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ROCKS, RIGHTS AND RATIONALE
Indonesia’s allure
JIM KERR
GENERAL MANAGER EXPLORATION
HILLGROVE RESOURCES LTD
The search for resources, physical and human, deservedly take up
a vast proportion of a corporate’s total focus, and with Australian
companies arguably drowning in a sea of increasingly onerous
social and political concerns, it is hardly surprising that companies
are increasingly targeting their quest for resources offshore.
Jim Kerr, General Manger Exploration of Hillgrove Resources,
explains how his company has found the combined advantages
offered by Indonesia hard to ignore in the organisation’s ongoing
quest for investments where rewards outweigh risks.
It is no great leap of logic or sweeping statement to say that at
the heart of all great resource companies are great resources, both
physical and human. The trick for emerging companies is to get
these resources in hand quickly, but the challenges, like those
faced by almost all global mining houses, are many.
Effectively setting the risk profile of each investment
decision are ever-mounting demands on the good governance of
companies, which combine to make the identification, acquisition
and development of natural resource assets increasingly
difficult. Just some of these demands include fierce competition
for assets, access to development capital, market instability
and uncertainty over the global economic outlook, declining
exploration opportunities in mature environments, rising costs of
exploration and fluctuating commodity price environments. There
are also greater responsibility and accountability for effective
social and environmental management practices, concerns over
political stability, land access, increasing competition for land
use, intensifying scrutiny and in some cases interference of
operations by government, communities, NGOs, interest groups
and media, increasingly complex and potentially prohibitive
legislative environments, security of tenure, rapidly shifting and
potentially punitive taxation bases, corruption, and the attraction
and retention of outstanding people.
The risk profile is then inevitably weighed against the prime
motivational force; reward. To offset these seemingly daunting
challenges, aspiring mining companies need to methodically set
about de-risking their investments.
Australia’s newest copper producer, Hillgrove Resources,
is in the enviable position of having a quality copper resource
with significant upside at its Kanmantoo copper mine in South
Australia, as well as controlling two highly prospective licences
in Indonesia. Turning its cash flow towards these assets and other
opportunities is a high priority for the company under a strategy
to grow into a mid-tier mining house within five years.
Key to that plan is to grow, find or acquire great resources, both
physical and human.
It is probably fair to say that the low hanging mineral resources
“fruit” have been vigorously plucked in Australia, forcing
exploration companies to move into arguably more difficult or
expensive environments in the search for world class deposits.
Hillgrove specifically targeted Indonesia due to its rapidly
modernising legislative environment, the significant improvement
in the governance and macro economy of the country, the
relaxation of restrictions imposed on foreign ownership of mineral
assets, the proximity to Australia, the strong ties inherent in that
geographical relationship and most importantly, the undeniable
KARIPI GOLD PROSPECT, SUMBA ISLAND, INDONESIA
MINESITE 2011
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