The Gambler’s Game
Hidden beneath South Australia’s enviable landscape is a treasure trove of precious resources awaiting discovery. Finding these valuable resources is not a game, but remains a gamble for the companies willing to explore.
The resources industry provides a third of South Australia’s annual exports at a colossal value of $4 billion and contributes $237 million in royalties for future state growth. But the development of a mine can take up to 12 years. Without a pipeline of new discoveries, the wealth the resources sector brings to the South Australia economy could be dramatically impacted.
Hidden beneath South Australia’s enviable landscape is a treasure trove of precious resources awaiting discovery. Finding these valuable resources is not a game, but remains a gamble for the companies willing to explore.
The resources industry provides a third of South Australia’s annual exports at a colossal value of $4 billion and contributes $237 million in royalties for future state growth. But the development of a mine can take up to 12 years. Without a pipeline of new discoveries, the wealth the resources sector brings to the South Australia economy could be dramatically impacted.
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Although globally there are around 10,000 active exploration projects, history tells us that only 73 of these will result in discovery. Finding these resources is a gamble for exploration companies with a 1-in-137 chance of success.
South Australia’s land is unique. A large portion of the State’s mineral resources are buried under ‘deep cover’. Having to explore deeper under the surface to locate higher grade deposits increases technical and financial risk. Add into the mix remote locations and complex land access issues, it is no surprise that there has been a decline in exploration activities in recent years. |
Once a deposit is discovered, global data indicates that less than half are developed into operating mines. However, knowing what lies beneath our resource rich states surface and the prospect of high-reward keeps our tenacious explorers on task – particularly in South Australia. The Australian Bureau of Statistics reports that exploration investment in our State rose 55 per cent to $85 million in 2018-19 – well above the national growth rate of 19 per cent.
Mineral exploration is a low impact activity on the land and it is not mining. The increase of publicly shared geological data, new drilling technologies and survey equipment means exploration companies are requiring less access to land and are becoming increasingly more accurate with their predictions. Community engagement and communications are also helping land-owners better understand the process of mineral discovery.
Despite the great wealth at risk, our State only accounts for 4 per cent of Australia’s exploration spend. Further, the Fraser Institutes Annual Survey of Mining Companies, 2018 reports that South Australia has dropped to 24th out of 83 in its investment attractiveness investment index; citing ‘poor and flawed legislation relating to the Mining Act (1971) is a major concern for investors’. It is also reported that 50 per cent of the survey respondents said that transparency in South Australia was a deterrent to investment.
Following ongoing lobbying for Incentivised Mineral Exploration the South Australian Chamber of Mines and Energy welcomed the South Australian Government’s mid-year announcement of a $10 million ‘Accelerated Discovery Initiative’ to support exploration in our State.
However, there is more work to be done. In the exploration and development phases of a mine life streamlining of legislation and regulation is required to ensure it is fit for a modern mining industry. If South Australia is to achieve an ambitious 3% growth target impediments to discovery and development must be addressed. The future prosperity of South Australia depends on it.
Hillgrove Exploration - Case Study
When companies communicate well, they build trust with their audiences.
Hillgrove Resources’ Kanmantoo Copper Mine is a good example of excellent communication and community consultation. Nestled in the Adelaide Hills, less than an hour out of Adelaide, Hillgrove has demonstrated how new technologies and open communication within communities can deliver results – not just for the company, but the whole community.
Starting with an exploration licence spanning 490 square kilometres that hosted around 2,900 land allotments, Hillgrove narrowed their search for copper using airborne magnetics. Helicopter electro-magnetic studies were then used to further refine their search before rock samples were taken from 50 square kilometres - around 10 per cent of the original area.
Landowners were contacted to engage in conversation and explain the process to establish if Hillgrove’s proposed activities were of interest to them. Activity was modified as community feedback requested.
All applicable landowners were personally contacted prior to entry to establish their entry conditions and gain approval. Following the work’s competition all applicable landowners were personally surveyed for feedback.
The next scope of work was a walking, non-disturbance activity that measured the ground magnetics over a 25 square kilometre area. Again, all landowners were personally contacted prior to entry. As a result, a ground area of 10 square kilometres became the exploration focus and its electrical conductivity was measured. A completion meeting with landowners finished off this stage of the exploration project.
After evaluating the data collected from the original 490 square kilometres of land to the 10 square kilometre electrical conductivity tests, Hillgrove identified specific locations to test drill the rocks. With timings for drilling and drill hole location modified to align with landowner expectations, Hillgrove were given permission for drilling activities to commence.
Affected areas were reduced to 0.1 per cent of the original area surveyed. There was no loss of land-use reported as a result of Hillgrove’s drilling.
The results of the Exploration Drilling located a mineral deposit which lead to a large number of drill-holes in a small area being completed over a 4-year period. This disturbed 2 square kilometres of land. The results from this drilling assessed a mining operation as being economically viable and in the best interest of the State.
The Kanmantoo Mine has generated significant benefit for rural communities despite its small 4-square kilometre footprint. Hillgrove’s Mining Operation has directly paid around $200 million to local employees and contractors within one hour's drive of Kanmantoo Mine – supporting its local community.
This high level of respect continues to run throughout Hillgrove’s business. The company has continued to put the wishes and concerns of the community at the heart of their operations.
The company instigated the formation of a consultative committee to engage with the Kanmantoo Action Group on behalf of local residents. One of the main issues was dust, and a Working Party was established to monitor dust and measure impacts on health and lifestyle.
Samples were recorded and all the data was sent independently to the committee and Hillgrove, engendering trust within the community and paving the way for further collaborative projects.
The company has stated in the past that they will not enter land where they do not have landowner permission, despite their legal entitlements. They are a company that places great value in earning trust from their landholders, peers and stakeholders.
Read SACOME's information guide on Mineral Exploration - The Challenge of Discovery here.
Mineral exploration is a low impact activity on the land and it is not mining. The increase of publicly shared geological data, new drilling technologies and survey equipment means exploration companies are requiring less access to land and are becoming increasingly more accurate with their predictions. Community engagement and communications are also helping land-owners better understand the process of mineral discovery.
Despite the great wealth at risk, our State only accounts for 4 per cent of Australia’s exploration spend. Further, the Fraser Institutes Annual Survey of Mining Companies, 2018 reports that South Australia has dropped to 24th out of 83 in its investment attractiveness investment index; citing ‘poor and flawed legislation relating to the Mining Act (1971) is a major concern for investors’. It is also reported that 50 per cent of the survey respondents said that transparency in South Australia was a deterrent to investment.
Following ongoing lobbying for Incentivised Mineral Exploration the South Australian Chamber of Mines and Energy welcomed the South Australian Government’s mid-year announcement of a $10 million ‘Accelerated Discovery Initiative’ to support exploration in our State.
However, there is more work to be done. In the exploration and development phases of a mine life streamlining of legislation and regulation is required to ensure it is fit for a modern mining industry. If South Australia is to achieve an ambitious 3% growth target impediments to discovery and development must be addressed. The future prosperity of South Australia depends on it.
Hillgrove Exploration - Case Study
When companies communicate well, they build trust with their audiences.
Hillgrove Resources’ Kanmantoo Copper Mine is a good example of excellent communication and community consultation. Nestled in the Adelaide Hills, less than an hour out of Adelaide, Hillgrove has demonstrated how new technologies and open communication within communities can deliver results – not just for the company, but the whole community.
Starting with an exploration licence spanning 490 square kilometres that hosted around 2,900 land allotments, Hillgrove narrowed their search for copper using airborne magnetics. Helicopter electro-magnetic studies were then used to further refine their search before rock samples were taken from 50 square kilometres - around 10 per cent of the original area.
Landowners were contacted to engage in conversation and explain the process to establish if Hillgrove’s proposed activities were of interest to them. Activity was modified as community feedback requested.
All applicable landowners were personally contacted prior to entry to establish their entry conditions and gain approval. Following the work’s competition all applicable landowners were personally surveyed for feedback.
The next scope of work was a walking, non-disturbance activity that measured the ground magnetics over a 25 square kilometre area. Again, all landowners were personally contacted prior to entry. As a result, a ground area of 10 square kilometres became the exploration focus and its electrical conductivity was measured. A completion meeting with landowners finished off this stage of the exploration project.
After evaluating the data collected from the original 490 square kilometres of land to the 10 square kilometre electrical conductivity tests, Hillgrove identified specific locations to test drill the rocks. With timings for drilling and drill hole location modified to align with landowner expectations, Hillgrove were given permission for drilling activities to commence.
Affected areas were reduced to 0.1 per cent of the original area surveyed. There was no loss of land-use reported as a result of Hillgrove’s drilling.
The results of the Exploration Drilling located a mineral deposit which lead to a large number of drill-holes in a small area being completed over a 4-year period. This disturbed 2 square kilometres of land. The results from this drilling assessed a mining operation as being economically viable and in the best interest of the State.
The Kanmantoo Mine has generated significant benefit for rural communities despite its small 4-square kilometre footprint. Hillgrove’s Mining Operation has directly paid around $200 million to local employees and contractors within one hour's drive of Kanmantoo Mine – supporting its local community.
This high level of respect continues to run throughout Hillgrove’s business. The company has continued to put the wishes and concerns of the community at the heart of their operations.
The company instigated the formation of a consultative committee to engage with the Kanmantoo Action Group on behalf of local residents. One of the main issues was dust, and a Working Party was established to monitor dust and measure impacts on health and lifestyle.
Samples were recorded and all the data was sent independently to the committee and Hillgrove, engendering trust within the community and paving the way for further collaborative projects.
The company has stated in the past that they will not enter land where they do not have landowner permission, despite their legal entitlements. They are a company that places great value in earning trust from their landholders, peers and stakeholders.
Read SACOME's information guide on Mineral Exploration - The Challenge of Discovery here.