Mining investment out of Ireland

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
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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

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Acknowledgements

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