Ongoing and sophisticated greenfield mineral exploration is vital to the longevity of the mining industry, yet nationally Australia’s mining sector is experiencing a chronic shortage in greenfield investment and the discoveries it has the potential to uncover, according to Western Services Principal Dr Jon Hronsky.

Bringing 30 years of experience to the table, and as chairman of both The Centre for Exploration Targeting in Western Australia and the Australian Geoscience Council, Dr Hronsky knows a thing or two about mineral exploration.

According to the Department of Mines, Industry Regulation and Safety’s Western Australian Mineral and Petroleum Statistics Digest 2017-2018, the mix of Australian exploration expenditure remained static over the five years from 2013 to 2017, roughly weighted at a 70:30 ratio towards brownfield exploration.

Speaking to National Mining Chronicle, Dr Hronsky said if Australia was not “efficient as an industry” and didn’t change its exploration, financing and training models, it would stand no chance of discovering the next generation of ore deposits.

“Our financing model strongly favours recycling of old, marginal to sub-economic mining and exploration projects rather than genuine greenfield exploration for new tier-one deposits,” he said.

At the crux of the problem, Dr Hronsky said there was a common misconception among many major miners that junior explorers and miners would “do the job for them”.

“Junior explorers offer flexibility, but do not have access to adequate funding,” he said.

“They are financed mostly from the retail sector, which is strongly sentiment-driven and short-term focused.

“The amounts of capital raised in the junior sector are too small and have to be raised too frequently to support the sort of long-term, sustained work which needs to be done in greenfield exploration.

“Each one of those companies has to spend several hundred thousand dollars a year just to keep the lights on. Every time they go to the market and raise the next two or three million dollars, a few hundred thousand dollars of that goes into raising fees, so obviously the proportion that’s going to real exploration is declining.

“The net result of all that is all of these dynamics encourage a funding model that encourages behaviour that isn’t really in the game to find the big new deposits.”

While government incentives aim to increase greenfield exploration, Dr Hronsky said more education was needed at market.

Western Australia’s Exploration Incentive Scheme, for example, has led exploration companies to actively drill the Fraser Range north-east of Esperance, and contributed to a substantial nickel-copper discovery by Sirius Resources, which has subsequently been developed into a mine by Independence Group.

Earlier this year, 46 mining companies shared in $31 million to explore for Australia’s mines of the future under the Australian Government’s Junior Minerals Exploration Incentive for 2018-19.

Dr Hronsky said while the institutional investors who wanted to invest in mining were certainly out there, they simply didn’t understand the early-stage exploration space.

“These investors see it as too risky,” he said. “I think some of that is a misunderstanding because if you are investing in exploration you are not actually investing large amounts of money, and if you take a portfolio approach you could make the case that it’s not necessarily riskier, but you need to be patient; investors need to have that strategic perspective.

“These institutional investors need to put in place an interface with the junior companies relating to exploration. That can do several things; it can filter the projects in the first place to make sure the ones they are funding are genuinely good greenfield exploration projects that are focused on finding those really big deposits that will make a difference in the industry, and it can make sure those companies that are being funded are being supported with the best scientific and technical resources.

“As an industry, we need to move away from the comfort zones of places like Kalgoorlie, Mt Isa and Broken Hill, and move into new areas and look for new things.”

Dr Hronsky pointed to a strong need to upgrade the industry’s training protocols.

“We train geoscientists at university, but need explorationists in the industry,” he said.

“Exploration skills need to be learnt, and the current practice is ad-hoc and largely on the job.

“There is the challenge of transferring the tacit knowledge of long-term experience to university students and graduates through progressive curriculums and greater use of simulated environments.”

While many larger companies have been wary of investing in new mines due to complexity and cost, leaning towards cost-effective brownfields projects at existing mines or well-known prospecting spots, there are signs of a shift, albeit at a gradual pace.

Rio Tinto, for example, is spending a significant amount on greenfield exploration in the Paterson region in Western Australia’s Great Sandy Desert, spurring rumours of a prime copper discovery.

“I hope Rio Tinto has found something big in the Paterson, and I hope that’s the first of a number of new discoveries that we are going to see over the next 10-plus years,” Dr Hronsky said.

The Australian Bureau of Statistics’s Australian mineral exploration statistics for the September 2018 quarter revealed that, compared with the previous quarter, metres drilled for mineral exploration rose six per cent, with greenfield exploration rising 7.2 per cent, and brownfields 5.8 per cent.

Nationally, greenfield mineral exploration expenditure was up 13 per cent – or $25.7 million – to $223.6 million in the quarter.

Dr Hronsky said he believed Australia was gradually moving into what he labelled “the Greenfields Renaissance”.

“We need to move on a sooner-rather-than-later basis to breakthroughs in undercover exploration to unlock what we believe is enormous potential to add to Australia’s rich history of minerals discovery, albeit at surface or shallow depth,” he said.

“If we look at it globally, we say the ability to find low-cost metal is intrinsically linked to the massive transitions in the global economy that are upon us in terms of decarbonisation and moving to electric cars. We can only decarbonise the economy by mining a whole lot more metal.

“From an Australian perspective we need to sustain our lifestyle and industry, and so we need that next generation of deposits. If we don’t find them, our industry will gradually become less and less competitive, our production will decline and it will become a lower contributor of wealth to the nation.”

Image: Dr Jon Hronsky

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