Bar in the East Pilbara of Western Australia.

Calidus Resources completed initial reconnaissance drilling at Coronation that has defined high-grade strike of 250 metres adjacent to the previously high-grade drilling results.

Impact Minerals (ASX: IPT) managing director Dr Mike Jones garnered some interest following his company announcing prior to the conference of intentions for work to be ramped up over the next six months at four of the company’s 100 per cent-owned gold and base metal projects across Australia.

Impact Minerals has drill programs planned for the Commonwealth gold-silver-base metal project in New South Wales, the Clermont gold project in Queensland and the Mulga Tank gold and nickel project in Western Australia.

The work will also entail the first bulk samples taken at the Blackridge conglomerate gold project in Queensland, in which Impact recently acquired an option to earn 95 per cent.

On day two, Meteoric Resources (ASX: MEI) managing director Dr Andrew Tunks provided plenty to think about in the cobalt space.

Meteoric announced completion of a closely spaced, ground based geophysics program of induced polarisation (IP), resistivity and magnetics at the company’s 100 per cent-owned Mulligan cobalt project in Canada.

Meteoric Resources had the ground based gradient IP / resistivity and magnetic survey conducted to investigate the location and extent of cobalt rich polymetallic veins that were previous mined at Mulligan.

These surveys outlined numerous target regions where very little historic work has been reported and where no modern exploration techniques had previously been applied.

AMEC Convention to encourage confidence in Australian exploration

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THE CONFERENCE CALLER: Members of the resources sector will gather next week at the Crown in Perth for the AMEC Convention 2018.

Conference organisers, the Association of Mining and Exploration Companies (AMEC) said the upcoming event will showcase the Australian mineral exploration and mining sector and promote Australia’s resources potential.

The AMEC Convention is one of the key events for the industry and is one of the first marked off on office calendars at the start of each year.

The theme for the AMEC Convention this year is ‘Building Confidence’ and delegates will hear from a range of speakers focusing on this theme throughout the two days.

In addition to showcasing the Australian mineral exploration and mining sector, the Convention is the opportunity for companies and delegates alike to share stories of excellence and promote the potential of the country’s mineral resources sector.

The event will also provide regulatory direction and education for the mining community, which will be valuable for mineral explorers, producers, regulators, investors and service providers, as well as providing extensive trade show and networking opportunities.

“The AMEC Convention 2018 is a must attend event for the Australian exploration and mining industry, which will see mining’s best and brightest come together under one roof.” AMEC chief executive officer Warren Pearce said.

“As confidence returns to the industry, it is a pivotal time to make new contacts, promote new investment, and seize the opportunity to be a part of this fast-growing industry.”

With this year’s focus on the building of confidence in the industry the AMEC Convention will features presentations from Government and industry professionals plus a number of listed mining companies.

One such presentation will be delivered by former FMG chief executive officer Nev Power, who is slated to deliver the highly-regarded Sir Arvi Parbo Oration.

This keynote address honours Sir Arvi Parbo, the mineral exploration and mining industry leader and Power will take the chance to reflect on his time in the mining industry and how it has evolved.

The Convention’s Keynote address is to be given by 2018 Australian of the Year, Scientia Professor of Quantum Physics in the Faculty of Science at the University of New South Wales Michelle Simmons.

Professor Simmons built the world’s first electronic devices in silicon at the atomic scale, creating a whole new field of electronics.

She will talk about how this technology will change the resources sector.

The line-up includes two speakers from outside the mineral resources field – Michelle Cowan, inaugural coach of the Fremantle AFLW team who will talk about tackling diversity challenges and Mark Donaldson, Australian Victoria Cross recipient who will speak about building confidence.

“The AMEC Convention is the signature event for our association,” Pearce said.

I encourage everyone associated with the mining and mineral exploration sector to attend.

“There is still time to register and attend.”

Anybody wishing to attend the AMEC Convention 2018 just needs to click on the link below.

 

www.amecconvention.com.au.

 

 

Renewables Out-generating Fossils

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THE CONFERENCE CALLER: Delegates at the Paydirt 2018 Battery Minerals Conference in Perth heard that investment in renewable generation has eclipsed investment on fossil fuel generation in recent years.

Speaking on day one of the Paydirt 2018 Battery Minerals Conference, Future Smart Strategies managing director, Professor Ray Wills, told punters that since 2016, additions of renewable capacity in the power sector has been higher than coal, gas, oil and nuclear combined.

“Rapid, non-linear developments in and uptake of clean technologies – and even more rapid reductions in technology pricing – mean the nature of the global energy market, and in particular the electricity market, is changing both off-grid and on-grid around the world,” Professor Wills said.

“We are also seeing revolutionary shifts in how we do planning, project financing, and engineering for energy – and downstream into network and energy system management.

“A core difference to the technology now being deployed is its ability to be built quickly – and now more cheaply – than any other source of electricity generation.

“Add ever-increasing digitisation and integration for mobile applications – not just phones and tablets, but also power tools and gaming devices, and for personal mobility – also boosts demand for energy storage.”

According to Wills, the arrival of cost-competitive stationary storage offering network services as well as stored energy can deliver on-demand power provision from renewables.

He said a feature of mobile devices needing power is a perpetual pursuit of both energy efficiency in devices to prolong battery life, and battery density improvements to carry more solar and efficient appliances.

This includes lighting and storage that will demand smart energy management utilising AI and machine learning.

As battery technology improves so too does the falls in battery cost reductions, which continue to be consistently demonstrated with a high probability to continue.

Will said the emergence of electric vehicles, and the batteries that power them, has seen the automotive industry move from a “headline a year” to a “headline a day” in the car industry.

“Beyond the basics of all vehicles going electric, there are so many elements changing in the car industry – part of global mega trends in mobility and connectivity and autonomy and the internet of things,” he said.

“From the point of view of minerals for the storage revolution, it is crucial that action is taken quickly so Australia takes a share of the many new jobs (skilled and semi-skilled) in this two trillion-dollar value chain – an opportunity that might just double Australia’s GDP from a single new industry sector.

“In the age of a digital economy, Australia’s next major growth phase can be delivered by down-streaming and value-adding Australia’s lithium and other energy storage related resources.

“The key change with the new trends is that we have moved on from predicting what might happen in the future to measuring it, seeing it happen.

“The only question is just how fast the growth trend is – fast, very fast – or ludicrous?”

 

Western Australia Placed to Benefit from Technology Metal Rush

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COMMODITY CAPERS: Pundits speaking at the at Paydirt’s 2018 Battery Minerals conference in Perth have painted a rosy future for Western Australia as the country’s centre for battery technology commodity development.

Opening Day One of the conference, WA Minister for Mines and Petroleum, Bill Johnston highlighted the state’s potential to become a leader in the pending electronic resources boom.

“Strategic imperative for markets to not be overly exposed to single supplier systems has the potential to smooth out the customer base and increase demand for Western Australia’s resources,” Johnston said.

His expectations were echoed across the two days as speakers lined up to sing the praises of WA’s abundant technology metals resources.

According to Midas Engineering Group director/principal consulting engineer Damian Connelly, the expected demand for battery minerals will create a boom in Western Australia, “bigger and more sustained” than the state’s gold boom of the 1990s.

Speaking at day two of Paydirt’s 2018 Battery Minerals conference in Perth, Connelly said the sector was misjudging the full impact that demand for the precious commodity will have in the short to medium term.

“Make no mistake, the demand for battery minerals will create a WA boom bigger and more sustained than the gold boom of the 1990s,” Connelly said.

“The market and financial institutions are underestimating the huge disruptive change and the speed of change occurring in the technology of the battery market.

“The very demanding technical specifications for battery minerals will limit the suitability of some ores.

“With cobalt, nickel, vanadium and manganese, and exciting new technology will produce the demanding pure specifications required.

“Demand is currently exceeding supply and current expansions will still lag behind for a number of years to come.”

Connelly’s warning rang out the day after it was claimed Western Australia could soon become a global hub for battery manufacturing with the state expected to be the only jurisdiction in the country to produce all raw materials for lithium ion battery production.

Minerals Commodities Limited business development manager Daniel Hastings told the conference that with WA expected to become the only jurisdiction in Australia and possibly the world producing all raw materials for lithium-ion battery production – including nickel sulphate, lithium carbonate and hydroxide, and potentially battery anode material – the state will be well positioned to entice battery manufacturers to invest in infrastructure.

“We take the view – like most other companies – that the current energy revolution has just begun and the outlook for battery raw materials is extremely positive,” Hastings said.

Connelly basically agrees – and warned that sector and financial institutions need to act fast to ensure WA maximised this potential.

“The demand for high purity battery grade lithium carbonate is expected to grow significantly in the near term,” Connolly said.

“The lithium-ion battery sector is one of the fastest growing and largest consumers of lithium.

“Lithium-ion batteries have superior energy density, are more efficient and environmentally friendly than traditional acid batteries and the cost is falling based on innovation and technical development.

“Demand for battery minerals in WA is expected to grow at intense levels – plans and structures put in place now will heed well for the future.”

 

Modern Technology Lends a Hand to New Resource Discoveries

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THE CONFERENCE CALLER: Technology plays a big part in modern day resources exploration and has been as big a contributor to recent discoveries.

The Resources Roadhouse caught up with Chris Brand managing director of Australasian reseller of Bruker portable X-ray Fluorescence (pXRF) instruments Portable Analysers Australia at the recetn RIU Explorers Conference in Fremantle.

 

Website: www.portableanalysersaustralia.com

2018 RIU Explorers Conference Day Three

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THE CONFERENCE CALLER: The Resources Roadhouse wraps up its coverage of the 2018 RIU Explorers Conference in Fremantle.