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Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008

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

Mining investment out of Ireland

Christian Schaffalitzky Job Langbroek

Finex 2008

Christian Schaffalitzky Job Langbroek

Finex 2008

Page 2: 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

Page 3: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

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

Page 4: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

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

Page 5: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

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

Page 6: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

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

Page 7: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

1959TYNAGH1959TYNAGH

TSXTSX

TSX & MajorsTSX & Majors USMUSM AIMAIM

1963SILVERMINESMAGCOBARGORTDRUM

1963SILVERMINESMAGCOBARGORTDRUM

1970NAVAN1970NAVAN

1986GALMOY1986GALMOY

1990LISHEEN1990

LISHEEN

Page 8: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

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’

Page 9: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

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

Page 10: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

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

Page 11: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

Data from IMEG, EMD

Page 12: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

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

Page 13: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

SUCCESS RATE?SUCCESS RATE?

Total 61

Private 27

Listed 34

Dead 22 (2)

Mining 10

Irish Companies 1962 - 2008

Page 14: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 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

Page 15: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

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?

Page 16: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

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

Page 17: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

Data from IMEG, EMD

Page 18: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

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

Page 19: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

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

Page 20: Mining investment out of Ireland Christian Schaffalitzky Job Langbroek Finex 2008 Christian Schaffalitzky Job Langbroek Finex 2008

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