Australian mineral explorers require further relief from Australian governments to weather the COVID-19 pandemic, with the Association of Mining and Exploration Companies (AMEC) saying the sector could help recharge the country’s economy.

The mining industry body noted that while the sector was partially exempt from travel restrictions, nearly half the companies surveyed had ceased all exploration activities while investment appetite had been curtailed.

AMEC chief executive Warren Pearce says this meant that companies have been unable to attract private investment to fund ongoing exploration.

There are certainly exceptions though given that De Grey Mining (ASX:DEG) closed a $31.2m placement late last month thanks to strong investor interest in its Hemi gold discovery in the Pilbara.

“Explorers are being dealt an added blow, with mineral exploration companies being excluded from the Jobkeeper initiative, because of the definition used in the eligibility criteria,” Pearce added.

While Jobkeeper was designed to help companies keep employees on the books, the eligibility criteria requiring companies with a turnover of less than $1bn have to prove that their revenues have fallen by 30 per cent or more compared to this time a year ago is a stumbling block for small explorers, which often have no revenue or turnover.

“This at a time, two years into the exploration cycle, when new discoveries are being made and when the next year of mineral exploration could well kickstart the next mining boom and help recharge Australia’s damaged economy,” Pearce noted.

The Western Australia, Queensland, South Australia and New South Wales governments have all provided some relief, though AMEC believes that more help is needed.

Queensland recently introduced a multi-million dollar package aimed at supporting the survival and revival of explorers, while Western Australia has steadily introduced a raft of measures such as the reduction of the Mines Safety Levy and giving explorers exemptions from exploration expenditure requirements.


Survey results

AMEC’s survey of 63 member companies found that 47 per cent had ceased all exploration, while 27 per cent had stopped most exploration.

Access to operations was somewhat better with 32 per cent having unchanged access while 48 per cent had access to their tenements with modifications.

Of the 25 per cent of companies that had no access to their ground, 74 per cent said they would continue operations if they were able to.

More worryingly, 74 per cent of the companies do not think their cash reserves will last the year, with 10 per cent saying that their funds would last less than three months while 27 per cent have enough cash for between three and six months.

The survey also found that 51 per cent of respondents believed that it would be seven to 12 months before they could carry out a raising that would provide more than a year of working capital, while 18 per cent said it would take more than a year.

Over half the companies are already laying off staff or were planning to in the coming three months, while three quarters say they had or are planning to adjust salaries in the next three months.

At Stockhead, we tell it like it is. While De Grey Mining is a Stockhead advertiser, it did not sponsor this article.