Deductibility of Exploration Expenses Threatened

The ruling, which has been circulated to the industry for comment, would permit deductions only for the cost of work carried out on actual exploration tenements. The large expenses that companies incur for regional geophysical and geochemical surveys, and geological reconnaissance, would no longer be tax deductible. The move has serious implications for the level of mineral exploration in Australia. The ruling is based on a strict interpretation of the relevant clause of the Tax Act, which states that exploration costs on mining tenements may be deducted from mining income. Thus, by implication, exploration costs elsewhere should not be deductible. Past practice has allowed companies to write off all exploration costs, but the Tax Office now proposes to interpret the law more strictly.

The industry has made strong submissions opposing this new limitation. However, tax officials claim it is their duty to enforce the law as it stands, and the industry’s recourse should be to get the law changed. A final version of the ruling is expected to be published by the end of the year. Mining to resume at Ballarat

After a lapse of almost 50 years, mining is set to begin again at the historic Ballarat gold district in Victoria. A Melbourne-based exploration company, Ballarat Goldfields acquired some old mining leases, and adjacent exploration rights in Ballarat East several years ago. Surface drilling, and underground exploration from old workings that the company dewatered and rehabilitated, proved up a mineable gold orebody.

The company has now arranged financing of $10 million(A) through a new share issue and a loan from the Australian Industry Development Corp. The funds will be used to modernize an old shaft for production, and to re-develop the underground workings to allow modern mining methods. This work will take about two years, and the company expects to start production before the end of 1991. New Gold Mine Reports Maiden Project

Broken Hill metals (not to be confused with Broken Hill Proprietary) has joined the ranks of Australia’s profitable gold producers. The company announced earnings of over $6 million(A) for the first six months of its 1988-89 fiscal year, and estimates at least $10 million for the full year.

The company was formed in 1969 to explore for base metals in the great Broken Hill base metal district of New South Wales. Its early ventures were unsuccessful, and it remained a junior exploration company until 1986 when it purchased a partly developed gold prospect in West Australia from a local prospector.

Further exploration proved up three separate commercial gold orebodies. Production for 1988-89 was about 3,421 kg and should reach 4,354 kg in 1989-90. Reserves, given as 7.5 million tonnes at 2.6 g per tonne, are large enough to sustain the present mining rate for several more years, and exploration is continuing to develop more ore, so the company’s future looks assured.

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