Australia's Identified Mineral Resources 2006

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Summary

Australia's economic demonstrated resources (EDR) of the following mineral commodities increased during 2005?bauxite, cobalt, diamond (gem and industrial), iron ore, manganese, nickel, rutile, silver, uranium, zinc and zircon. EDR of black coal, copper, gold and tantalum decreased in the same period. EDR for brown coal, magnesite, molybdenum, niobium, platinum group metals, shale oil, and vanadium remained at levels similar to those reported in 2005.

Increases in EDR were due to on-going drilling and evaluation of known deposits resulting in the transfer (re-assessment) of resources from inferred or sub-economic categories into EDR, and discoveries of new deposits or extensions of known deposits. A few mining companies re-estimated ore reserves and mineral resources more conservatively, notably in regard to black coal, to comply with the requirements of the Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code).

World ranking: Australia's EDR of zinc, lead, nickel, mineral sands (rutile and zircon), tantalum, uranium and brown coal remain the world?s largest, while bauxite, black coal, copper, gold, iron ore, ilmenite, lithium, manganese ore, niobium, silver and industrial diamond rank in the top six worldwide.

Accessible economic demonstrated resources (AEDR): A relatively small number of mineral deposits are inaccessible for mining because of government policies or environmental and land access restrictions that prevent mining. In particular, this is the case for some mineral sands and uranium deposits.

Resources and current rates of mine production: Ratios of AEDR to current mine production provide rough estimates for the resource life. AEDR of most major commodities can sustain current rates of mine production for many decades. While this is the longer term assessment, resource life based on ore reserves is shorter in duration reflecting a shorter term commercial outlook.

Based on EDR, the resource lives for gold (an average of 20 years at current rates of production), lead (just over 30 years) and zinc (around 30 years) are amongst the lowest. These assessments continue to highlight the need for ongoing successful exploration in the short and medium terms to sustain production of these commodities at current levels.

Mineral exploration: Mineral exploration expenditures in Australia rose by 7.4% to $1028.3 million in 2004?05, the highest financial year current dollar spending since 1997?98.

Although gold continued to dominate expenditure at $391.7 million, this was $6.4 million less than in 2003?04. Strong growth in exploration was recorded for all other commodity groups except diamond where a reduction of 8% saw spending fall to $23.7 million. Very strong growth was recorded in spending on exploration for uranium, which increased by 97% to $20.7 million, iron ore by 83% to $116.4 million, base metals by 72% to $261.1 million and coal, which rose by 55.6% to $126.8 million. Mineral sands exploration spending recovered after the fall recorded in 2003?04 with a 16% increase to $27.6 million.

The increase in exploration activity saw a strong growth in the number of reported intersections of mineralisation and several new discoveries. In response to world demand there was substantial activity in the iron ore sector, with new resources and drilling results released for many smaller deposits and prospects that had previously been too small to be of commercial interest.

Growth in the Chinese economy and its demand for mineral resources, particularly base metals, iron ore and coal continue to play an important role in the outlook for exploration in Australia.

Overall, the outlook for exploration is sound and improvements in levels of exploration can be expected unless there is a sharp reversal of the expected economic performance of key countries or metal prices collapse.