Challenging times are opening up exciting opportunities for smaller mining and exploration companies; and, those who are prepared to think and do differently will reap the greatest rewards. LOUIS WHITE reports
Article from resourceful: Issue 9, March 2016.
Australia's smaller mining and exploration companies face some interesting times. Investment is tapering off, business confidence is either static or falling and it's almost as if the Australian economy is on hold, while we wait to see what China is going to do.
Grant Thornton Australia's 2014 JUMEX (Junior Mining and Exploration Companies) Survey states that Australia is in desperate need of "consistency of policies for planning purposes in order to restore Australia as a strong investment destination in this sector".
The report encourages junior mining and exploration companies "to continue to explore innovative ways to create shareholder value".
Times are tough at the moment and in all likelihood are only going to get tougher.
"Of the Australian Stock Exchange (ASX) listed junior mining and exploration companies with a market cap of less than $500 million, only four per cent of junior miners are in the mining or production phases – the majority are still exploring," Ausindustry research facilitator, Ken Green says.
"Right now, the commodities price is making new mining projects an unattractive investment for the money markets.
"This means companies can't go 'back to the well' as freely as they were before and so they need to rethink how to make the most out of their biggest investment: exploration drilling," Mr Green says.
CSIRO business development manager, Wayne Robertson, believes that companies will have to become innovative in their thinking about their research and fundraising.
"Now that investment has been curtailed, the biggest challenge for mineral exploration companies in the future will be to determine new and innovative ways to explore both greenfield areas and the areas close to, and within, current deposits with a significantly reduced budget," Mr Robertson says.
According to Mr Robertson, while there will always be a level of uncertainty in exploration, science can play a big part in limiting the risk and helping focus the exploration opportunities.
"Smarter and better informed exploration campaigns can be designed through the understanding of scientifically based new and novel approaches to exploration. And, when coupled with new leading-edge data analytical techniques, these new approaches can greatly assist in lowering the level of uncertainty in exploration and the overall cost," he says.
In fact, exciting opportunities await smaller resource companies, as they face the challenges of a more diversified investment market and greater restrictions upon their funding. Not only can they utilise the benefits of applying more scientific rigour to their drilling and general research, these results should enable them to focus more efficiently on prospects.
"When money is readily available we naturally get lazy because we have the resources to throw at scaling the opportunity, but in doing so, all we do is scale the inefficiencies too," Mr Green says.
"Innovation occurs best in a constrained environment. This current environment is Australia's opportunity to develop competitive world-class mining projects by innovating throughout their development, starting with the characterisation of the project."
CSIRO is currently working with Sandfire Resources, a mid-tier Australian mining and exploration company with the 100 per cent-owned DeGrussa Copper-Gold Mine, located 900 kilometres north of Perth in Western Australia.
The project is investigating the chemical footprint of the company's DeGrussa deposit by summarising previous research and company data. It's also providing a framework of the cover stratigraphy, mineralogy and geochemical characterisation of the palaeochannel, with insights on physical and chemical proxies for element dispersion associated to the DeGrussa deposit. This is providing interpretation of the palaeo drainage geometry itself.
The project includes activities that will enable the company to determine the optimal mineral extraction strategies for the mine ensuring full economic return.
There are many privately funded organisations and research organisations, like CSIRO, working with smaller mining companies in their quest to develop their projects or refine their exploration to assure greater success upon drilling.
"There are various state government-based incentives particularly in Western Australia, South Australia and Queensland when it comes to attaining finance," Mr Green says.
"At a federal level the Entrepreneurs Programme 'Innovation Connections' is the simplest grant scheme for companies wishing to collaborate with the research sector. A facilitator will help with the project definition and contract formation stages as well as access to funding."
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