Australian gold miners note crash in exploration
Gold Exploration Loses Its Lustre
By Tess Ingram
Australian Financial Review, Melbourne
Thursday, August 7, 2014
If there is one key message from this week's presentations at the gold-dominated Diggers and Dealers conference, it is that increasing exploration is essential to the sustainability of the gold sector.
Gold exploration expenditure dropped off 30 per cent or $34.8 million during the March quarter, in line with a 25.5 per cent fall in total exploration expenditure.
Evolution Mining chairman Jake Klein told the conference that the last 12 to 18 months have been the toughest he has experienced during his more than 20 years in the industry.
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"Gold discoveries have become increasingly rare and in fact over the last couple of years increasingly bleak," Mr Klein said. "One thing that is definitely insane is deleting exploration from your budget in order to save cash because you are fundamentally destroying your business if you are not investing in exploration."
Evolution is investing $20 million a year for exploration, with a current focus on exploration at three of its projects and a new joint venture.
Exploration plans were detailed by the majority of the gold companies presenting at Diggers, with Northern Star Resources' $50 million exploration budget for the financial year one of the most substantial discovery budgets for the local sector.
Northern Star managing director Bill Beament said the company looks to grow its resource base further through the extensive drilling program.
"There is a large amount of high-grade highly profitable gold to be found in and around our projects," Mr Beament told the conference.
Junior gold miner Doray Minerals, which poured its first gold this time last year, earned the crown of Prospector of the Year at the Association of Mining and Exploration Companies' convention in June for the exploration efforts that discovered its Andy Well gold mine.
Doray's managing director Allan Kelly said that the company is now looking forward to returning its focus to exploration after working to get Andy Well into production.
Drilling on deposits surrounding its key Wilbur Lode deposit has been underway to increase the mine's 3.7-year mine life, with Doray announcing Wednesday that it had increased the ore reserve for an adjacent deposit, the Judy Lode.
"The discovery replaces ore mined during our first year of underground, maintaining Andy Well's mine life," Mr Kelly said.
Mr Kelly said that a decline in exploration has forced prices down, making now a good time to "get rigs in the dirt" if a company has the cash.
"If you have money to do work, you get really good value for money," he said. "Now is the time that you can actually set yourself up for the next boom if you have the resources to do that, so that is what you have got to try and make the most of."
Optimism is improving, according to Mr Kelly, who said he has noticed a bit more momentum at this year's mining conferences.
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