At the Queensland Department of Natural Resources and Mines (DNRM)’s Digging Deeper 2016 Seminar recently, Simon Crouch of the Geological Survey of Queensland quoted figures of the benefit of Collaborative Drilling Initiative (CDI) drilling programs to the Queensland economy.

These figures did not include the economic stimulation of Conduct and Compensation Agreements (CCAs).

CDI grants are often awarded for areas of new exploration and, as such, the recipient exploration company is required to establish CCAs with the relevant landholders.

Exploration companies spend a considerable amount on negotiating CCAs (legal prerequisites to any exploration drilling programme in Queensland), yet this expenditure is not reportable under current Queensland regulations.

To present an example of the costs involved, a not atypical CCA for three drill sites for less than two weeks drilling took well over six months to negotiate and the landholder’s solicitor’s invoice exceeded the compensation retained by the landholder.  In this exploration campaign of just under $2 million reportable exploration expenditure which involved several landholders, the unreported cost of direct landholder negotiation was 7.5%  of the reportable exploration expenditure while the compensation payments (also unreported) were a further 3.7%.

So, had a CDI grant been received for this exploration program, departmental figures of the dollar benefit to the Queensland economy would have been 11.2% short of the real benefit.

This is one reason why I encourage the Department to consider including an item for CCA costs in the Annual Expenditure Statement submitted with Exploration Annual reports.

I would be interested in other AIG members thoughts on this matter, in particular whether such an expenditure item should be compulsory or voluntary.

Lucy Wittholz MAIG
Consultant Geologist

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