02/07/2014 - 15:48

Government releases detail on exploration incentives

02/07/2014 - 15:48

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The federal government has released details on how its long-awaited exploration development incentive will work, with the policy expected to be a much-needed boost for the industry.

The federal government has released details on how its long-awaited exploration development incentive will work, with the policy expected to be a much-needed boost for the industry.

The cost of the scheme will be capped at $100 million, while exploration credits will be capped at $25 million for activities occurring in 2014-15, $15 million in 2015-16 and $40 million in 2016-17.

Companies eligible for the incentive will be those with no taxable income, while mining companies that have commenced production will be excluded.

Exploration firms that decide to participate in the incentive will be allowed to choose whether to issue exploration credits to all shareholders, or just those that bought shares after June 30.

Shareholders that receive exploration credits will be entitled to tax offsets, claimed in the same year they receive the credits.

The government said the incentive would apply to eligible greenfields exploration spending incurred in Australia from July 1.

Activities included under the incentive comprise geological mapping, geophysical surveys, systematic search for minerals, except petroleum, and quarry materials, and drilling activities.

The incentives will not apply for exploring for shale oil, petroleum and geothermal energy resources.

Feasibility studies will be excluded from the incentive.

Industry Minister Ian Macfarlane said the legislation was necessary as exploration for new mineral discoveries had reached a 10-year low.

“We have long recognised that additional investment in junior exploration companies was required to discover quality resources,” he said.

“This investment in turn ensures the resource sector’s continued contribution to our national economy over the medium to long term.

“We will continue to work with industry to ensure the exploration development incentive is enacted into legislation in a way that is simple and effective, without unduly burdening small companies with increased regulation.’’

The release of the details has been welcomed by the Association of Mining and Exploration Companies.

“The EDI should go a long way towards addressing low discovery rates of new mines,” AMEC chief executive Simon Bennison said.

“It should help reverse the ongoing reduction in the global share of Australian greenfield exploration activities and the low number of initial public offerings for mineral projects in Australia.

“The EDI will improve investor confidence in mineral exploration companies with projects in Australia.”

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