A 70% rise in the cost of permit fees is being defended by Government permitting agency New Zealand Petroleum & Minerals, which says junior mining companies should "raise sufficient capital" to meet the new charges.
One Otago permit holder had its permit fees rocket 18-fold, from $3000 to more than $50,000, while another had to produce a mine plan report, costing more than $50,000, for the one-off document which added no value to its operation.
Many of the 220 delegates at the New Zealand branch of the Australian Institute of Mining and Metallurgy annual conference in Christchurch were scathing of the price increases, which hit "junior" explorers especially hard.
"Where are the juniors? They can’t afford to hold any ground," was the general refrain.
New Zealand Petroleum & Minerals (NZPM) acting national manager for minerals Jackie Adams was contacted about the issue and said the permit fee costs were recovered from the industry and the fee structure had not been reviewed since 2006.
"The fees weren’t covering the actual cost of administering permits and the changes last year are designed to better reflect the actual amount of work required for each permit type," Mr Adams said.
In most cases, the application and annual fees charged by NZPM made up only a very low percentage of the total prospecting, exploration or mining expenditure over the total lifespan of a project, he said.
"We do not consider the actual dollar increase in fees to be prohibitive."
He was asked to outline the percentage increases of each permit type, ranging from prospecting, exploration and mining permits.
"The weighted average forecast increase for all minerals permits was 71%, which was required to ensure a break-even cost recovery," Mr Adams said.
Exploration by junior companies around New Zealand is at an all-time low and although exploration spending is up, much of last year’s $44 million spend was in existing, brownfield, mines.
Mr Adams was asked if the fee rise was a disincentive to the juniors, meaning new areas would not subsequently be explored.
"Regarding new market entrants, juniors, we appreciate that the capital market for raising funds in the minerals industry can be challenging when commodity prices drop significantly or are highly volatile.
"But if new market entrants raise sufficient capital and apply for an appropriately sized permit, the fees are not prohibitive," he said.
Previously, the fees for minerals prospecting permits, in particular, were far below the cost of administering them and because the fees had been "very low", that encouraged applicants to take out larger permits than necessary, Mr Adams said.
New Age Exploration made two partial surrenders of applications in July, both of which were minerals prospecting permits, he said.
New Age was undertaking a low impact $150,000 ground study near Lawrence and Roxburgh to see if a schist belt that extended south 60km from Oceana Gold’s successful Macraes mine also hosted gold. It was understood, but not confirmed, that in the face of fee rises New Age relinquished about 75% of its land mass to offset costs.
Mr Adams said prospecting permits such as New Age’s, were designed to identify exploration targets, so were not long-term permits and were ordinarily only granted for two years.
Government’s aeromagnetic surveys were helping understand mineral potential in the lower and upper South Island, including Otago, and that data was being made available to minerals companies, Mr Adams said.
From 2019, the permit fees would be reviewed every three years.
