EXPLORATION AND MINING IN

AUSTRALIA

Bernie Hogan

Regional Manager

Association of Mining & Exploration Companies

About AMEC

• Established over years ago

• Over 300 company members and growing

• Members include explorers, producers, and service industries

• National coverage – offices in Brisbane, Perth and Sydney

• Policy development and advocacy

AMEC is totally committed to obtaining the best business

environment for the mining and exploration industry across

Australia

2

After 12 months…

3

This is what we have…

4

Australia’s challenge unchanged

• Australia is losing exploration market share

• Continued global competition

• Costs spiralling

• Certainty and regulation affecting investment

• Scarce capital

• EDI, ESS, 457

5

More capital in the system

• Exploration Development Incentive

• AMEC policy leading into 2013 election

• Tax deduction for investors – rewards risk takers

• $100M over 3 years

• Australian projects

• Australian Company (tax rate)

• Australian Investor

• Still with Dept of Industry

6

Helping start-ups

• Employee Share Schemes

• Ruined as a Long Term Incentive

• Difficult for explorers to compete

• Discussions with Government to return to 2009 legislation

• Opportunity for cross-bench “heroes”

7

Developing Northern Australia

• Opportunity must be grasped

• Committee has conducted wide ranging interviews

• Infrastructure and stranded assets

• Planned growth and incentives

• Funding options

• Remove legislative barriers to land access.

8

457

• Important debate for Northern Territory

• AMEC policy to support where labour supply is short – particularly skilled labour

• In some instances, skilled migration will be a valuable HR alternative

9

Estimated Remaining life for Major Australian Mines (based on all operations mining >1 Mt ore in 2010. Excludes Bulk Minerals)

10

2011 2015 2020 2025 2030 2035 2040

Closure Date based on current

Reserves

Estimated Mine Lives are approximate only and are based on dividing the current

P&P Reserves and MI&I Resources by the production rate reported for 2011

Half of Australia’s existing

mines could close down

within 7 to 18 years

Closure Date based on current Resources

Source: MinEx

Consulting © August

2012

Brownfield vs Greenfield

Exploration in Australia

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Percentage of Total Metres

Drilled

% Green % BrownSource: ABS 8412.0

81%

64%

47%

61%

49%

33%

19%

36%

53%

39%

51%

67%

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90%

2008 2009 2010 2011 2012 2013

Percentage

% Australian Projects % Global ProjectsSource:

To 31 October 2013

* Exploration includes Greenfields and Brownfields Exploration

Destination of Exploration Funds

Raised on ASX

12

ASX raised funds

for overseas

projects

More ASX raised

funds still heading

overseas!!

13

Australia’s Share of Worldwide

Exploration Expenditure (non-ferrous)

13 Source: Metals Economics Group

Source: Metals Economics Group

Australia 12%

Canada 16%

USA 8%

Latin America 18%

Pacific/SE Asia 16%

Rest of World 14%

Africa 16%

2012 Australia

20%

Canada 14%

USA 11%

Latin America 27%

Pacific/SE Asia 11%

Rest of World 6%

Africa 11%

1996

How to stifle exploration…

• Constant tinkering with regulation in all forms has

undermine investor confidence

• Land Access is major hurdle for Northern Territory

• Environmental Approvals has been highest profile battle

ground

• Uncertain taxation and transfer duties

• Overly prescriptive legislation. Regulatory creep.

14

Remove the barriers

• Cost recovery mantra from governments Territory and

Federal. Provide core services.

• Cultural and Heritage Surveys (estimated at over

$1Billion). Cannot become another opportunity to delay

• Infrastructure – capacity needs to build and access needs

to be assured for junior entrants.

• Senate uncertainties to key reforms

Remove obstructions to exploration and development with

outcome based policy. Gov’t to focus on compliance

instead of regulation

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THANK YOU

Visit www.amec.org.au for more information

Bernie Hogan

Bernie.hogan@amec.org.au