rspt - maintain the rage

It is widely known that Junior Resource companies are responsible for the vast majority of mineral discoveries in this country. For many years these small exploration companies perservere out in the field with only very few achieving the ultimate aim of developing their projects into viable mines. Aspirational investors in the junior resource companies directly support these companies providing high risk funds continually to support this exploration effort risking their own capital/savings for years with no return in the hope that one day their will be a just return.
Australia compared to its peers, namely Canada has always significantly undervalued these companies making raising exploration funding much more difficult continually diluting existing shareholder equity in the process. Significantly, the vast majority of junior resource companies have not had any benefit from the so called Resources Boom particularly the Exploration companies, who do not make any profits unless they progress to actually mining any discoveries made. The vast majority of Junior Resource company share prices also remain currently at only a fraction of values of 3-4 years ago,i.e. prior to the GFC. i.e. they have not been ripping off anybody!

The GFC itself was caused by the Banks being condoned by all world Governments by their risky lending practices, and fancy derivitive tading schemes. In Australia the disgracefull Opes Prime debacle also caused untold share price carnage when the ANZ Bank siezed the Opes Prime share assets. The ANZ bank then proceeded to sell these shares down indiscriminately on a truly massive scale without disclosure so that shareholders were completely in the dark at what was occurring to their investments. The so called regulatory substantial shareholder disclosure laws which were supposed to be protecting shareholders simply allowed this to occur which caused massive shareholder losses from which many of us are yet to recover from. In effect the Bankers directly caused much of the GFC which is continuing to reak havoc in global markets, with much worse to come I fear.

The new 40% Resource Super Profits Tax is being introduced on the mining sector with the Government stating that the new tax will give benefit to all Australians and prevent excess profits from going offshore.
The Government is obviously completely ignoring, or ignorant of the fact that the vast majority of small junior resource companies are in fact Australian owned with predomitately Australian shareholders. What the Government is now planning to do is to disenfranchise all existing aspirational investors in these junior resource companies by diverting the bulk of profits to all Australian's benefit, which in itself is very debateable.
In effect this will mean investment value being taken from the risk takers, who have had their own savings tied up often for many years with no return, and redistributed to the vast majority who would never dream of risking their own funds in the high risk Junior Resource companies. Why would they when they can keep their own funds nice and safe in the bank, especially with the Governments Bank Deposit Guarantee in place.

With the planned RSPT all existing investors in the Junior Resources sector must now be seriously questioning whether it remains viable to commit any further funds to this high risk sector unless substantial changes are made especially to the low 6% profits threshold rate it will currently apply from. The 40% RSPT will also make Australia one of the highest taxing countries in the world, and more than 150% higher than Canada our main competitor in world markets.
One way to ease concerns would be to introduce the long requested "Flow Through Share Scheme" where tax paid by the company is fully rebated to Australian Investors in these companies. Only something of this nature will likely now encourage these aspirational investors to continue to invest in this high risk and now, low reward sector. The so called 30% rebate for resource companies that fail is also fraught with danger and does nothing to help these junior resource companies raise sufficient funding to explore. Damage the exploration sector and where will the future flow of discoveries come from?
As the large institutional investors do not normally invest in most junior resource companies until all the hard work has been done, I ask who is going to supply these high risk funds in the future? Until Government addresses this very major problem directly caused as a result of this new unfair and unjust tax, the market turmoil will no doubt continue, and the entire sector will be denied its lifeblood support wiping out the aspirations of all its investors in the process.

I have personally written to both the Prime Minister, and the Leader of the Opposition raising these concerns and I urge all shareholders to do similiar. I am only one vote and don't matter much in the scheme of things, however there are hundreds of thousands of Aussie investors in these companies with their investments and in some cases life savings now very much at risk.
Andrew Forrest of Fortescue Metals (FMG) has recently urged all Australian shareholders to write to the Government about their concerns which I commend.
There are hundreds of thousands of similiar shareholders right across Australia and if the Government is simply bombarded with individual investors concerns/letters they will eventually have to listen because they know we will all cast our votes accordingly at the coming election.

Consider also writing in to Kerry Obrian on the 7.30 Report, I have, and this will encourage him to continue to probe in depth the effects of this tax with the relevant ministers such as occurred in last nights program 25/5/10.
Our own investments were simply trashed in the GFC etc and in 2009 early 2010 we had been slowly recovering from very substantial losses. The new RSPT now looks like we are on the trash heap again with substantial losses already occurring across the board. I shake my head in disbelief and believe all Australians will now lose big time if major changes are not made to the imposition of this unfair new 40% mining tax.
Other sectors of the economy such as the Banks have been making obscene profits for many years with no attention cast their way. Nice and cosy for them isnt it? Every clear thinking Australian knows it is only Mining and Resources sector that have so far protected this country from the worst effects of the continuing Global Financial Crisis.
Damage it and it will be to Australia's and all Australians peril and we will all know who is to blame for this current madness.

Cheers!