Strong investment in resource stocks during the past year has started to flow onto the ground with a significant increase in June quarter exploration spending. Jim Hawtin reports.
Strong investment in resource stocks during the past year has started to flow onto the ground with a significant increase in June quarter exploration spending. Jim Hawtin reports.
SUCH is Western Australia’s dominance of the nation’s mining sector that, of the 248 junior mineral exploration companies listed on the Australian Stock Exchange, explorers from this State led the exploration stakes in June.
Figures compiled by West Perth-based Intierra Resource Intelligence for the WA Business News June Exploration Survey show that Western Australian explorers filled the top three spots of those miners looking to get into nickel, iron ore or gold production in WA.
The three companies to top the survey – Western Areas, Fortescue Metals Group and Tanami Gold – spent a combined $9.5 million and each averaged $3.2 million on exploration in the June quarter.
This was well above the combined average for all Australian-listed exploration companies, which was almost $450,000, however this quarter’s average was well up on the March quarter average of $363,000. This suggests investment capital for resource stocks, which has surged in the past 12 months, is seeping through.
The remaining seven explorers making up the top 10 positions were eastern States-based explorers working on a mix of gold and copper (and small amount of nickel) projects spread throughout Asia, South Africa and Australia.
The combined spend of these seven explorers – Pan Australian Resources, Bendigo Mining, Tethyan Copper Company, Allegiance Mining, Tianshan Goldfields, Range River Gold and Moto Goldmines – totalled $13.2 million, while the average spend was $1.9 million.
Emerging Western Australian nickel producer Western Areas again topped the list, spending just more than $4 million on exploration.
This was up on its exploration expenditure of $3.7 million and $2.7 million respectively in the two previous quarters
The WA-based miner has a stake in a number of nickel and gold exploration plays as well as a couple of mining operations throughout WA.
However, most of Western Areas’ June quarter exploration expenditure was absorbed by its 100 per cent owned Forrestania nickel sulphide project near Southern Cross, where it is currently progressing a feasibility study.
Western Areas managing director Julian Hanna said two diamond drill rigs had been operating around the clock at the various Forrestania deposits during the quarter, with a third rig operating from time to time.
Western Areas had been drilling out the high-grade Flying Fox deposit and conducting resource definition drill work at the New Morning and Diggers South/Daybreak deposits, Mr Hanna told WA Business News.
He said while it was the company’s intention to eventually develop three mines at Forrestania he said the company’s core activities was exploration and it was intended to maintain that focus.
One company looking to break the traditional Australian explorer mould – and one that has been stepping up its exploration – is emerging iron ore producer Fortescue Metals Group (FMG).
FMG is developing a $1.85 billion integrated iron ore project in the Pilbara region.
In the June quarter FMG spent $3.1 million on exploration to place second behind Western Areas.
FMG was ranked in fourth spot behind Bendigo Mining and Monto Minerals, spending $2.2 million on exploration in the previous quarter.
FMG expects to take its recent exploration push even further next quarter.
In the September quarter it has budgeted to spend $4 million, an amount that will put it at number one in terms of the exploration expenditure by Australian listed explorers.
As well as advancing plans for iron ore infrastructure through its partly owned Pilbara Infrastructure Fund, FMG has been rapidly trying to prove up resources at its Pilbara iron ore tenements.
Following recent discoveries at Christmas Creek in the Chichester Range it put exploration at its original Mt Nicholas iron ore project on hold, according to FMG operations director Graeme Rowley.
FMG plans to announce JORC-compliant indicated resources at its Christmas Creek tenements at the end of next month, as well as having recently identified significant tonnages of direct ship microplaty hematite ore at the same tenements. Mr Rowley said while the company would continue to explore the Pilbara, exploration was just the first phase of developing the company into a major new force in iron production and sales.
He said FMG had recently been encouraged by the success of new exploration techniques on old iron ore tenements.
Another explorer to step up its exploration expenditure significantly in the June quarter was Tanami Gold.
Tanami is more of a traditional-type explorer with a large number of grass-roots exploration plays in Northern Territory and WA.
However it really stepped up its exploration expenditure following the acquisition of AngloGold Australia Ltd’s Western Tanami Project late last year.
Tanami refocused early last year, deciding to get into production to fund its ongoing exploration efforts.
Tanami is currently engaged in a feasibility study on the project (expected to conclude in October) where it is drilling out and conducting metallurgical tests on a number of resources at the Coyote Larranganni projects.
Tanami executive chairman Denis Waddell said that, while most exploration expenditure in June had been directed towards the Coyote feasibility study, some had been spent on the regional programs in NT.
The plan was continued to increase exploration expenditure in Central Australia region where it is one of the largest landholders.
Mr Waddell said production at the Coyote project would enable the company to fund that ongoing exploration internally rather than from public funding arrangements.
