Digging in for exploration spend

Some of Western Australia’s biggest gold miners plan to boost their exploration spend in the coming year, with Saracen Mineral Holdings and Northern Star Resources among those committed to putting increasing amounts ‘into the ground’.

WA’s total spend on minerals exploration in the year to June was $870 million, according to the Australian Bureau of Statistics, and gold miners contributed a significant part of this figure, including around $175 million by the 10 companies listed in the table below.

Northern Star managing director Bill Beament said his company had been an early mover on exploration, and that the renewed focus on it was an exciting part of the industry at the moment.

“We’ve upped our exploration budget 15 to 20 per cent, we’re spending $62 million,” Mr Beament told Business News.

“(Saracen are) trebling their exploration budget this financial year.

“What I love about this is everyone’s doing the same; everyone’s pumping money in the ground, which is great for the sector in the future.

“If you don’t pump money in the ground you don’t find stuff.

“With this money going in there we’re (the gold sector) really setting ourselves up nicely for years to come.”

With the completion of capital spending at Thunderbox giving it more cash for exploration, Saracen is planning to ramp up its spend from $14 million last year to $42 million in the year ahead.

Saracen chief geologist Daniel Howe said the company had been a bit behind on drilling in the past couple of years and had some catching up to do.

Most of the cash would be spent on moving inferred resources into the indicated column to convert into ore reserves, he said.

“A fair chunk of the $42 million is going back into the mines, and really that’s about consolidating the mine plan and adding to it across both operations,” Mr Howe said.

“There’s a small consideration of our budget going back into the regional greenfields space which is longer term, new discovery type work. That’s in the order of $3 million.”

Aside from the strong gold price, lower drilling costs are helpful for companies planning to spend on exploration.

Mr Howe estimated that drill rates had fallen 40 per cent from the peak of the boom, however work appeared to be picking up in recent months.

Saracen’s main drilling contractors include Orlando Drilling and DDH1 Drilling.

Another miner, St Barbara, will lift its spend from $15.8 million to somewhere between $18 million and $22 million in its most recent guidance.

Silver Lake Resources flagged a spend of around $14 million, slightly down from $15 million in the 2016 financial year, while Independence Group is tplanning to spend $6 to $8 million at Tropicana.

Among internationals, Newcrest Mining reported in $US8 million in exploration spending at the Telfer deposit, while AngloGold Ashanti reported exploration expenditure of $US10 million across its portfolio, a large portion of which was in Australia, in the six months to June.

Meanwhile, explorers have put together deals to get drilling.

Intermin Resources signed an agreement offering Eastern Goldfields the opportunity to earn into a joint venture by spending to develop two projects, while Primary Gold will issue $3 million of share to Ausdrill in return for about 30,000 metres of drilling.