He said he had not spoken to one resources company even remotely in favour of the tax and noticed the federal government kept focusing its war of words on the big players like BHP Billiton, Rio Tinto and Xstrata from a “populist” point of view.

“And that’s just wrong, if they went out there and spoke to the smaller companies they would find out that they hate the whole tax just as much as the big companies do,” Wendt said.

“What often gets forgotten is that there’s 850-plus listed resource companies in Australia.

“Let’s take out the two biggest ones and take out the two biggest ones that are always in the media, the 850-plus are also dead set against this tax.

“People forget there are smaller companies being affected, and that are going to be impacted by this tax just as much, or more, than the big guys.

“Just because the big guys are going to be paying the bulk of the additional revenue doesn’t mean that relatively they’re the ones that are worst off – they’re not and actually it’s going to be the smaller players that are going to be more impacted by this in terms of being able to raise money in the first place if you’re an exploration company, given the flight of capital that is going to happen, [and] already is happening, out of Australia.

“It is going to be harder for the small companies to raise money. It raises the bar in terms of project liability, if and when they are lucky enough to get to the stage of having a project or a resource that is potentially mineable.

“The bar has just been raised in terms of the extra tax the company is going to have to pay and you have also got this overwhelming issue of dealing with sovereign risk, so the smaller companies are just as much affected as the big guys are.”

While the federal government might be trying to drive a wedge between big mining companies and their smaller compatriots, Wendt observed the government had not named any resources companies in favour of the tax and feared some might be “bullied” onside through its consultation process.

If the Rudd government wins the next election

Although polls are suggesting this could be a one-time Rudd government, the growing popularity of the Greens could mean otherwise if preferences favour the Labor party.

So far, Fortescue Metals Group and Xstrata have shelved Australian projects, while Rio and BHP are advancing projects overseas, but the real impact of the tax will be felt if the Rudd government wins office again with the RSPT.

Wendt said if the government gets back in and the tax is going to be a reality then that is when companies would really start to reinforce their words with clear and definitive action.

He can see Australian projects being canned, big cuts to exploration and development budgets, and potentially a small downside in company share prices, should that eventuate.

Buying opportunities

Despite the RSPT, Wendt believes some buying is likely to come back to the Australian resources sector on the back of recent positive US and Chinese economic data.

However, he said this would increase if there were more sentiment that the Rudd government is likely to be voted out of office.

He continues to view the coal sector as generally the place to be at present, because of strong demand and supply constraints.

Wendt can also see potential upside in aluminium producers and notes Rio is well-placed for a recovery in this commodity.

With gold continuing to shine during these uncertain economic times, he favours gold companies in the development stage.

At the top of his list in this regard is west Africa-focused Perseus Mining, which plans to start production from its Central Ashanti gold project in the September quarter of 2011.

He also views the merger of Newcrest Mining with Lihir Gold as creating a very dynamic company with growing exposure outside of Australia.

Wendt is a former senior resources analyst for Fat Prophets and specialises in junior resource stocks.

Full details of the proposed 40% tax on profits from extracting resources are still being worked out.

The final design paper for the RSPT is scheduled for a late 2010 release.