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Mining investment out of Ireland

Mining investment out of Ireland. Christian Schaffalitzky Job Langbroek Finex 2008. What is exploration?. Commodity prices Good legislative framework Good people Good projects Geology Frontier activity Enough money Good luck. Early Irish Exploration. Legal/fiscal framework from1956

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Mining investment out of Ireland

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  1. Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008

  2. What is exploration? • Commodity prices • Good legislative framework • Good people • Good projects • Geology • Frontier activity • Enough money • Good luck

  3. Early Irish Exploration • Legal/fiscal framework from1956 • “Promotion” by geological survey of Ireland • Irish-Canadian explorers - Entrepreneurs • Canadian venture capital

  4. 1958 - 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

  5. 1970 - 1985 • Discovery of Navan - 5th largest in the world • New ‘left leaning’ government • 1974 Finance Act • “limits to growth” • Arrival of ‘oil’ Majors

  6. 1986 - 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

  7. 1956 Finance Act 1967 Finance Act 1974 Finance Act TSX & Majors USM AIM TSX 1963 SILVERMINES MAGCOBAR GORTDRUM 1986 GALMOY 1959 TYNAGH 1970 NAVAN 1990 LISHEEN

  8. Good 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’

  9. Good 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

  10. Enough 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

  11. Data from IMEG, EMD

  12. Irish 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

  13. SUCCESS RATE? Irish Companies 1962 - 2008

  14. Irish Minerals Companies 2006 Million Euros

  15. 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?

  16. Exploration 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

  17. Data from IMEG, EMD

  18. Success in Exploration • Geo-entrepreneurial skills • Legal framework • Fiscal environment • Infrastructure • Modern science • Trained professionals

  19. 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

  20. Acknowledgements • Sean Beary (IMEG) • Sean Finlay • Eamonn Grennan • Ralph Horne • Hugh McCullough • John Pyne (EMD) • Katy Lutley

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