Junior explorers will see the benefits of the Exploration Development Incentive (EDI) after it was passed through the Senate as part of the Budget 2015.
The EDI will allocate $100 million over the next three years to allow investors in early stage exploration projects to receive tax breaks for expenditure by the explorer.
Such expenditure was previously held as a loss for individual companies, and could only be claimed once adequate revenue had been generated, a great difficulty for junior explorers.
The scheme, which is limited to junior mining companies and will start from July 1 2015, has been met with industry approval.
Association of Mining and Exploration Companies (AMEC) CEO Simon Bennison applauded the passage of the EDI, which formed part of the Liberal Government’s pre-election policy.
“The Government has recognised the need to encourage investment in mineral exploration in Australia in order to discover the mines of tomorrow and sustain the economic benefits for all Australians,” he said.
“AMEC has been the leading advocate for an exploration tax credit system and was instrumental in the Government adopting the EDI.”
Bennison said there was an urgent need for implementation of the EDI to reduce risk in the market to encourage retail investors and stimulate the sector.
“In the Fraser Institute’s Annual Survey of Mining Companies for 2014, all Australian jurisdictions except for South Australia decreased on the Investment Attractiveness Index,” he said.
“Capital is extremely mobile so further damage to Australia’s reputation will see reduced investment in Australian projects and companies moving to more attractive jurisdictions.
“In 2014, 47 per cent of capital raised on the Australian Securities Exchange for mineral exploration was invested globally.
“Given the long lead time from discovery to a producing mine, investment in greenfields exploration is essential.”