Gold, lithium companies pushing resurgence in Aussie mining sector: report

Gold and lithium mining is prompting a mining resurgence in Australia, a report said.

The report, released by Melbourne consultancy firm Pricewaterhouse Coopers (PwC) on Wednesday, said that the Australian mining sector has experienced the worst of the industry downturn and is now on its way back up again.

PwC said that market value for the 50 medium-sized miners on the Australian stock exchange increased almost 25 percent from 2015 to 33 billion U.S. dollars in 2016 with gold firms accounting for nearly half the market value.

The report said the average Australian gold price rose 9 percent in 2016 to more than 1,300 U.S. dollars per ounce, prompting the value of gold companies within the mid-50 miners to soar by an average of 158 percent since 2015.

Despite the growth in value the companies recorded an aggregate after-tax loss of 750 million U.S. dollars and 1.5 billion U.S. dollars of impairments, down from 4 billion U.S. dollars in impairments in 2015.

Chris Dodd, head of mining in Australia for PwC, said there had been a pickup in deals, particularly in the gold and lithium industries.

"We think we have seen the bottom of the market. There are an increase in the amount of spend that companies are willing to put both into capital expenditure and dividend returns," Dodd said on Wednesday.

"We are seeing an increase in the level of merger activity or acquisitions that are playing out in the market, and we are just seeing an overall confidence in the ability to raise money on markets."

Dodd said he expected a slight downturn in the number of deals done in 2017, especially between gold companies due to higher prices.

"It's likely the gold groups are probably fairly fully valued for current prices, so that becomes difficult for transactions to happen," he told the Australian Broadcasting Corporation (ABC).

Lithium and graphite sectors have been given significant boosts by the development of new technologies such as smart phones which use the materials.

"Where are really seeing activity ... is around the lithium and graphite market," Dodd said.

"It certainly shows signs of being like the iron ore boom in terms of the rush to create supply to meet demand and whether we overshoot the mark there is again a risk that the industry has to consider." Endit