PERTH (miningweekly.com) – The Association of Mining and Exploration Companies (Amec) has called on the federal government to extend the Exploration Development Incentive (EDI) beyond 2017, saying it will take nearly a decade for the programme to demonstrate its true value.

The EDI encourages shareholder investment in small exploration companies, enabling companies to create exploration credits by giving up a portion of their tax losses from greenfield exploration and distributing these to equity shareholders.

Australian resident shareholders issued with an exploration credit are entitled to a refundable tax offset or additional franking credits, while the exploration company’s carry forward losses are reduced proportionately to reflect the amount of exploration credits created.

The federal government set aside A$40-million for the EDI for the 2016/17 financial year.

Amec’s call comes as advisory firm Grant Thornton released its seventh survey of junior mining and exploration (Jumex) companies.

The report noted a "definite improvement" in market conditions for junior miners that had been sustained for over six months. A strong improvement was also noted in fundraising success, particularly in the gold and lithium sectors.

Amec CEO Simon Bennison said initial public offerings were still "very thin" on the ground in the mining and exploration sectors, although there appeared to be a bottoming in 2015, with an increase in late 2016.

“Capital is still scarce and the governments must continue with the various co-funded drilling programmes to ensure that greenfield mineral exploration prospers and new discoveries drive employment and revenue streams for companies and the nation’s economy.

“Amec is committed to reducing the cost of doing business for the industry and this has been reflected in government support across the exploration and mining sectors in various jurisdictions. These have included discounts on port charges to reductions in tenement expenditure. However, much still remains to lock in these arrangements for the longer term and, in particular, to reduce the overregulation of the industry,” he added.

Bennison urged state, territory and federal governments to commit to the deregulation of the industry.

“They must improve efficiencies across the agencies that reduce costs through shorter approval timelines. Approval delays and administrative costs continue to cripple projects and constrain investment. Governments must do more to streamline approval processes and reduce timelines.”