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Mining investment out of Ireland
Christian Schaffalitzky Job Langbroek
Finex 2008
Christian Schaffalitzky Job Langbroek
Finex 2008
What is exploration?What is exploration?
Commodity prices
Good legislative framework Good people Good projects
Geology Frontier activity
Enough money Good luck
Commodity prices
Good legislative framework Good people Good projects
Geology Frontier activity
Enough money Good luck
Early Irish ExplorationEarly Irish Exploration
Legal/fiscal framework from1956
“Promotion” by geological survey of Ireland
Irish-Canadian explorers - Entrepreneurs
Canadian venture capital
Legal/fiscal framework from1956
“Promotion” by geological survey of Ireland
Irish-Canadian explorers - Entrepreneurs
Canadian venture capital
1958 - 19701958 - 1970 ‘Use it or lose it’ licence system
Discovery and development of Tynagh, Silvermines, Gortdrum, Magcobar 1958-1965
1967 Finance act Growth of Northgate Group 1970 - 4 mines represent 4% of Irish GDP
‘Use it or lose it’ licence system
Discovery and development of Tynagh, Silvermines, Gortdrum, Magcobar 1958-1965
1967 Finance act Growth of Northgate Group 1970 - 4 mines represent 4% of Irish GDP
1970 - 19851970 - 1985
Discovery of Navan - 5th largest in the world
New ‘left leaning’ government 1974 Finance Act “limits to growth” Arrival of ‘oil’ Majors
Discovery of Navan - 5th largest in the world
New ‘left leaning’ government 1974 Finance Act “limits to growth” Arrival of ‘oil’ Majors
1986 - 19971986 - 1997
New discoveries at Galmoy and Lisheen
Modern environmental legislation and structures
New Mines ‘State of the Art’ Start of gold exploration Maturing of base metals exploration - deeper targets
Open file data release
New discoveries at Galmoy and Lisheen
Modern environmental legislation and structures
New Mines ‘State of the Art’ Start of gold exploration Maturing of base metals exploration - deeper targets
Open file data release
1959TYNAGH1959TYNAGH
TSXTSX
TSX & MajorsTSX & Majors USMUSM AIMAIM
1963SILVERMINESMAGCOBARGORTDRUM
1963SILVERMINESMAGCOBARGORTDRUM
1970NAVAN1970NAVAN
1986GALMOY1986GALMOY
1990LISHEEN1990
LISHEEN
Good PeopleGood People In 1958, 2 Irish economic geologists, one in GSI
By 1980 - 150 geologists employed in exploration at all levels of management
Also 5,000 employees in the minerals sector 1975 to date
Industry 100% private sector and ‘entrepreneurial’
In 1958, 2 Irish economic geologists, one in GSI
By 1980 - 150 geologists employed in exploration at all levels of management
Also 5,000 employees in the minerals sector 1975 to date
Industry 100% private sector and ‘entrepreneurial’
Good ProjectsGood Projects
Carboniferous limestones of Ireland - major base metal province
Gold found in PreCambrian and Lower Palaeozoic rocks
These two themes account for 80% of geology of Ireland
Carboniferous limestones of Ireland - major base metal province
Gold found in PreCambrian and Lower Palaeozoic rocks
These two themes account for 80% of geology of Ireland
Enough MoneyEnough Money
Early phase venture capital from Canada - largest mining capital base in the world
Later Irish ‘grub stake’ money London next door USM and AIM (OFEX/PLUS) Experienced promoters
Early phase venture capital from Canada - largest mining capital base in the world
Later Irish ‘grub stake’ money London next door USM and AIM (OFEX/PLUS) Experienced promoters
Data from IMEG, EMD
Irish EntrepreneursIrish Entrepreneurs
Irish based promoters active since early 1980s
Initially worked in Ireland but also overseas
Initially tended to concentrate on gold and base metals, based on local experience
Activity continues to present
Irish based promoters active since early 1980s
Initially worked in Ireland but also overseas
Initially tended to concentrate on gold and base metals, based on local experience
Activity continues to present
SUCCESS RATE?SUCCESS RATE?
Total 61
Private 27
Listed 34
Dead 22 (2)
Mining 10
Irish Companies 1962 - 2008
Irish Minerals Companies 2006 Million Euros
Kenmare (KMR ID) 372.8Celtic Resources (CER LN) 113.3African Diamonds (AFD LN) 56.5Minco (MIO LN) 29.2Ormonde Mining (ORM ID) 25.2Mwana Africa (MWA LN) 22.1MinMet (MNM ID) 18.2Glencar (GEX ID) 16.6Ovoca Gold (OVG ID) 16.6Lapp Plats (LPP LN) 3.0
Traditional ModelIs it finished?
Traditional ModelIs it finished?
Too many companies fishing in small pond
Scale Problem - successful exploration requires project finance
Poor liquidity Big increase in costs 80-120% since 2002
What size the grubstake?
Too many companies fishing in small pond
Scale Problem - successful exploration requires project finance
Poor liquidity Big increase in costs 80-120% since 2002
What size the grubstake?
Exploration CyclesExploration Cycles Commodity price Cycle
Junior activity - risk taking Equity finance ‘saturation’Consolidation/Joint ventures/sales with majors
Reduction in frontier activity
Junior activity - risk taking
Commodity price Cycle
Junior activity - risk taking Equity finance ‘saturation’Consolidation/Joint ventures/sales with majors
Reduction in frontier activity
Junior activity - risk taking
Data from IMEG, EMD
Success in ExplorationSuccess in Exploration
Geo-entrepreneurial skills Legal framework Fiscal environment Infrastructure Modern science Trained professionals
Geo-entrepreneurial skills Legal framework Fiscal environment Infrastructure Modern science Trained professionals
Model for elsewhere?Model for elsewhere? Irish experience a clear case study for non-state involvement in exploration
Requirements are a benign legal/fiscal environment
Good geological database Very efficient use of capital due to highly competitive structure
Constraints are the supply and demand cycles in commodities
Irish experience a clear case study for non-state involvement in exploration
Requirements are a benign legal/fiscal environment
Good geological database Very efficient use of capital due to highly competitive structure
Constraints are the supply and demand cycles in commodities
AcknowledgementsAcknowledgements
Sean Beary (IMEG) Sean Finlay Eamonn Grennan Ralph Horne Hugh McCullough John Pyne (EMD)
Katy Lutley
Sean Beary (IMEG) Sean Finlay Eamonn Grennan Ralph Horne Hugh McCullough John Pyne (EMD)
Katy Lutley