Ground Breakers: Covid lockdowns didn't stop miners spending almost $1bn on drilling in Q3

Australian miners spent nearly $1 billion on exploration drilling in the September quarter, defying lockdowns that kept more than half of the country confined to their homes.

Mineral exploration expenditure climbed by 7.7% to $982.4 million from the June Quarter according to figures released by the ABS this week.

It was also a whopping 32% higher than the same period in 2020. Around 65% was spent in WA, with most of that dropped on gold.

That is a level barely seen since the iron ore boom of the early 2000s. Australian explorers have only spent more than $1 billion in a quarter twice in history, in the fourth quarter of 2011 and the second quarter of 2012.

Driven by copper exploration, which rose by 22%, New South Wales actually saw companies tip more cash into the ground in the September quarter despite the lockdown hitting Sydney and some regional areas.

Iron ore exploration hit its highest level since 2013, with companies spending $174 million looking for the bulk commodity as prices came off record highs (but nosedived almost 60% across the quarter).

“Other exploration”, a category understood to include the booming lithium market, skyrocketed from $66.1m in the June quarter to $91.1m in the September quarter as lithium prices climbed to record levels.

Meanwhile the Association of Mining and Exploration Companies also noted greenfields exploration, which miners have often ignored in recent years in favour of less risky brownfields exploration, was on the rise.

A number of greenfields discoveries in recent years, like Chalice’s Julimar nickel-copper-PGE find, have reinvigorated investor interest in new mining areas.

Greenfields expenditure rose 11.5% to $346.1m, with brownfields expenditure only climbing by 5.8%.

“The September 2021 quarter shows that greenfield exploration remains a priority for Industry,” AMEC CEO Warren Pearce said.

“The ongoing growth in greenfield expenditure demonstrates Industry’s commitment to discovering mines of the future. In particular, the Northern Territory has had a strong quarter, with greenfields exploration increasing 46% ($4.7m) from the June 2021 quarter.”

“Queensland and New South Wales also performed well with growth of 44% ($16.9m) and 43% ($10.3m) respectively, compared to last quarter.”

Iluka closer to solution to unlock Victorian mineral sands mine

Iluka Resources (ASX:ILU) believes it is closing in on a solution that could unlock a significant rare earths and mineral sands deposit in Western Victoria’s Murray Basin.

Rare earths are all the rage right now, with Australia’s leading purveyor of the products for magnets, catalytic converters, EVs and wind turbines Lynas (ASX:LYC) telling investors yesterday it expects the market to grow at a rate of 10% a year as decarbonisation policies drive consumption for the raw materials.

That makes Iluka’s Wimmera deposit a tantalising prospect but a technically challenging one.

The sands in the Murray Basin are finely grained and riddled with impurities, which has made extracting minerals such as zircon – commonly used in the manufacture of ceramics – nigh on impossible.

Iluka has given its strongest indication yet that its technological solutions are closer to fruition by presenting a maiden resource estimate for the Wimmera 100 and Wimmera 50 deposits, opening the door for the potential development of a “multi-decade mine”.

Figures released by Iluka show the Wimmera 100 deposit, subject to a current PFS, contains an indicated 340Mt grading 4.7% heavy mineral sands for 16Mt of contained heavy mineral sands, and a further inferred resource of 100Mt grading 3.4% HM for 3.4Mt of contained HM – totalling 440Mt grading 4.4% HM for 19Mt of contained HM.

The WIM50 deposit contains an inferred Resource estimate of 360Mt grading 4.1% HM for 15Mt of contained HM, while the WIM50 North deposit boasts inferred resources of 580Mt grading 5.7% HM for 33Mt of contained HM.

‘The Wimmera region in Western Victoria has the potential to be a multi-decade future source of critical minerals, in particular zircon and rare earths,” Iluka MD Tom O’Leary said.

“Deposits in this region have a range of technical challenges relative to traditional mineral sands developments; and, over the last decade, Iluka has invested material energy and resources in progressively overcoming these challenges.”

“The key challenge relates to impurities in the region’s zircon which, absent a processing solution, render it ineligible for most end-markets, including ceramics.”

“Iluka’s declaration of resources at the WIM100 and WIM50 deposits reflects our confidence in progress toward a processing solution, with larger scale piloting currently underway.”