Prime Meridians: 4 Critical Points From India’s New Mining Policy

This week in Pierce Points:

Aussie papers hinted at an oil mega-merger. BHP may be eyeing a buyout of top Oz producer Woodside, according to The Australian.

Philippines’ mine approvals moved forward. Government officials say they will permit their first new operation since 2012.

Newmont spent $4M… on exploration. The gold major is buying out its junior partner in Haiti.

Russia and Iran discussed swapping oilCrude exchanges through the Caspian could give Russian exports a direct route to Asia.  

Non-traditional investors bought two more mines. The deals show mining finance is undergoing a major shift.

The 4 Most Critical Points From India’s New Mining Policy

This is the weekend of the fighting peacock.

That bird is the symbol of the National League For Democracy (NLD) — a party trying to make history in the Southeast Asian nation of Myanmar this Sunday. By becoming the country’s first democratically-elected government in over half a century.

Pierce Points Mining Investment Exploration

The fighting peacock, symbol of Myanmar’s National League For Democracy

If the NLD’s high-profile leader “The Lady” Aung San Suu Kyi can pull off a win, it will be historic change for Myanmar. And many resource developers in mining and energy are watching closely — to see how an outcome, either way, will affect the burgeoning offshore natural gas sector, as well as the onshore minerals industry.

One of the big things the mining sector is waiting for is a new legislative framework. With a draft of new mining rules having been winding its way through Myanmar’s government for years now.

The coming of elections has further delayed that process. But there’s hope now that this weekend’s vote could pave the way for these important changes to finally crystallize.

But another nation beat Myanmar to the punch this week — India.

The government here released a draft of a new National Mineral Exploration Policy on Friday. A development I’ve been expecting for some time — and one that looks like it could bring real change to the exploration sector in this high-potential nation.

You can download a full copy of the new policy from the government website. Officials are even inviting us to comment on the draft before the 20th of November — e-mail dirtech.mom@nic.in.

The document has a lot of useful information on India’s mineral industry — in terms of what’s been done to date, and what could happen in the future. It’s a must-read for anyone considering an entry to the exploration sector here over the coming years. Below are four of the most critical takeaways.

The System Has Failed Up Until Now

Anyone who’s tried to explore for gold, platinum or copper in India the last decade already knows this. But the numbers from the new policy document show just how badly the current system has failed the exploration business.

In 1999, the national government introduced the “reconnaissance permit” in order to spur exploration. These licenses were supposed to facilitate easy first-pass exploration of an area — and could then be converted to a full-on prospecting licenses, and eventually to a mining license.

Between 2001 and 2015, India issued 401 reconnaissance permits. Just 26 permits per year, and that was during one of the biggest exploration booms the world has ever seen.

And it gets worse. Only 341 of these reconnaissance permits were actually implemented — and only 191 permit-holders submitted a final report on their prospecting work.

How many of these first-pass permits got converted to more advanced prospecting and mining licenses? Only 15. An average of one per year.

The failure is also apparent in terms of exploration drilling. With India seeing an average of just 500,000 meters of drilling annually — less than 5% of what is completed in Canada.

And Yet, There’s A Lot Of Data Available

At the same time as the private exploration sector has languished, India’s government has been very active in mapping, sampling and surveying the country’s vast areas of prospective ground.

Over the last 10 years, the state-run Geological Survey of India has spent $860 million across the country. A full 98% of the country has been geologically mapped at 1:50K scale. Gravity geophysical data is available across the entire country, and aeromagnetic and radiometric surveys are available for some areas.

Geochemical sampling has also been carried out, at a very refined spacing of one sample per square kilometre in some of the most prospective parts of the country. And 8,500 reports on specific projects are available from the Geologic Survey.

The downside is, little of this data is readily available to the public in digital format. But the new policy is recommending this should change — with the data being digitized and made available through a central data repository, as is done in established exploration districts like Australia and Canada.

There Are Good Leads On Where To Start

All of the work to date has already pinpointed some of the most prospective areas for minerals across the country. The map below from the new policy document shows so-called zones of “obvious geological potential” highlighted in yellow (spelling errors notwithstanding).

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The document also contains a list of some of the newer deposits discovered to date. And the results are intriguing — with finds such as the 2010 Banswara gold deposit containing 3.3 million ounces grading an impressive 2.1 g/t Au.

Significant finds have also been made during the last five years for copper, silver, molybdenum and iron ore.

The Government Is Listening To Industry

So what will the new mining policy do to spur exploration in India? The document identifies several important adjustments to the permitting regime.

One the most critical changes is drilling density. 

Current rules around exploration drilling in India have been an industry killer. With forestry regulations allowing only 20 drill holes per 10 square kilometres of exploration ground. 

That equates to a spacing of five hundred meters between drill holes. Which is woefully insufficient to define a mineral resource under major international codes like NI 43-101 or JORC. 

The government is now trying to change this. Proposing an amendment that would do away with the drill spacing restrictions, provided that the total area utilized for drilling and access roads is less than 100 hectares. 

That would be a huge step in opening up exploration potential — giving private firms an unprecedented ability to test mineralized targets across the country. 

The proposed policy also upholds important issues like full transferability of licenses. A consideration that is critical for junior developers who want to sell discoveries to larger miners. 

All of which offers real hope for change. There are still issues that need to be worked out — for example, the auction system that has been proposed for initially licensing out known prospects. But if this does lead to a functional exploration system, it’s going to be an opportunity worth following — the policy document reveals that some of the world’s largest miners, including BHP, Rio Tinto, Anglo American, and De Beers are already establishing a presence in India. 

Watch for further developments after the comment period closes on November 20. 

Here’s to real policy,

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Dave Forest

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