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5 SECRET BOOM-TOWNS THAT CAN MAKE YOU RICH!

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REAL ESTATE RESOURCE RICHES

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Dymphna Boholt As someone who went from virtually zero to a $3.5 million property portfolio in just 18 months, Dymphna knows what it’s like to be on both sides of the wealth creation coin.She’s an accountant, advisor, presenter, entrepreneur, corporate director, miner, wife and mother. Most importantly, she understands property as well as anyone in the country. And when she speaks, the top experts listen. In 2009, everyone was talking about the real estate market collapsing. But while the media was telling everyone to SELL EVERYTHING AND RUN, Dymphna stepped forward (in March, 2009) and ran full-page advertorials in all of the major Australian newspapers (at her own expense) saying… “Don’t believe what all the myths, lies and half-truths in the media & all the trusty experts are telling you about the Australian real estate market dropping by 40%.” What’s more, she made several bold forecasts at the time – AND ALL OF THEM CAME TRUE. Ignoring her recommendations in 2009 probably cost you somewhere between $50,000 and $150,000. Ignoring her advice now could cost you even more.

About this publication Whilst the media report doom and gloom for most of the Australian real estate landscape, experienced and full-time property professional, Dymphna Boholt reveals a completely different picture. In her ground-breaking real estate research reports, you’ll discover 5 very different, unique and little-known areas in Australia that are booming right now. Ordinary and everyday Australians are creating extreme income and wealth with this exact information. Many have been able to replace their income in the last 12 months, and several hundred others are on their way to doing exactly the same. Why not you?

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Greatest Real Estate Boom since the 80’s From the Author Dymphna Boholt

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urrently, we are in the most amazingly unique time in investing history. There are enormous possibilities for investors today in the boom areas. It is the biggest phenomena to hit real estate investment in recent times. The boom is not going to be broad based and cover all of Australia however. It will be patchy and focus on the increasing decentralisation of Australia and in particular the strength of the mining industry and the flow on effects it has across a broad range of industries. These towns and areas which will, and in some instances have already experienced incredible growth in both value and rental yield and are mostly connected to the mining boom and its run off effects. They are riding on the commodities boom. They are the mining towns, and the ports from where the raw ore, coal, LNG ( Liquid Natural Gas), bauxite and gold are processed and shipped. This list of minerals is not exclusive and there are all the minor minerals such as copper, lead, zinc, lithium, phosphate, silver and a multitude of other minerals that are exported from our shores also. The following map really shows the extent of just how much Australia has in resources both under the ground and under the sea. There are opportunities in these areas for a quadruple real estate whammy! – positive cash flow properties, combined with manufactured income opportunities, manufactured growth potential along with natural growth.

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There are so many opportunities for investors to really have their cake and eat it too. Great cashflow, great growth, and the ability to be able to refinance and move on to the next deal more quickly. Historically, mineral resource development has been a strong driver of housing construction and accommodation, especially in localised areas: more so than many other industries. One reason is that until recently, mineral ore bodies were discovered on the fringes of industrial and agricultural activities, frequently in remote and lightly settled areas and were more visible. The development of mines created a strong demand for labour. In the San Francisco area between 1849 and 1855 the gold-rush resulted in the population expanding from approximately 15,000 to 300,000. Although many were initially temporarily accommodated in tents, the construction of more permanent dwellings followed. In Victoria, the gold discoveries near Ballarat resulted in the Melbourne and regional populations increasing from 20,000 to plus 500,000 between 1851 and 1857. There are many other local examples here in Australia where there was once a lonely parched environment and then a significant mineral was discovered and has resulted in shacks and huts around Investors can have the early mines, fairly quickly leading to modern inland cities. Prime examples their cake and eat it of this modern mining urbanisation are too! Great cashflow, Broken Hill NSW (1885), Kalgoorlie WA 1894 and Mt Isa QLD (1927). great growth, and the Frequently the inland mining activity has ability to be able to led to smelting and refining activities refinance and move on on the coast and the development or expansion of additional towns. Thus, Port to the next deal more Pirie SA smelting the Broken Hill lead and quickly. silver ores; the Townsville nickel refinery, Bell Bay (TAS) aluminium smelter and the steelworks of Newcastle NSW to list just some: and the ports through which the mineral products are exported also flourish as a result of the flow on effect.

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Broadly across Australia the multiplier effects of mining and processing is 5 to 1 or more. For every miner and process plant worker there are five elsewhere in support. Often the impact is subtle, another fitter apprentice in Wollongong, another schoolteacher in a Newcastle school or more nurses in Townsville. All this activity and increase in demand leads to more demand for housing, rental and overall growth.

In 2008 there were 108 significant underground gold and base metal mines in Australia and hundreds of open cut mines and countless quarries. Today in mid 2012, the resource industry is dominated by the gas extraction and iron ore mining in WA and extensive coal mining in QLD. Although there are a number of underground coals in NSW and QLD, generally coal and iron ore is mined in the open air from open cuts and pits.

Committed Government backing is always a good indicator, as is Local, State and Federal Government money being put into infrastructure.

Once mining personnel were most exclusively housed and accommodated permanently adjacent to the mine in a nearby town or city this is no longer the case. The introduction and rapid expansion of fly-in fly-out (FIFO) and drive-in drive-out (DIDO) and even bus-in-bus-out (BIBO) has diluted the need for mine-site domestic housing and support facilities (schools, police stations, hospitals) as once existed. However, mine and gas development and operation are still strong drivers of accommodation and even with the strong reliance on camp construction and operation close by or in adjacent locations, the social issues which can arise from separating families has meant there is still a growing demand for mine site townships. With a large labour expansion, permanent housing is also required wherever the FIFO flights originate and in other locations where it is convenient for the resource extraction and construction employees to reside or take rest and recreation. Wherever they are, workers must be accommodated temporarily and/or permanently and this means an expanding workforce offers real estate and housing opportunities. The challenge is to identify existing and new locations where resource activities will provide an opportunity for additional housing sales and rentals, including leased on-site accommodation for workers (previously known as SPQ’s – single persons’ quarters). The financial returns from an investment in resource housing can be high. For example in Port Hedland WA, house prices have risen on average 16% per year for the past ten years (2002 – 12) and the median price is close to $1 million. But every mine and gas project carries its own unique risks and world trade and financial risks apply as well. So, before rushing off to the rural boom areas with cash in your pockets, there are a few considerations to be taken into account. The longevity and the

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capacity of the investment are factors that are paramount for investors. There are indicators to help you with determining these. Population is an indicator. Usually the best capital growth results are to be found in towns and cities with populations between 5,000 and 100,000. Any less and they’re too small, any larger and the impact can diminish. Geographic isolation is another factor in determining whether or not to invest in an area. Committed Government backing is always a good indicator, as is Local, State and Federal Government money being put into infrastructure. An area that solely leans on one industry is more risky than one that has diversity. Australia is littered with the remains of mining towns. They were solely reliant on one industry and when that industry dried up, so too did the town. If there is infrastructure for a couple of industries in an area, and good employment Mines exist across them, then the risk of investment is lessened. where there is the Overnight sensations can also be avoided by looking at the permanency of the employment in the area. Some large infrastructure projects generate a lot of jobs when they are being built but employment diminishes or almost completely disappears after the project is complete. Dams and wind farms are typical examples. Mines, ports and LNG projects all employ large numbers of people for extended periods of time.

technical expertise to discover, develop and operate the often covered ore body, the availability of labour and equipment and a profit to be made to recoup the capital outlay and make more.

The above factors all affect demand for housing, so if there’s enough supply to soak up the demand, prices won’t move. The local council zonings will give you a rough indicator of whether there will be enough supply to meet the demand as the industries of the area grow. Too much supply does not lend itself to good growth or cashflow.

Mining is a distinct economic activity which has been undertaken since the Stone Age. There are a few mines which have intermittently operated over thousands of years. In recent times some mines have operated continually over 400 years. Mines exist where there is the technical expertise to discover, develop and operate the often covered ore body, the availability of labour and equipment and a profit to be made to recoup the capital outlay and make more.

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The factors which determine whether a mine can come into existence and prosper include: • Location, isolation and climate • Government policy on land tenure and control of the ground • Native title issues • Government approval to mine the mineral. In Australia some minerals are prohibited in some States, e.g. uranium exploration in QLD> • The grade (concentration) of the ore body and whether all things considered it can render a good profit when mined the substantial factors relating to a profit include; • Metallurgical complexity. Some ores cost a lot to treat, including some iron ores and complex gold ores • Operating costs (including taxes) versus sales price of the upgraded mineral product (or metal) offered for sale, on the world markets • The likely life of the mine. This, itself is a function of costs and profits, but assuming a profitable operation it will cease when the ore reserve is depleted. The ore reserve determines whether the operation has, say, a 5 year life or a 100 year life. Most mines fall somewhere in between. has

Australia been blessed with significant mineral deposits, especially of coal, iron ore, bauxite for aluminium, gold, lead and zinc, uranium to name some.

Australia has been blessed with significant mineral deposits, especially of coal, iron ore, bauxite for aluminium, gold, lead and zinc, uranium to name some. All of these minerals have been or are still found in relative abundance on other continents as well. There are currently about 200 mining towns in Australia. Many are vibrant new-comers such as the coal-mining towns of QLD and some are “red dwarfs” from the 1800’s and presumably about to disappear.

Many mining towns from the 19th and 20th centuries have prospered and even though the original mining has ceased or declined, the towns – now often cities – live on and prosper. Most are household names – Bendigo and Ballarat in Victoria both circa 1952, Broken Hill NSW 1884, Kalgoorlie WA 1895, Mt Isa QLD 1927, etc. With the Australian mining industry booming and underwriting again (as it has done previously especially in the mid 1800’s) much of Australia’s prosperity at this time, many investors and potential investors look towards mining as an investment, either direct share ownership, or mining town investment (real estate or accommodation). If there is a large mining expansion in a given area (say a number of mines

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opened or expanded) then logically and actually, it presents real estate opportunities, especially dwelling construction or the remodelling and extension of existing housing. Timing is one of the most important investment considerations when looking at a mining town investment. Simplistically the bottom line is, to get in at the growth stage and avoid the disappointments of an aging mine, a shrinking town and mine closure. To successfully invest in resource town real estate/accommodation it is generally necessary to: • Invest in a booming mining area with good growth potential and a strong demand for accommodation • Invest in a healthy mining support area such as a treatment plant area, a port or other service area enjoying the mining boom • Invest in dormitory or recreational towns enjoying strong mining workforce support • Identify suburbs in major cities from which mine workers originate • Locate new Greenfield mining operations just post discovery where accommodation will be a major need.

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Investing in mining towns – a sound or hazardous investment decision The Australian Bureau of Statistics paper “Australian Social Trends” states: “Rising demand and prices for many minerals has breathed a new life into some regional and remote towns. In recent years, some towns have experienced relatively rapid growth because of strong demand for labour by the mining industry, accompanied by its ability to pay comparatively high wages. The need for workers and accommodation in some regional and remote mining towns has led to increased outcomes, property values, rents and people, though not necessarily a commensurate increase in the number who consider the town to be where they live. Flexible working practices such as extended shift rosters and greater provision of temporary housing have made ‘drive in/drive out and ‘fly in/fly out’ (FIFO) arrangements common for mining company employees and associated contractors in regional and remote mining towns.” 1

Media is often to blame for a lot of sensational information and conjecture. This conjecture leads to confusion and indecision in investment circles and more often than not this indecision leads to those investors missing out of great deals with good cash flow. However, I will address some of the risks associated with boom town investing. Perhaps the most obvious risk is commodity prices which fluctuate in a free market with supply and demand. Some commodity prices also fluctuate due to government policies and intervention, for example China’s recent embargo on the export of rare earth minerals.

Towns of the Mineral Boom 2008 , Australian Bureau of Statistics, Commonwealth of Australia, 2009 1

Whilst there is strong demand for iron ore and coal in China and Japan, with India backing up closely behind, supply has struggled to keep up and prices have risen. But high prices encourage exploration and new mines, with increased supply and more competition eventually pushing prices down. China for example, is actively seeking alternative supplies of most commodities, with African iron ore in particular, to break the iron ore duopoly of Brazil and Australia. Although not limited to mineral resources Government actions can

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unexpectedly bring a cold wind on investments including housing, for example the 2011 ban on live cattle exports to Indonesia and say the revised mineral tax or the carbon tax. More recently, in March 2012, the new Queensland Government quickly moved to scuttle coal-seam gas developments in certain farmlands. More ominously, in response to Australia’s new defence moves with the USA and possibly in retribution for preventing Chinalco taking up major equity in the Australian iron or industry, China has started to publically explore retaliation moves against Australian resource purchase. Most of this is ‘political hogwash’ and sells a few newspapers and advertising around headlines. Cameron Stewart in The Australian newspaper, March 29 2012, reported “...Last month a Chinese think tank, the Knowfar Institute of Strategic and Defense Studies, called for China to exert direct economic pressure on Australia, including diverting mineral investments In the past, to other countries, to discourage Canberra from seeking closer some mining towns military ties with the US...”

which were permanent i.e. had long term housing, suddenly changed to FIFO with no family housing, school and other social facilities.

Again – fear feeding sells newspapers and TV and internet advertising slots. When can you remember a political banter having a long term effect on existing major trade contracts?

Another major factor to be considered as a risk in resource town investment is the transient nature of the town or mines employees. The demand for employees fluctuates depending on the development phase. There is now also the beginning of a move towards automated haul trucks, blast-hole drills and driverless trains. Whilst these initiatives may have some short term impact, they will have a greater long term effect of greater profitability and competitive price to further strengthen our standing on a world stage. The specific company philosophy towards on-site accommodation, whether it favours permanent long-term residence or FIFO also needs to be taken into consideration. In the past, some mining towns which were permanent i.e. had long term housing, suddenly changed to FIFO with no family housing, school and other social facilities.

Bureau of Mining & Economics Outlook “The Battle for the Pacific” Cameron Stewart, The Australian, March 29, 2012, p.11 2

All of the investment in the mining boom to date is but a shadow of what’s about to come according to the latest update by the Bureau of Resources and Energy Economics. The analysis identifies “advanced projects” worth an amazing $260.8 billion, as

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well as a second category of less-advanced projects worth $242.4 billion. If all the projects outlined by the Bureau came to fruition it would exceed half a trillion Australian dollars, making this era easily a new investment milestone. Just to put this into perspective, if you totalled all of the resource and energy investment to date in all of the mining booms since the turn of the century, it amounts to $138.4 billion. (That’s an inflation-adjusted figure, the dollar figure is lower.) That’s a fraction over half this current boom and that took over a decade. Add in the projects that are less advanced, and it’s more than three times all that’s been spent to date. The surprisingly large value of the projects at an advanced stage is matched by their surprisingly small number... A mere 98 projects account for the $260.8 billion - 39 in energy, 38 in minerals, 19 in infrastructure and two in processing. The big money is in energy projects: seven of them are liquified natural gas projects worth a combined $164 billion. The latest addition, the Ichthys LNG project off north Western Australia will pipe gas to Darwin via a 900 kilometre underwater pipeline, the world’s longest. Owned by the Tokyo-listed Inpex Corporation and the French oil and gas multinational Total, it has the potential to meet 10 per cent of Japan’s LNG needs, needs that are likely to grow as Japan turns away from nuclear power. Western Australia accounts for half of the investment at an advanced stage. When taken together with Queensland and the Northern Territory it accounts for 94 per cent. Less than $1 billion of the investment is in NSW, less than half a billion in Victoria. We are just at the cusp of this exciting expansion era.

Rather than focusing on a lot of media rhetoric, I believe the bigger question that investors should be asking is what is the strength of the ore body and

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the longevity of the town as a result – and therefore the strength and risk of the real estate opportunities. So let’s consider the main ore bodies carrying the Australian mining boom, and to do that you first need to understand the size and magnitude of the reserves.

Iron ore A quick look at an “Intierra – Australian Iron Ore Map” shows a preponderance of deposits, irons mines and iron towns in Western Australia, from Koolan Island in the tropics north of Derby to Mt Caudan a bit south of Southern Cross, about 300 kilometres due east of Perth. There is one operating mine and 7 to 8 deposits in South Australia, a couple of mines in Tasmania, one in the Northern Territory and one mine in Queensland. In the Pilbara district of Western Australia, there are approximately 20 operating iron mines and more being developed. Some are mature and well known – Mt Tom Price, Paraburdoo, Pannawonica to list just a few. Ramanaidou and Wells in their paper on Sedimentary ores say: The name iron is derived from a Celtic word, isarnon and bears the chemical symbol Fe from the Latin ferrum. Iron is indisputably the most significant element on Earth and also the most abundance being concentrated in the core. However, it is the 4th most abundance element in the Earth’s crust after oxygen, silicon and aluminium..... Nowadays the vast majority of iron ores are mined from large open pits such as Mount Whaleback, Marandoo and Yandi in Australia; Eurajas in Brazil with rare underground mines such Kuruna in Sweden... From a profitable viewpoint iron is the most significant metal. Sedimentary iron deposits, from which the majority of iron is extracted, are currently in high demand. With the exception of concrete, steel is currently produced in greater quantities than any other man-made material. Now (2010) the bulk of iron ore production comes from China (900Mt/yr) Australia (420Mt) Brazil (370Mt) and India (260Mt). Russia, Ukraine and South Africa produce smaller tonnages ranging from 50 to 100 Mt/year...3 “Sedimentary Iron Ores” Eric Ramanaidou and Martin Wells, The AusImm Bulletin No 2, April 2012, P 68 - 73 3

It may come as some surprise that China is the World’s largest producer of iron ore, yet imports 67% of the world’s total iron ore exports.

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Reserves In the published paper on iron ore demand, Homes and Ramanaido state: Based on publically available information, the known high-grade iron ore resources (measured, indicated and inferred) remaining in Western Australia are of the order of one billion tonnes at 64% Fe, although the total resources increase substantially to more than 20 billion tonnes if the cut-off grade is reduced to 60% Fe and even higher if the cut-off grade is set below 60%. 4 Other commentators place the reserves at 13.6 billion tonnes, sufficient for about 31 years of production at the current rate of mining. However, an Australian Government GeoScience Australia summary document titled “Iron Ore” (see attachment Annexure 3) states “Australia’s Economic Demonstrated Resource (EDR) of iron ore are around 28 billion tonnes with Western Australian accounting for about 98%.

COAL The origin of the name is unclear, possibly of Saxon origin. Coal is a combustible sedimentary rock formed from ancient vegetation which has been consolidated between other rock strata and transformed by the combined effects of microbial action, pressure and heat over a considerable time period. Coal occurs as layers or seams, ranging in thickness from millimetres ro many tens of metres. It is composed mostly of carbon (50 - 98 percent), hydrogen (3 13%) and oxygen, and smaller amounts of nitrogen, sulphur and other elements. It also contains water and particles of other inorganic matter. When burnt, coal releases energy as heat which has a variety of uses. Coal is broadly separated into brown and black which have different thermal properties and uses.5

” Iron Ore - meeting growing demand” Dr Ralph J Homes and Eric Ramanaidou, The AUSIMM Bulletin, No 3, June 2011, p 67-68 4

“Australian Energy Resource Assessment” 2010 Chapter 5 - 5.2.1 p 134 Department of Resources, Energy and Touris 5

Where freely available coal has been used by humans since the use of fire for cooking and heating became widespread. However the Industrial Revolution in England resulted in the systematic underground mining of coal to feed the steam engine boilers. Population growth together with the depletion of native forests resulted in its widespread use for cooking and heating accommodation. In Australia, coal was first discovered circa 1795, by Europeans, at Coalcliff, a small hamlet just south of Sydney, where a large seam is exposed in cliffs at the high tide mark. Not long afterwards it was also found along the Hunter River to where convicts were deployed for its mining and where the City of Newcastle grew. It has been continuously mined in Australia ever since.

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Coal is Australia’s largest export earner (valued at $55billion in 20082009) and employs around 137,000 Australians, 37,000 directly and 100,000 indirectly, mainly in regional Australia.

Australia is now the fourth largest producer of coal in the world and the largest exporter. It has the fourth largest reserves in the world. “At the end of 2008, Australia’s recoverable Economic Demonstrated Resources (EDR) of black coal amounted to 39.2 Gt. At the 2008 rate of production of around 490 Mt per year the EDR are adequate to support about 90 years of production.”6 Coal is Australia’s largest export earner (valued at $55billion in 2008-2009) and employs around 137,000 Australians, 37,000 directly and 100,000 indirectly, mainly in regional Australia.7 Queensland (56 percent) and New South Wales (40 percent) have the largest share of Australia’s black coal EDR, with the Sydney (35 percent) and the Bowen (34 percent) basins containing most of the recoverable black coal EDR.

The following map shows the coal reserves around Australia As you can see, Queensland and NSW has the majority stronghold on coal, particularly coking coal used for steel manufacture. The lesser grade coal being brown coal used for power stations.

Australian Energy Resource Assessment, 2010.... 6

“The Australian Coal Industry - Creating Value for Australia’s Future”, Peter Morris and Frank Nizynski, The AusIMM Bulletin No 1, Feb 2011, pp44 - 48 7

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Gold mining Australia is the second largest producer of gold, after China. Until recently the Republic of South Africa held a dominant position. Most Australians are aware of the role of gold in populating the country through the second half of the 1800’s and the creation of many towns and cities, especially in Victoria. In the decade 1850 onwards “nearly three quarters of a million immigrants, from Europe and North America came to Australia to seek their fortunes. Australia’s non-Aboriginal population increased from 400,000 to 1.15 million 10 years.”8 Although gold mining flourishes again, the onetime goldmining regions of Victoria, New South Wales and Queensland are relatively quiet and Western Australia has seen most of the renaissance. Company goldmines never quiet died in WA to the extent they did in other States, although they came close it in 1928 and in the early 1970’s. After looking at the iron ore industry, coal mining and Uranium and LNG (in sections of this report) gold mining looks a little like a poor cousin. The main differences are in scale. There are just a few gold mines similar in size to an iron ore pit. The so-called “Super Pit” at Kalgoorlie is the prime example and the largest gold producer in the Country, with an annual output of 850,000 ounces. Other differences in gold mining are: • Although there are a few with over 1,000 employees most company mines are modest in size with 100-200 personnel • In WA, which produces about 70% of Australian output, the majority of mines are self-reliant, often semi-remote open-pit operations.

“Overview of the Australasian Gold Industry - History of Australian Gold Production”,in Australasian Mining and Metallurgy, The Sir Maurice Mawby Memorial Volume, Second Edition, Vol 2, Hugh M Morgan, AO, p801 - Edited by J.T. Woodcock and J.K. Hamilton, Monograph No 19. The Australasian Institute of Mining and Metallurgy. 8

• Few WA mines rely on a town for much support. In any case in the Goldfields, towns are few and small. As a consequence FIFO/DIDO is common and the mine camp a feature of nearly all mines away from Kalgoorlie. Significant gold mines in other States are often located in a settled area, near an established town (Olympic Dam is an exception to this). • Gold mines, unlike iron and coal mines, require no railway to get their product to market. • The product, usually a gold and ore bar poured on site (or bars) is high value, easily transported and easily sold for a good price. Security is possibly more of an issue than other minerals, but still low-key and non-intrusive. This in part is because with the treatment process (Carbon in pulp in a cyanide solution) the gold is rarely visible or attainable. • Most so-called free milling gold ores contain high purity metallic gold

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AUSSIE REAL ESTATE MINING RESOURCE TOWNS RICHES

particles, but in very small quantities. A run-of-mine grade in the range of 1-2 grams gold per tonne of ore is not uncommon. This equates to 1-2 parts per million. The particles of gold in the rock constituting the ore are usually very fine and often invisible to the naked eye. This adds to the difficulty of exploration, mining grade control and metallurgical recovery of the gold. • Gold has one of the highest densities of all elements (19.3g/cc). It is chemically inert (a noble metal. • Australia produces around 260t.year of gold whilst World output is around 2,600t/yr. World demand in 2010 was about 4,000 tonne. There is substantial recycling from central banks and personal holdings of (combined around 50,000 tonnes (equivalent to 19 years’ world production.9

Oil and gas (including coal seam gas) Oil and gas are also resources but very different from coal and metallic resources. Oil and gas are generally extracted without being seen, in gas or liquid form they flow through pipes, are often mined off-shore and sometimes in territory contested by Australia’s neighbours. (Indonesia, Timor, Papua New Guinea) ” Gold and why it lacks the normal supply-demand features of a commodity”, Neil Phillips, The AusIMM Bulletin, No 6 Dec 2011 p9 44-47 9

Its extraction, refining and export is large-scale and frighteningly expensive - $36 billion for Phase 1 Browse Basin James Point, $20 billion for Gladstone Phase 1. The Australian industry is dominated by foreign entities including foreign governments (e.g. the Japanese government’s Inpex Corporation is potentially very profitable.)

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In the Construction and perhaps Start-up phase it requires a large labour input. Thereafter nowhere near as many. But initially a lot of accommodation is required. Typically 3,000 employees in the construction phase of a three train liquid natural gas (LNG) plant. There are a number of well established oil and gas projects, mostly off-shore. These include the Otway Basin off-shore Victoria and the North-West Shelf Venture situated off the Pilbara coast of Western Australia.

The observation has been made that Australia’s mineral boom is largely an oil and gas/coal seam gas (CSG) boom.

There are also a number of coal seam gas producers in New South Wales (eg Camden operation) and in the Surat Basin in Queensland. The observation has been made that Australia’s mineral boom is largely an oil and gas/coal seam gas (CSG) boom. The projected capital costs of the Browse Basin James Price Point project and the three approved Gladstone LNG/CSG projects is at least $56 billion. Add to that the Inpex Corporation $25billion plans, Greater Sunrise $14billion, North West Shelf Expansion $27 billion, Chevron’s Gorgon project $43 billion and its Wheatstone oil and gas $29 billion, a total of $188 billion suggests the claim is plausible. In an article published in The Australian, Cameron Stewart states: We will have resources related investment over the next 30 or 40 years of some $500 billion in (the north) yet this is the most sparsely populated part of the country.....In north-western Australia alone more than $170 billion in investments has been made in energy and resource projects....10 Of course Stewart includes off-shore oil and gas and on-shore iron ore rail and ports in this thumb nail sketch. (Planned on-shore mining projects in Australia are still substantial even if they don’t match oil and gas plans. These are various major coal mine developments, Olympic Dam $20 billion expansion, Fortescue Metal’s expansion $8.4 bill, Gina Rinehart’s Hope Downs project $7 billion, BHP iron ore expansion $7.4 Billion and Port Hedland Outer Harbour $? and Rio Tinto’s iron ore expansion $20 billion, maybe totalling $80 billion.)

“Our Vulnerable North” Cameron Stewart, The Australian, February, 1, 2012, p13 10

In North-West Western Australia and off-shore, extraction has about 70% of the proposed LNG expansion with Inpex Corporation planning to treat its gas in Darwin and Sunrise still negotiating with the Timor Leste Government. (The same region has approximately 60% of planned major mine expansions).

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The following map shows the oil and gas reserves across Australia.

Coal seam gas Coal seam gas (CSG) is natural gas from coal. The main areas for its extraction are the Surat Basin in QLD and northern NSW. In Qld it has been extracted and used to power homes for over 15 years. Coal Seam gas is somewhat controversial particularly with respect to its impact on the Great Artesian Basin, the process of “fracking” which mostly uses water and sand, underground water reserves, land-holders rights, especially in respect of land access and its potential impact on good cropping land. Queensland coal seam gas (CSG) industry has grown rapidly over the last 15 years. Three export LNG projects based on Queensland coal seam gas resources are under construction on Curtis Island near Gladstone with first cargoes expected in late 201411

“Queensland’s coal seam gas overview” Feb, 2012 Prepared by Geological Survey of Qld, Department of Employment Economic Development and Innovation. www. mines.industry.qld. gov.au/assets/coalpdf 11

Recently the Federal Government approved three major CSG projects based on processing and export, via Gladstone Harbour Qld. The projects are controversial in as much as dredging and shipping frequency is expected to impact on the Great Barrier Reef.

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CSG Drilling There are approximately 400 CSG holes drilled in NSW and 4000 in Queensland. Something like 40,000 holes has been mentioned for drilling the next decade. What is the labour component to this? The speed of hole completion depends on a number of factors including hole depth, hole diameter size and power of the drill rig, the hours per day in which drilling occurs, etc. Many holes drilled so far are between 500 - 900 metres deep. Each possibly takes 1 - 2 weeks and requires careful casing off, of the upper water zones. Potentially, a drill rig might drill 25 -40 holes per year. The number of suitable rigs in the field is unknown, but the number is limited. Assume 40 rigs, 40 x 40 = 1600 holes per annum. Forty rigs with a crew of three equals 120 drill crew members. Eighty rigs double shifts/day is 80 x 6 = 480 crew, plus maintenance and support, say 600. The point is numbers are unlikely to be large and they are dispersed across the coalfields from south of Sydney to a latitude north of Rockhampton’s, consequently a large number of towns are affected by the activity. These oils and gas projects have momentum and are unlikely to significant shrink in the near future. World population continues to expand and nations continue to improve their lifestyles and consume more energy per capita. But rain often threatens a picnic. In his article “Shale rise threatens LNG exports” Matt Chambers12states: A rise in US shale gas exports and the potential in China’s shale gas reserves are the main threats facing Australia’s booming liquefied natural gas sector, according to the Bureau of Resources and Energy Economics. In its March quarter report, BREE lists eight US applications to produce more than 100 million tonnes a year of LNG.

Real Estate Opportunities In its header page for the Australian Oil and Gas Exhibition and Conference titled “Resourcing the Pipeline – skills for Tomorrow” it states: Of the 75 advanced projects currently listed by The Australian Bureau Agriculture and Resource Economics 41 are in the energy sector. “Shale rise threatens LNG exports” Matt Chambers, The Australian Newspaper - Business, March 22, 2012p 20. 12

Pending the number of LNG trains constructed by 2015, it is anticipated around 3,200 new operational jobs will be generated with replacement demand in gas operations around 2,000 per annum. With another 61,500 new jobs required in the mining industry together with

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45,000 new jobs in resource construction, the industry is now facing a skills shortage that far exceeds that experienced in the boom period of 2003 to 2008.13 From what has been written previously on oil and gas, it points to potential real estate opportunities in the Pilbara (Onslow, Karratha, Port Hedland) and possibly James Price Point and Darwin. In terms of oil and gas/CSG and real estate the focus areas are fairly obvious, again, Onslow, Karratha, perhaps Broome, Gladstone and environs and the major towns of the Surat Basin previously discussed. Darwin will also become a gas hub, so there should be more real estate opportunities there.

Conclusion So where does all this leave the investors as part of this mining boom? Very well placed!!!!! Much of the boom is still yet to come with high growth and strengthening rental yields. With the increase in employment will come the increase in real estate demand, a shortage of supply and an increase in prices and rents. This gives the investor a unique opportunity to manufacture income and growth and hold a good high yielding cash cow. Investors really can have their cake and eat it too!!!!! So what’s next? In the next releases of my boom town series I will review in detail the actual boom towns and hot spots – the why and the how of income replacement and riding the real estate success wave. So stay tuned – lots of good stuff to come. Dymphna

“Resourcing the Pipeline - Skills for Tomorrow” Australian Oil and Gas Exhibition and Conference Brochure, Perth Convention and Exhibition Centre, 2022 February, 2012 13

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