Mineral exploration in Western Australia sinks to lowest level in seven years

Mineral exploration in WA has sunk to its lowest level in seven years, with insiders warning that further falls are likely.

Australian Bureau of Statistics data released today put expenditure on exploration at its lowest level in trend terms since the March quarter of 2007.

Spending in the June quarter of this year was down 15 per cent on the previous three-month period and had fallen 60 per cent since the first quarter of 2012, the record high.

WA's struggles helped drag the national trend figure to its lowest level since the December quarter of 2006.

Chamber of Minerals and Energy chief executive Reg Howard-Smith said WA's decline was an extremely concerning trend.

"I sincerely hope I'm wrong in saying that, but I suspect we might have a little bit further to go in a downward trend," he said.

"Cost of doing business and cost of capital, those things will take some time to turn around.

"Whereas in the past a small exploration company might be able to do a very successful drilling program with $2-4million, arguably these days it's double that and it's hard to raise capital."

Mining decline yet to bottom out: analyst

Business commentator Tim Treadgold said the decline was yet to bottom out and warned it would have significant consequences.

"There has been a dramatic collapse in exploration and it's going to cause pressure right through the system," he said.

"There'll be less project development, there are obviously fewer discoveries."

Mr Treadgold said the issues were being driven by smaller companies not having the money to finance exploration and bigger businesses focusing more on improving returns for shareholders.

"The money is still flowing out of the companies to shareholders and that will probably continue for at least another year," he said.