Read this incredible article, in WATODAY about mining explorers in Western Australia,

Cashed up and striking gold: the resurgence of Australia’s mineral explorers

Australia’s mineral exploration companies are revelling in the best conditions they have experienced in a decade, with investors stumping up billions of dollars for the next generation of discoveries.

More than $2.3 billion flowed into the 658 companies exploring for minerals on the Australian Securities Exchange in the March quarter, bringing cashflows for the past 12 months to just shy of $8 billion, according to accounting firm BDO.

That cash bounty compares to the $4.99 billion raised by the sector a year earlier, weighed down by COVID-19, and sees investment levels creep close to the highs of the last mining ‘boom’, which peaked in 2011.

The cash is providing the companies with healthy bank balances to spend searching for mineral riches, with exploration expenditure for the March quarter at $549 million, 18 per cent higher than BDO’s two-year average quarterly spend of $464 million.

The findings echoed recent data from the Australian Bureau of Statistics which put the metres drilled by mineral explorers just shy of the fresh nine-year high recorded in the December quarter.

There is so much activity on the ground that drilling companies are busier than they have been in years, labour is hard to come by, and the geologists hoping to strike gold or other metals are waiting months for results from testing laboratories as ore samples flood in.

Sy Van Dyk is chief executive of DDH1 and said the drilling company, which has about 100 rigs across the country, had never been busier.

“All our drill rigs are busy … there is no spare capacity today,” he said.

The Perth-based company has been forced to turn away potential work away, or schedule it months in advance, due to high demand.

“Over the last year, our forward order book or what we call our rig schedule, which is an indication of where these rigs are going to work, is the longest dated it has been in this company’s history,” Mr Van Dyk said.

“We now have a fair understanding of where we are going to drill in the next 12 months, whereas we used to have a clear idea for six months.

“Rates are definitely on the increase due to the supply demand tightening and utilisation is on the increase across the industry. And what is great about the current demand signal is that it is multi-commodity, unlike most of the previous booming times which have been driven by a single commodity.”

As well as high prices for commodities such as iron ore, copper and gold fuelling the boom, mining-focused fund manager Hedley Widdup said investors’ appetite to support the work of explorers had also been sparked by a run of significant discoveries in 2019 and 2020.

“The message used to be that exploration was a risky enterprise that didn’t reward you,” Mr Widdup said.

“But after those discoveries the message became that exploration is a risky enterprise but you can find things and you can build massive value through doing that. We have seen that shift in attitude flow through to the spend in the ground but also to the equity prices of smaller companies in Australia.”

The beneficiaries have been companies like De Grey Mining and Chalice Mining, which have seen their market capitalisations rise after firming up major new projects in WA, from about $50 million to over $2 billion and $3 billion respectively.

https://www.watoday.com.au/business/companies/cashed-up-and-striking-gold-the-resurgence-of-australia-s-mineral-explorers-20210531-p57wog.html