The 2018-19 round of the Junior Minerals Exploration Incentive (JMEI) has allocated $31 million to 46 smaller mining companies exploring new mineral deposits in Australia.
The successful companies were offered between $82,500 and $1.576 million, which they can use to convert tax losses into tax credits for shareholders.
Established in March 2018, the JMEI replaced the former Exploration Development Incentive with the aim to encourage additional private investment in Australian greenfields mineral explorations.
The new measure targets smaller exploration companies as they often have little income to offset their deductible exploration expenditure, and ususally find it difficult to attract capital investments for greenfields minerals explorations. Superannuation funds, for example, tend to avoid the risks associated with junior explorers, but may now be encouraged to invest because of the refundable nature of the JMEI.
The FMEI provides $100 million over four years from 2018-19, with initially $15 million allocated for 2017-18, and $25 million for 2018-19. However, as the 2017-18 round produced only 23 successful applicants awarded $8.5 million, the remainder of the $15 million was rolled over into the 2018-19 round.
Australian greenfields exploration has not produced a major discovery in nearly two decades, and projects targeting new mineral deposits lack momentum. This is highlighted by recent data from the Australian Bureau of Statistics which show that across Australia the meters drilled in greenfields mineral explorations fell by 9% in the December 2017 quarter, despite a 2.4% increase in expenditure.
The chief executive of the Association of Mining and Exploration Companies, Warren Pearce, commented that "overall there remains an imbalance between greenfields and brownfields exploration, with 67% of drilling happening in already explored brownfield locations. This imbalance must be addressed if Australia is to find the future mines”.
On a positive note, the second round of the FMEI was now over-subscribed, and according to a Government statement, this may indicate an upswing in confidence among mining companies.