The Association of Mining and Exploration Companies (AMEC) has urged state and territory governments to implement a moratorium of at least six months on tenement rentals and associated expenditure requirements for mineral exploration licenses.
Reports by global advisory organisation, BDO, show that small Australian mineral exploration companies are already facing challenges raising funds in difficult financial markets.
The BDO December Update stated that 40 per cent of ASX-listed mineral exploration companies reported less than $1 million cash at bank in the December 2019 appendix 5B reports, and 15 per cent have less than $500,000.
AMEC chief executive Warren Pearce said the association was now concerned that with the COVID-19 crisis, small Australian mineral exploration companies would have little to no opportunity for capital raising over the next six months.
He said the requested pause on payments was in line with the latest advice from the Commonwealth Government that suggests COVID-19 would disrupt normal operations until at least October 2020.
“The human impact of COVID-19 and the safety of those in our industry is the number one priority for AMEC and its members,” Pearce wrote in a statement.
“Each of our member companies is systematically implementing management plans across their operations to protect against the risks of COVID-19 and substantial resources are being allocated to ensure employees and companies are prepared.”
“However, the broader disruptive influence of COVID-19 on the economy and the financial markets is increasing the economic pressures on many of our member companies.”
“Already some companies have informed me that without the ability to raise funds they will struggle to carry employees and meet overheads through this period.”
Pearce said as COVID-19 weighed heavily on the market, AMEC was growing increasingly concerned for the future of smaller mineral exploration companies that need to raise funds to survive.
“These companies are small businesses without a source of revenue, that live on capital raised on the ASX and from private equity to explore for opportunities,” he said.
“This moratorium would allow companies to re-purpose their expenditure to sustain internal operations, retain their employees, and help ride out the COVID crisis.”