The New South Wales ICAC has come up with a radical new model for the allocation on mineral exploration licenses that could kill off exploration by small companies in the state. Discretion would be stripped from the Minister, for a start. Approvals would have to go to the cabinet but even the most senior ministers would lack the freedom to buck a recommendation from public servants. Companies would have to demonstrate clearly that they had the technical skills and financial resources to get the job done before they got a license. Some social and environmental issues would have to be decided before an exploration license was granted - not when a mining application was made. The financial holding costs to a company would escalate dramatically over time to force companies to act speedily limiting their flexibility to react to cyclical conditions.
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
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If ICAC had its way, any potential explorer would have to raise capital first (i.e. the current model would be turned on its head). That is what ICAC wants to have happen but it does risk stifling activity - all because we cannot count on NSW politicians being honest.
The junior mining space has enough headwinds as it is. Certainly they have responsibilities socially and environmentally, however, with the exception of a rare few many mines run on the margin of being economic depending which part of the cycle we are in. The model you have alluded to would pretty much rule out progress for the majority of junior explorers.