One of the most worrying implications of the current mining downturn for the future of the industry is the significant drop in exploration activity. Of course, without ongoing exploration the pipeline of projects for future development will dry up - a concern not only for the industry but for the Australian economy overall. After several years of limited capital for mining, especially for explorers, drilling companies are really suffering. The positive news is that costs of drilling are significantly lower now than a few years ago and there are no issues around availability of drill rigs. We have seen a number of drilling companies prepared to drill for project equity - not a sustainable business model but very helpful for explorers in the short term, enabling them to progress and add value to projects with limited funds. As a result, whilst exploration expenditure has fallen, metres drilled is only slightly down - you have to take the good news where you can at the moment!
Australia's spend on mineral exploration slid by a third in just 12 months to its lowest level in nine years as miners continue to hammer down costs and expenditure.The Australian Bureau of Statistics says the national spend on exploration fell 33 per cent year on year to just $322 million in the June quarter, led by $30 million of spending evaporating in Western Australia.Veteran minerals economist Richard Schodde said one of the key takeaways from the data was that while the total spend declined by a third, the number of metres drilled in the nation's exploration efforts was only down 9 per cent."That suggests we are getting a lot more out of the dollars that go into drilling as costs come down," Mr Schodde said.