WHERE ARE THE MINES OF TOMORROW?

Mining the Territory 2012

Bernie Hogan

Regional Manager - QLD and NT

Association of Mining & Exploration Companies

About AMEC

• Established 30 years ago

• Over 350 company members and growing

• Emphasis on junior to mid tier mining companies

• Members include explorers, producers, and service industries

• National coverage – coordinated voice of the industry from

Brisbane, Perth and Sydney

• Advocacy, policy development and advisory

2

Exploration & Mining in

Australia

• UWA paper – “Where are Australia’s mines of tomorrow”

• Where are exploration funds spent

• High tax, high cost, low productivity

• Capital harder to raise

• Availability of quality geoscience data

3

Australia must be globally

competitive

4

Greenfield spend is now

half that of Brownfield

0%

20%

40%

60%

80%

100%

1996 1998 2000 2002 2004 2006 2008 2010 2012

MinEx

estimates

Percentage of Total Spend

Greenfield

Exploration

Late Stage &

Feasibility

Mine Site(ie Brownfield)

Brownfield Exploration

35%

Source: © Metals Economics Group,

Corporate Exploration Strategies 2011

Note: Base metal + gold + diamond exploration expenditures by All

Companies

Excludes exploration on Bulk Minerals and Uranium

Detailed breakdown for 1996 & 2012 are MinEx estimates

Assumes that all of the Grassroots spend by Majors and half of the

Grassroots spend by Juniors is on Greenfield targets

21%

39%

47%

Government Policies

• Taxation

– Royalties

– MRRT

– Carbon Tax

– Business Tax Working Group (BTWG)

• Cost Recovery

• Diesel Fuel Tax Credits

• Regulation

• Native Title and Heritage negotiation

Creates a High Cost Environment

5

6

-

2.00

4.00

6.00

8.00

10.00

12.00

-

5.00

10.00

15.00

20.00

25.00

2008 2009 2010 2011 2012

AverageCapitalRaising

($m)

TotalCapitalRaising($’00m)

Source:

Average Amount

raised in $millions

Total Amount

raised in $’00m

YTD

$517m

Australian exploration

companies are not

raising as much as

they used to

ASX Capital Raisings

for Exploration

Quality of geoscience database

7

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Canada USA Australia Oceania Africa Latin America Eurasia

Source: Fraser Institute

98% of exploration

company executives believe

Australia’s geoscience

database encourages

investment

Positive news from the NT

• Fraser Institute Report. NT ranked 11th ahead of “mining

states” WA & Queensland

• Increased funds spent on exploration, particularly post

financial crisis

• Success of the co-funded drilling programs – Bringing

Forward Discovery

88

Challenges ahead

• New Government

• Discoveries are deeper and more remote

• Small population - limited workforce – greater costs

• Conservation estate, including marine parks – creates

uncertainty

• Few mines paying royalties, and they don’t last forever!

• Regional and remote nature of the Northern Territory

99

10

Expenditure on the rise?

11

But are the metres growing?

So how does NT remain

internationally competitive?

• AMEC NT policy platform

• Approvals reform – statutory timelines for approvals

• Conservation estate including moratoriums

• ALRA (needs to be better understood)

• Infrastructure – water, power, road, rail and port (be the

gateway to Asia)

• Back the co-funded programs

Provide Investor Certainty – Clarity in policy

1212

And on a national scale?

• Must be a coordinated National response - SCER

• Remove tax burdens that make projects unsustainable

(MRRT/Carbon/reduction in Diesel Fuel rebate/ Cost recovery)

• Support Exploration Tax Credit – mix of Flow-through

shares and dividend imputation schemes

• Workforce Planning – including immigration

• Workforce Relations

• Mining Environmental Rehabilitation Fidelity Fund

1313

Thank You

14

Unless otherwise credited the graphs in this presentation

can be found in the following report:

WHERE ARE AUSTRALIA’S MINES OF TOMORROW?

Richard Schodde, Managing Director MinEx Consulting, Adjunct

Professor, The University of Western Australia (UWA) and,

Pietro Guj, Research Professor, Centre for Exploration Targeting

(CET), The University of Western Australia (UWA)

September 2012

Visit www.amec.org.au to download the paper