Preface

Preface
Preface
This report is prepared annually, on behalf of the Intergovernmental Working Group on the
Mineral Industry (IGWG), for presentation to federal, provincial and territorial mines ministers. It contains the latest information on exploration expenditure levels in Canada, a review of
current exploration and development activities in the provinces and territories, and commentaries on and analysis of current domestic and international trends that affect the Canadian
mineral exploration sector.
The data contained in this report are current as of April 1998 unless indicated otherwise, and
the views expressed by the various authors have been assembled and agreed upon by IGWG.
The Minerals and Metals Sector of Natural Resources Canada (NRCan) was responsible for
compiling, editing, producing and distributing the report.
Throughout the report, the expression “mineral exploration” refers to grassroots and advanced
exploration for metallic minerals, nonmetallic minerals, coal and uranium. It does not refer to
petroleum-related exploration.
This document can be accessed on the Internet at:
http://www.nrcan.gc.ca/mms/efab/invest/exploration.
To obtain additional information on exploration activities in Canada, you can also contact the
federal, provincial and territorial government offices listed on the following page.
NOTE TO READERS
This report has been prepared on the basis of information available at the time of writing.
The authors make no warranty of any kind with respect to the content and accept no
liability, either incidental, consequential, financial or otherwise, arising from the use of
this document.
iii
Government Contacts
For further information on specific issues related to this report, the reader is invited to contact
the appropriate federal, provincial or territorial authorities by telephone or e-mail:
Natural Resources Canada (Ottawa)
(613) 992-2662
•
Louis Arseneau
(principal editor)
(613) 995-0959
larsenea@nrcan.gc.ca
•
Ginette Bouchard
(Canadian exploration expenditure
statistics and analysis)
(613) 992-4665
gbouchar@nrcan.gc.ca
•
Donald Cranstone
(diamond deposit discoveries in
Canada, and Canada’s standing as a
world exploration target)
(613) 992-4666
dcransto@nrcan.gc.ca
•
André Lemieux
(globalization of the mining industry)
(613) 992-2709
alemieux@nrcan.gc.ca
Newfoundland and Labrador (St. John’s)
(709) 729-2768
(709) 729-6425
Nova Scotia (Halifax)
(902) 424-8135
Prince Edward Island (Charlottetown)
(902) 368-5018
New Brunswick (Fredericton)
(506) 453-3862
Québec (Québec)
(418) 627-6296
Ontario (Sudbury)
(705) 670-5877
Manitoba (Winnipeg)
(204) 945-6505
Saskatchewan (Regina)
(306) 787-1160
Alberta (Edmonton)
(403) 422-7872
British Columbia (Victoria)
(250) 952-0521
Yukon (Whitehorse)
(403) 667-5462
Northwest Territories (Yellowknife)
(403) 920-3214
iv
Executive Summary
According to preliminary figures, $804 million was spent on mineral exploration in Canada in
1997. Although down from the $895 million spent in 1996, this amount still represents the second highest total of the 1990s. Company spending intentions, as compiled in January 1998,
reveal that $767 million could be spent on mineral exploration in Canada in 1998. The 1998
forecast expenditures are almost $120 million below those recorded in 1997, but they still point
to sustained interest on the part of the mining industry in Canada’s mineral discovery potential. It should be noted, however, that in light of current base-metal and gold prices, the Asian
crisis, and the financing difficulties encountered by some companies, actual exploration expenditures may well fall below the forecast that was established in early 1998.
In 1997, Ontario, the Northwest Territories, Québec and British Columbia were Canada’s most
actively explored jurisdictions. In comparison to 1996 expenditure levels, exploration spending
increased in only four provinces: Alberta, Saskatchewan, Québec and Nova Scotia. The largest
declines occurred in the Northwest Territories, Newfoundland and Labrador, and Ontario. In
1998, the Northwest Territories, Québec, Ontario and British Columbia are expected to account
for 71% of total exploration expenditures in Canada. Spending is expected to increase in six
provinces and territories, with the greatest increases occurring in Alberta, Québec and British
Columbia.
According to the redesigned Survey of Mineral Exploration, Deposit Appraisal and Mine Complex Development Expenditures, approximately 75% of 1997 exploration expenditures in
Canada were directed at grassroots exploration as opposed to deposit appraisal work. Spending
by junior exploration companies stood at $298 million in 1997, accounting for 37% of total
expenditures. Junior company expenditures are expected to increase by 5% to reach $312 million in 1998. Senior company spending amounted to $506 million in 1997, and is expected to
decline to $456 million in 1998.
One of the highlights for 1997 was the claim-staking rush that took place in Alberta. Renewed
interest in the search for diamonds in that province resulted in new mineral claims covering a
total area of 37 million hectares and will likely result in a significant increase in exploration
activity in 1998. The 44 million hectares of new mineral claims recorded for Canada as a whole
represented the largest area of mineral claims ever recorded in a one-year period in this country, surpassing the impressive totals established during 1992 and 1993 at the peak of the diamond-staking rush in northern Canada.
Exploration for diamonds continues at a rapid pace in many regions of Canada. Although diamond exploration expenditures were lower in 1997, substantial amounts were spent on mine
development. The Ekati diamond mine is scheduled to begin production in the fall of 1998, and
the Diavik project could be in production in 2002. Work also continues on several other promising properties. The positive outlook for diamond mining in Canada remains a bright spot for
Canadian mineral exploration.
Globally, Canada remains one of the world’s top mineral exploration targets. Canada’s standing
as a destination for exploration investment from worldwide sources is remarkable given the
rapid growth that has occurred since the early 1990s in mineral exploration activity in many
developing countries.
v
Canadian companies are also continuing to increase their exploration and mining activities
abroad. They now conduct more than one third of the world’s exploration programs by larger
companies for precious-metal, base-metal and diamond exploration, and they hold the dominant
share of that market in Canada, Latin America, Europe and the Former Soviet Union.
vi
Table of Contents - English
Preface
Government Contacts
Executive Summary
1. MINERAL EXPLORATION EXPENDITURES IN CANADA
1.1 Introduction
1.2 1997 Exploration Expenditures
1.2.1
1.2.2
1.2.3
1.2.4
Statistical Summary
Spending by Junior and Senior Firms
Main Exploration Targets
New Mining Investment Expenditures
1.3 1998 Exploration Expenditures C An Outlook
1.3.1
1.3.2
1.3.3
1.3.4
1.3.5
Statistical Summary
Spending by Junior and Senior Firms
Main Exploration Targets
New Mining Investment Expenditures
Outlook for Exploration Based on Statistical Estimation
1.3.5.1 Methodology
1.3.5.2 Results
1.4 Recent Mineral Exploration Successes
2. DIAMOND DRILLING
2.1 Introduction
2.2 Overview of Drilling Activity
2.2.1 Statistical Background
2.2.2 Canadian Drilling Association Results
2.2.3 Exploration Drilling
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3. CLAIM STAKING AND EXPLORATION INTENSITY
3.1 Introduction
3.2 New Claims Staked and Claims in Good Standing
3.3 Exploration Intensity
4. EXPLORATION FOR DIAMONDS IN CANADA
4.1 Diamond Exploration Highlights
4.2 Statistical Summary
4.3 Advanced Projects
4.3.1
4.3.2
4.3.3
4.3.4
4.3.5
Ekati Diamond Mine
Diavik Project
Jericho Project
AK Property
Camsell Lake Area
4.4 Other Diamond Exploration Projects
4.4.1 Buffalo Hills, Alberta
4.4.2 ICE Claims LI-201 Kimberlite
4.4.3 Fort à la Corne, Saskatchewan
4.5 Comparison of Diamond Grades and Values of Canadian Diamond Deposits
with World Mines
5. REGIONAL OUTLOOK
5.1 Introduction
5.2 Newfoundland and Labrador
5.3 Nova Scotia
5.4 New Brunswick
5.5 Québec
5.6 Ontario
5.7 Manitoba
5.8 Saskatchewan
5.9 Alberta
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5.10 British Columbia
5.11 Northwest Territories
5.12 Yukon
6. HISTORICAL REVIEW OF MINERAL EXPLORATION SPENDING IN CANADA
6.1 Introduction
6.2 Historical Summary
6.3 Metal Prices and Exploration Levels
6.4 Exploration as Part of Total Mining Investment
6.5 Exploration Expenditures by Province and Territory
6.6 Exploration Expenditures by Type of Company
6.7 Exploration Expenditures by Type of Commodity Sought
6.8 Exploration and Development Expenditures by Foreign-Controlled Firms
7. CANADA=S STANDING AS A WORLD EXPLORATION TARGET
7.1 Introduction
7.2 Discrepancy Between Exploration Survey Results
7.2.1 Differences Between Canadian and Australian Statistics
7.2.2 Differences Between Official Canadian Exploration Statistics
and Metals Economics Group Exploration Statistics for Canada
8. GLOBALIZATION OF THE MINING INDUSTRY
8.1 Introduction
8.2 The Global Market for Mineral Exploration
8.3 Larger Canadian-Based Companies
8.4 Larger-Company Exploration Market in Canada
8.5 Larger Canadian-Based Companies Abroad
8.5.1 United States
8.5.2 Latin America and the Caribbean
8.5.2.1 Mexico
8.5.2.2 South America
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8.5.2.3 Central America
8.5.2.4 Caribbean
8.5.3 Europe and the Former Soviet Union
8.5.3.1 Western Europe
8.5.3.2 Eastern Europe
8.5.3.3 Former Soviet Union
8.5.4 Africa and the Middle East
8.5.5 Asia-Pacific
8.5.5.1 Southeast Asia
8.5.5.2 East Asia
8.5.5.3 South-Pacific
8.6 Outlook
APPENDIX
Survey of Mineral Exploration, Deposit Appraisal and Mine Complex Development Expenditures
Last updated July 23, 1999
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1. Mineral Exploration Expenditures
in Canada
1.1
INTRODUCTION
This section highlights the 1997 preliminary survey results for exploration expenditures and
the 1998 company spending intentions for Canada, as obtained through the redesigned federalprovincial survey of mining and exploration companies. This survey, now known as the Survey
of Mineral Exploration, Deposit Appraisal and Mine Complex Development Expenditures, is
described in the Appendix. As mentioned in the Appendix, new definitions were implemented
for the 1997 preliminary estimates and 1998 forecast survey. As a result, new types of information are collected by the survey but are only briefly described in this year’s report. For this
transition year, the analysis reconciles to some extent the new data with those of previous years
by using only a sub-group of data. A more thorough analysis of exploration expenditures in
Canada will be possible in coming years as comparable data are accumulated and compiled.
This section also describes the results of a statistical model, designed by NRCan’s Minerals and
Metals Sector, to predict the amount of junior and senior company mineral exploration spending
that could occur in 1998. Finally, a review of some recent and significant mineral exploration
successes confirms Canada’s mineral discovery potential for high-quality mineral deposits.
1.2
1997 EXPLORATION EXPENDITURES
1.2.1 Statistical Summary
In 1997, 652 companies (project operators) and some prospectors spent $804 million on mineral
exploration in Canada (Figure 1). That number of companies represented an increase of 4%
from the 1996 total of 629 companies (expenditures of $895 million). A total of 130 companies
(compared to 143 in 1996) spent $1 million or more each on exploration (Table 1); these companies’ expenditures accounted for 85% of the total expenditures for 1997. In general, the major
spenders had lower exploration budgets in 1997 than in 1996.
Compared to 1996, spending decreases totaling $109 million were recorded in most provinces
and territories (Figure 2). Major decreases occurred in the Northwest Territories (39% of the
$109 million), Newfoundland and Labrador (22%), and Ontario (20%). Increases were recorded
in Alberta, Saskatchewan, Québec and Nova Scotia, for a total of $18 million. In decreasing
order of amounts spent on exploration, Ontario, the Northwest Territories, Québec and British
Columbia accounted for 70% of all exploration expenditures in Canada.
In 1997, expenditures for general (off-property) exploration activity decreased by 18% from
1996. Overall, $652 million, or 81% of all exploration expenditures, was for general exploration
activity. The Northwest Territories ranked first in general exploration activity with 22% of the
total, followed by Ontario and Québec with 19% and 16%, respectively.
Mine-site exploration expenditures increased by 53% to $153 million from the 1996 level of
$100 million. They accounted for up to 10% of the respective exploration totals recorded for
Nova Scotia, British Columbia, the Northwest Territories, and Newfoundland and Labrador; up
to 20% for New Brunswick and the Yukon; and around 30% for Québec, Ontario, Manitoba,
Saskatchewan and Alberta.
2
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 1
Project Operators Active in Exploration in Canada, 1988-98
(no. of operators)
1 200
Junior companies
1 000
Senior companies
800
600
400
200
0
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
Notes: Data exclude prospectors. 1997 data are preliminary; 1998 data are based on company spending intentions as compiled in January 1998.
TABLE 1. EXPLORATION EXPENDITURES BY RANGE OF EXPENDITURES AND BY TYPE OF COMPANY, 1997
AND 1998
Range of
Expenditures
Junior
Senior
Total
Percentage
of Total
Companies Expenditures Expenditures
Percentage
of Total
Companies Expenditures Expenditures
Percentage
of Total
Companies Expenditures Expenditures
($)
(number)
>10 million
5 million - 10 million
1 million - 5 million
500 000 - 1 million
200 000 - 500 000
100 000 - 200 000
50 000 - 100 000
0 - 50 000
Subtotal
1
9
59
58
106
76
57
128
494
($000)
(%)
(number)
($000)
(%)
(number)
($000)
(%)
64.70
15.39
15.69
2.29
1.20
0.35
0.26
0.11
100.00
20
21
89
74
127
90
77
154
652
343 959
133 787
208 586
50 093
41 041
12 205
5 317
2 696
797 684
42.77
16.64
25.94
6.23
5.10
1.52
0.66
0.34
99.19
1997
16
55
129
38
34
10
4
2
291
490
891
165
486
953
414
014
118
531
5.53
18.75
43.34
12.91
11.73
3.49
1.35
0.71
97.82
19
12
30
16
21
14
20
26
158
327
77
79
11
6
1
1
469
896
421
607
088
791
303
578
506 153
Prospectors
76
6 498
2.18
–
–
–
76
6 498
0.81
Total 1997
570
298 029
100.00
158
506 153
100.00
728
804 182
100.00
1
13
69
57
89
60
41
85
415
11
86
133
35
27
7
2
1
305
078
219
406
512
837
608
456
393
509
3.55
27.66
42.80
11.39
8.93
2.44
0.79
0.45
98.02
14
11
32
11
24
13
10
18
133
269
83
84
7
7
1
783
885
212
562
682
483
715
335
455 657
59.21
18.41
18.48
1.66
1.69
0.33
0.16
0.07
100.00
15
24
101
68
113
73
51
103
548
280 861
170 104
217 618
43 074
35 519
9 091
3 171
1 728
761 166
36.60
22.17
28.36
5.61
4.63
1.18
0.41
0.23
99.19
1998
>10 million
5 million - 10 million
1 million - 5 million
500 000 - 1 million
200 000 - 500 000
100 000 - 200 000
50 000 - 100 000
0 - 50 000
Subtotal
Prospectors
48
6 186
1.98
–
–
–
48
6 186
0.81
Total 1998
463
311 695
100.00
133
455 657
100.00
596
767 352
100.00
Source: Natural Resources Canada.
– Nil.
Note: Data for 1997 are preliminary estimates; 1998 data are based on company spending intentions as compiled in January 1998.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 2
Exploration Expenditures in Canada by Junior and Senior Companies, by Province and Territory,
1995-98
Junior companies
Senior companies
($ millions)
1995 $717.6 million
200
160
120
80
40
0
Nfld.
N.S.
N.B.
Qué.
Ont.
Man.
Sask.
Alta.
B.C.
N.W.T.
Y.T.
1996 $894.8 million
($ millions)
200
160
120
80
40
0
Nfld.
N.S.
N.B.
Qué.
Ont.
Man.
Sask.
Alta.
B.C.
N.W.T.
Y.T.
1997 $804.2 million
($ millions)
200
160
120
80
40
0
Nfld.
N.S.
N.B.
Qué.
Ont.
Man.
Sask.
Alta.
B.C.
($ millions)
N.W.T.
Y.T.
1998 $767.4 million
200
160
120
80
40
0
Nfld.
N.S.
N.B.
Qué.
Ont.
Man.
Sask.
Alta.
B.C.
N.W.T.
Y.T.
Sources: Natural Resources Canada and Statistics Canada, based on the federal-provincial survey of mining and exploration companies.
Notes: 1997 data are preliminary estimates; 1998 data are company spending intentions as compiled in January 1998. Overhead expenditures are
included.
3
4
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
1.2.2 Spending by Junior and Senior Firms
The analysis within this report often distinguishes between senior and junior mining companies. In general terms, a senior mining company derives its income from mining or other business ventures and can direct part of that income towards its exploration projects. Junior companies, on the other hand, usually have no regular source of income and must finance their
exploration activities through the issuance of treasury shares. Junior and senior mining companies are described further in the Appendix.
A total of 158 senior project operators accounted for 63% ($506 million) of all exploration expenditures in 1997 (Figures 1 and 2). Their proportional share of total exploration expenditures
was about the same as in 1996 when 166 senior project operators spent $580 million.
About 70% of the expenditures reported by senior firms occurred in Ontario, the Northwest Territories, Québec and Saskatchewan (in decreasing order). Senior firms decreased their expenditures in 1997 in most provinces and territories, excluding Saskatchewan, the Yukon and, most
significantly, Alberta where they increased by 69%.
Senior companies were the main contributors to exploration expenditures in all provinces and
territories except the Yukon, Nova Scotia and British Columbia. In British Columbia, senior
company expenditures almost equaled spending by the juniors. The share of senior expenditures exceeded 80% of total expenditures in each of Alberta, Manitoba and Saskatchewan.
The number of junior project operators rose to 494 in 1997, an increase of 7% over the
463 recorded in 1996. Prospectors are not counted in this total because only aggregated
prospectors’ expenditures are provided by provincial survey partners and because some
provinces do not survey prospectors. Prospectors account for, at most, about 2% of total
Canadian exploration expenditures.
Altogether, junior companies and prospectors spent $298 million in 1997, a decrease of 5% over
1996. Decreases in junior expenditures were recorded in the Yukon, the Northwest Territories,
Newfoundland and Labrador, and British Columbia. Junior exploration expenditures roughly
doubled in Manitoba and Alberta. Other increases varied between 9% and 64%, with the low
end of the range being registered in New Brunswick and the high end in Québec. In decreasing
order of expenditures, Ontario, the Northwest Territories, British Columbia and Québec
accounted for 73% of all junior expenditures in 1997.
1.2.3 Main Exploration Targets
The two main exploration properties or groups of properties (based on reported exploration
expenditures) for each province and territory in 1997 are listed in Table 2. Expenditures on
the projects listed in this table totaled $186 million and represented 23% of all exploration
expenditures in Canada for that year. In fact, by themselves, 22 companies accounted for
$220 million, or 27% of all exploration expenditures in Canada in 1997. About 80% of those
expenditures were made by senior companies. Emphasis was still placed on diamond exploration in the Lac de Gras area of the Northwest Territories, and on nickel-copper-cobalt
exploration in the Voisey’s Bay area of Labrador.
1.2.4 New Mining Investment Expenditures
The new breakdown of exploration expenditures (Figure 3, Table 3) by grassroots work (exploration) and advanced work (deposit appraisal), including other related project costs such as
engineering, economic and feasibility studies, and environmental and land access costs, shows
that grassroots exploration amounted to $679 million in 1997 (76% of the $897 million total).
More than 90% of the total expenditures were reported as grassroots work in each of Manitoba,
Newfoundland and Labrador, the Yukon and New Brunswick; between 70% and 75% in
Ontario, Québec, the Northwest Territories and Nova Scotia; and between 65% and 70% in
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
5
Saskatchewan, Alberta and British Columbia. The latter provinces likely were the sites of a
higher proportion of more advanced work on promising deposits. In terms of ranking by total
grassroots expenditures, the Northwest Territories placed first followed by Ontario, Québec,
and Newfoundland and Labrador. For advanced work, Ontario ranked first followed by the
Northwest Territories, Québec and British Columbia.
The other related project costs that are collected in the redesigned survey constitute about 12%
of the overall expenditures reported, the balance being almost equivalent to what the total
exploration expenditures would have amounted to under the previous survey’s definitions.
The mine complex development component (including other related project costs) totaled $1 billion and most of the expenditures occurred in Québec, Ontario, Manitoba and Saskatchewan.
TABLE 2. TWO MAIN EXPLORATION PROPERTIES OR GROUPS OF PROPERTIES, BY
CANADIAN PROVINCE OR TERRITORY, 1997
Province/Territory
Company
Main Project
Commodity
Newfoundland and
Labrador
Voisey's Bay Nickel Company
Ltd.
Donner Minerals Limited
Voisey's Bay
Voisey's Bay South
Nickel
Nova Scotia
Kaoclay Resources Inc.
Musquodoboit, Shubenacadie
and Stawrache Valleys
Kaolin clay
Savage Resources Canada
Scotia Mine, Gays River
Lead, zinc
Noranda Mining and
Exploration
Heath Steele mine and
Brunswick mine1
Zinc, lead
Chapleau Resources
Single Gulch, Sewell Brook,
Costigan projects
Zinc, lead
Québec
Barrick Gold Corporation
Société Minière Raglan Du
Québec Ltée
Doyon mine1
Raglan project
Nickel, base metals
Nickel
Ontario
Inco Limited
Goldcorp Inc.
Victor deposit
Red Lake mine1
Nickel, copper, zinc, gold
Gold
Manitoba
Hudson Bay Exploration &
Development Ltd.
Inco Limited
Snow Lake, Flin Flon, Ruttan,
Minago River area
Thompson mine1
Copper, zinc
Saskatchewan
Cameco Corporation
Cogema Resources Inc.
McArthur River project1
Close Lake, Douglas River,
Wolly, Shea Creek projects
Uranium
Uranium
Alberta
Smoky River Coal Ltd.
Ashton Mining of Canada Inc.
Smoky River Coal mine1
Buffalo Hills project, Peace River
region
Coal
Diamonds
British Columbia
Taseko Mines Limited
Boliden Westmin Ltd.
Prosperity property, Fish Lake
area
Myra Falls mine1
Gold, silver, copper, zinc
Yukon
Viceroy Minerals Corp.
Columbia Gold Mines Ltd.
Brewery Creek mine1
Fyre Lake project
Gold
Gold, copper, cobalt
Northwest Territories
Diavik Diamond Mines Inc.
Lytton Minerals Limited
Diavik property, Lac de Gras
Jericho project, Lac de Gras
Diamonds
Diamonds
New Brunswick
Preliminary Expenditures ($ millions)
Total for these
junior projects2
Canadian total for these
junior companies
Nickel, copper, cobalt
Nickel, copper
Copper, gold
% of Total Canadian Expenditures
63.3
7.9
63.3
7.9
Total for these
senior projects2
Canadian total for these
senior companies
123.1
15.3
156.4
19.5
Total for these projects
Total for these companies3
186.4
219.7
23.2
27.3
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
1 Mine-site exploration project. 2 A junior project is a project operated (managed) by a junior company; a senior project is
a project operated (managed) by a senior company. 3 Total expenditures in Canada of the companies listed in this table
only.
6
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 3
Provincial/Territorial Distribution of Mining Investment,1 Excluding That for Structures,
Machinery and Equipment, Preliminary 1997
($ millions)
Exploration
350
Deposit appraisal
Mine complex development
300
250
200
150
100
50
0
Ontario
Québec
Northwest
Territories
Saskatchewan
British
Columbia
Manitoba
Newfoundland
Alberta
Yukon
New
Brunswick
Nova
Scotia
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
1 Mining investment includes: on- and off-property expenditures for field work, engineering, economic and feasibility studies, overhead costs,
environmental characterization, permits and protection costs, restoration costs, land access agreements, permits and damages.
TABLE 3.
TOTAL MINING INVESTMENTS (ON-MINE-SITE PLUS OFF-MINE-SITE), 1997 AND 1998
Exploration
1997
1998
Deposit Appraisal
1997
1998
Mine Complex Development
1997
1998
Grand Total
1997
1998
($000)
Field work and overhead costs1
Engineering, economic and
feasibility studies
Environment
Land Access
Total
Capital expenditures2
$ for environmental protection
and restoration
Repair and maintenance
expenditures2
$ for environmental protection
and restoration
Total
Grand total
Total environment
Environment as a percentage of
grand total
643 843
586 639
160 339
180 713
951 705
924 705
1 755 887
1 692 057
16 744
16 696
2 089
7 392
3 501
2 260
37 867
19 234
668
74 545
12 460
3 179
16 179
36 296
4 322
15 886
39 669
2 288
70 790
72 226
7 079
97 823
55 630
7 727
679 372
599 792
218 108
270 897
1 008 502
982 548
1 905 982
1 853 237
8 470
9 490
82 330
150 428
1 797 401
1 511 746
1 888 201
1 671 664
41
12
226
176
23 660
40 759
23 927
40 947
74 465
1 511
23 371
29 399
1 086 010
1 030 554
1 183 846
1 061 464
1 053
39
78
1 015
28 468
26 994
29 599
28 048
82 935
11 001
105 701
179 827
2 883 411
2 542 300
3 072 047
2 733 128
762 307
614 803
323 809
450 724
3 891 913
3 524 848
4 978 029
4 590 375
17 790
3 552
19 538
13 651
88 425
107 421
125 752
124 625
3.19
1.13
11.79
6.16
2.62
3.27
2.82
2.85
Sources: Natural Resources Canada and Statistics Canada, from the federal-provincial survey of mining and exploration companies.
1 Exploration plus deposit appraisal total can be compared to some extent with previous exploration expenditures series. 2 Includes structures, machinery and
equipment.
Notes: Exploration and deposit appraisal activities include only the search for new mines; they do not include work for extensions of deposits already being
mined or committed to production. Overhead expenditures include land costs, field administration costs and project-related head office expenses. Numbers
may not add to totals due to rounding.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
1.3
7
1998 EXPLORATION EXPENDITURES — AN OUTLOOK
1.3.1 Statistical Summary
In 1998, 548 companies (project operators) and some prospectors intend to spend $767 million
on exploration in Canada (Figure 1). Despite a 16% reduction in the number of companies,
expenditures are expected to decrease by only 5% over 1997. A total of 140 companies (130 in
1997) each intend to spend $1 million or more (Table 1). These 140 companies expect to spend
a total of $669 million, or 87% of total intended expenditures for 1998.
More than 70% of the total exploration expenditures will be reported, in decreasing order, by
the Northwest Territories, Québec, Ontario and British Columbia (Figure 2). Increases in
exploration expenditures are expected in six provinces and territories for a total increase of
$41 million. Those provinces/territories are Alberta, Québec, Manitoba, British Columbia, the
Northwest Territories and Nova Scotia. Altogether, increases in Alberta, Québec and British
Columbia should account for 82% of the $41 million.
Total decreases of $78 million are foreseen for Ontario, Newfoundland and Labrador, New
Brunswick, Saskatchewan and the Yukon. About 83% of the total decrease is expected to occur
in Ontario and in Newfoundland and Labrador.
Company spending intentions (Table 22, Appendix) indicate that expenditures on general
exploration are expected to decrease by less than 1% from $652 million in 1997 to $646 million
in 1998. This type of expenditure is expected to account for 84% of total spending. Due mainly
to the temporary suspension of activity at some major projects, mine-site expenditures are
expected to decrease by 20% to reach $122 million in 1998.
1.3.2 Spending by Junior and Senior Firms
In the federal-provincial survey compiled in January 1998, 133 senior companies indicated
their intention to spend $456 million, representing 59% of total forecast 1998 exploration
expenditures and a 10% decrease in senior company expenditures from 1997.
Most of the expenditures by senior firms are expected to occur in the Northwest Territories,
Québec and Ontario. In 1998, senior company expenditures are expected to exceed 70% of total
exploration expenditures in Saskatchewan and in the Northwest Territories. In the remaining
provinces and territory, expenditures by senior companies are expected to amount to less than
70% of their total respective exploration expenditures. Expenditures by senior companies are
forecast to decrease in most regions except the Northwest Territories, Alberta and Québec.
The number of junior company project operators is expected to decrease by 16% in 1998. However, this reduced number of companies is expected to contribute a slightly higher level of
expenditures than in 1997. Junior companies are expected to spend $312 million in 1998, a 5%
increase from the $298 million spent in 1997. The amount spent by juniors is expected to
increase in most provinces and territories. The extent of the increase is expected to vary
between 1% in Nova Scotia and 338% in Alberta. Decreases are expected in New Brunswick
(down by 45%), the Northwest Territories (27%), and Newfoundland and Labrador (24%).
In 1998, 83 junior companies (compared to 69 in 1997) each intend to spend $1 million or more
on exploration. They are expected to account for 29% ($231 million) of all exploration expenditures, compared to 25% ($202 million) in 1997. Fifty-seven senior companies (61 in 1997) each
intend to spend $1 million or more in 1998. These companies are expected to account for 57%
($438 million) of total exploration expenditures, compared to 60% ($485 million) in 1997.
1.3.3 Main Exploration Targets
The two main exploration properties or groups of properties (based on reported spending intentions) for each province and territory in 1998 are listed in Table 4. Planned expenditures for
8
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
TABLE 4. TWO MAIN EXPLORATION PROPERTIES OR GROUPS OF PROPERTIES, BY
CANADIAN PROVINCE OR TERRITORY, 1998
Province/Territory
Newfoundland and
Labrador
Nova Scotia
Company
Main Project
Voisey's Bay Nickel Company
Ltd.
Donner Minerals Limited
Voisey's Bay
Nickel, copper, cobalt
Voisey's Bay South
Nickel
Kaoclay Resources Inc.
Musquodoboit, Shubenacadie
and Stawrache Valleys
Scotia Mine, Gays River
Kaolin clay
Heath Steele mine and
Bathurst mining camp
(various properties)
Zinc, lead
Savage Resources Canada
Ltd.
New Brunswick
Commodity
Noranda Mining and
Exploration
Lead, zinc
Zinc, lead
Heath Steele mine and
Brunswick mine1
Québec
Barrick Gold Corporation
Société Minière Raglan Du
Québec Ltée
Bousquet No. 2 mine1
Raglan mine1
Nickel, base metals
Nickel
Ontario
Exall Resources Ltd.
Armistice Resources Ltd.
Glimmer mine
Virginiatown property
Gold, silver
Gold
Manitoba
Hudson Bay Exploration &
Development Ltd.
Canmine Resource Corp.
Snow Lake, Flin Flon, Ruttan,
Minago River area projects
Maskwa, Binco and Osik
properties
Copper, zinc
Cogema Resources Inc.
Close Lake, Douglas River,
Shea Creek projects
Amisk/Laural Lake projects
Uranium
Saskatchewan
Claude Resources Inc.
Nickel
Gold, base metals
Alberta
Pure Gold Resources Inc.
Ashton Mining of Canada Inc.
Lethbridge project
Buffalo Hills project, Peace
River region
Diamonds
Diamonds
British Columbia
R.H. Stanfield Holdings Ltd.
Gallowai Bull River property
Redfern Resources Ltd.
Tulsequah Chief deposit
Yukon
United Keno Hill Mines Ltd.
Viceroy Minerals Corp.
Bellekeno and Silver King
Brewery Creek mine1
Feldspar, copper, gold,
silver
Zinc, copper, gold, silver
lead
Silver, lead, zinc
Gold
Northwest Territories
Diavik Diamond Mines Inc.
WMC International Limited
Diavik property, Lac de Gras,
Diamonds
Meliadine and Kivalliq properties Gold
Forecast Exploration ($ millions)
Total for these
junior projects2
Canadian total for these
junior companies3
Total for these
senior projects2
Canadian total for these
senior companies
Total for these projects
Total for these companies3
% of Total Canadian Expenditures
131.7
17.2
131.7
17.2
76.9
10.0
81.1
10.6
208.6
212.8
27.2
27.8
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
1 Mine-site exploration project. 2 A junior project is a project operated (managed) by a junior company; a senior project is
a project operated (managed) by a senior company. 3 Total expenditures in Canada of the companies listed in this table
only.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
9
Figure 4
Provincial/Territorial Distribution of Mining Investment,1 Excluding That for Structures,
Machinery and Equipment, Forecast 1998
($ millions)
Exploration
400
Deposit appraisal
Mine complex development
350
300
250
200
150
100
50
0
Québec
Ontario
Northwest
Territories
Saskatchewan
British
Columbia
Newfoundland
Manitoba
Alberta
Yukon
New
Brunswick
Nova
Scotia
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
1 Mining investment includes: on- and off-property expenditures for field work, engineering, economic and feasibility studies, overhead costs,
environmental characterization, permits and protection costs, restoration costs, land access agreements, permits and damages.
these projects total $209 million, or 27% of all intended exploration expenditures. For Canada
as a whole, 21 companies reported $213 million, or 28% of all intended expenditures for 1998.
About 80% of those expenditures will be incurred by senior companies. As in 1997, the main
exploration targets are diamond deposits in Canada’s North, mainly the Diavik project, and
base-metal deposits in Labrador. In 1998, the two main projects for Newfoundland and
Labrador again are expected to represent more than 50% of total exploration for that province;
the same is true for Alberta, New Brunswick and Nova Scotia.
1.3.4 New Mining Investment Expenditures
The new breakdown of exploration expenditures (Figure 4, Table 3) by grassroots work (exploration) and advanced work (deposit appraisal), including other related project costs such as
engineering, economic and feasibility studies, and environmental and land access costs, shows
that grassroots exploration could amount to $600 million in 1998 (70% of the $871 million
total). More than 70% of the total intended expenditures were reported as grassroots work in
each of New Brunswick, Nova Scotia, Alberta, Saskatchewan and Ontario. In British Columbia
and in Newfoundland and Labrador, the shares of the expenditures for grassroots activity are
the lowest (58% and 52% respectively), indicating that more advanced work is being conducted
in those provinces. In terms of ranking by total grassroots expenditures, the Northwest Territories placed first, followed by Québec, Ontario, British Columbia, and Newfoundland and
Labrador. For advanced work, the Northwest Territories ranked first, followed closely by
Québec, British Columbia, and Newfoundland and Labrador.
The other related project costs that are now collected in the redesigned survey constitute about
14% of the overall expenditures reported, the balance being equivalent to what the total exploration expenditures would have amounted to under the previous survey’s definitions.
Compared to 1997, grassroots expenditures are expected to decline in most provinces and territories except Alberta (up by 88%), Québec (up by 5%) and Manitoba (up by 4%). In contrast,
deposit appraisal spending is expected to increase in most provinces, excluding Ontario,
Saskatchewan and Alberta.
10
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
As in 1997, the mine complex development component (including other related project costs)
totaled $1 billion, and the expenditures occurred mainly in Québec, Ontario, Saskatchewan and
Manitoba.
1.3.5 Outlook for Exploration Based on Statistical Estimation
1.3.5.1 Methodology
In this section, an attempt is made to predict the level of exploration for 1998 using standard
statistical estimation techniques. Exploration spending is estimated by linking historical exploration spending to factors for which historical data are available.
An analysis of historical data indicates that the level of expenditures on mineral exploration in
a given year can be linked to the previous year’s metal prices. This may be because companies
view exploration as an investment, with expected returns from that investment being dependent on expected revenues from the subsequent mining of discovered deposits. Expected future
revenues would obviously depend on future mineral and metal prices, and expectations of
future prices would likely be influenced by current prices. As well, metal prices influence a
mining company’s revenues and profits, and are an important determinant of the amount of
internal funds available for spending on mineral exploration.
Changes in exploration spending are likely to lag changes in metal prices because exploration
activity in a particular year is the result of a budgeting process that takes place in the preceding year. Budget allocations in a given year are therefore likely to reflect the metal prices and
company profits of the preceding year.
To capture this relationship between exploration and metal prices, the NRCan yearly metals
price index, lagged one year, was included in the estimating equation. This index is a Fisher
Ideal Index, based on the prices of six metals: gold, silver, copper, zinc, lead and nickel.
Figure 5 shows the relationship between historical exploration expenditures by senior
companies and the NRCan price index, lagged one year.
Figure 5
Exploration Expenditures in Canada by Senior Companies, and the Metals Price Index Lagged
One Year, 1970-98
Metals Price Index (1971 = 100)
($ millions)
800
400
Exploration
(left axis)
–
Metals Price Index
(right axis)
600
300
400
200
200
100
0
0
1970
1974
1978
1982
1986
1990
1994
1998
Sources: Natural Resources Canada and Statistics Canada, based on the federal-provincial survey of mining and exploration companies.
Notes: 1997 exploration data are preliminary; 1998 data are company spending intentions as compiled in January 1998. Overhead expenditures are
included. "Lagged" means that the 1970 Metals Price Index is compared to 1971 exploration expenditures, and so on.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
11
Figure 6
Actual and Predicted Exploration Expenditures in Canada, 1969-98
($ millions)
1 600
1 400
Actual 1
1 200
Predicted
1 000
800
600
400
200
0
1969
1973
1977
1981
1985
1989
1993
1997
Source: Natural Resources Canada.
1 For 1997, preliminary expenditures are shown because actual expenditures were not available.
Mineral exploration is a multi-stage process that usually proceeds over a relatively long period
of time as information is gathered from geological mapping, geophysical and geochemical surveying, diamond drilling, and so on. At various stages, this information is used by exploration
companies to decide on where to concentrate further exploration activity and, indeed, whether
to proceed at all. If early stages of exploration are successful in discovering promising mineralization, the exploration company has a strong incentive to proceed with more detailed, and
more costly, drilling and analysis, thereby increasing the amount it spends on exploration. It
can therefore be argued that exploration in a given period is related to exploration spending in
previous periods. To capture this relationship, a lagged dependent variable was also included
in the equation.
1.3.5.2 Results
Using data for the years 1969-97, the statistical equation predicts that senior companies will
spend about $460 million on mineral exploration in 1998. For junior companies, the estimated
equation predicts exploration expenditures of about $255 million. For all companies, expenditures of about $720 million are predicted (Figure 6).
1.4
RECENT MINERAL EXPLORATION SUCCESSES
Historical production data for the Canadian minerals and metals industry show that this industry experienced tremendous growth starting in the early 1950s. Concurrent with a growing
world economy, this was the beginning of a remarkable 30-year period characterized by intensive metals exploration efforts and successes.
An analysis of Canadian mineral exploration success1 reveals that there was a considerable
drop in the mineral deposit discovery rate in the early 1980s. From 1981 to 1987, the discovery
cost per dollar of metal discovered became very high. There was notable improvement in the
1 Analysis by D.A. Cranstone, A. Lemieux, and M. Vallée referred to in “Canadian Mineral Exploration,”
Chapter 5 of the 1994 Canadian Minerals Yearbook, Natural Resources Canada, Ottawa, 1995, pp. 5.14-5.16.
12
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
three-year period 1988-90, but the cost of discovering this much metal far exceeded the same
costs for the 1950s, 1960s and 1970s, even after adjustment for inflation. For the period 1991-93,
indications are, on the basis of incomplete information, that the discovery record was mediocre
at best. However, the period 1994-96 appears to have been one of the most successful threeyear discovery periods since the 1970s. Post-1996 discoveries in Canada point to a good discovery success rate for the coming years.
Some of the most significant recent discoveries and developments are summarized below.
When summarizing recent mineral discoveries in Canada, one cannot overlook Inco Limited’s
Voisey’s Bay nickel-copper-cobalt deposit in Labrador. By the end of 1997, 116 million tonnes
(Mt) of mineralization had been identified on this property.
In Sudbury, Ontario, Falconbridge Limited has found the relatively high-grade Onaping Deep
deposit, initially intersected by drilling in 1994. This deposit is distinct from the one currently
being mined at the company’s Onaping operation on the northwestern rim of the Sudbury intrusion. Also in the Sudbury area, Falconbridge has discovered the Norman West deposit, a deep
deposit on the northeast rim that Falconbridge had initially intersected by drilling in 1996.
Still in the Sudbury area, Inco has also announced the discovery of two new nickel deposits in
the vicinity of the Copper Cliff South mine. These are the Kelly Lake deposit, located south of
the mine at a depth of 1370 metres (m), and an unnamed high-grade deposit to the north of
Copper Cliff South at a depth of 900 m. Inco is also conducting underground exploration at its
Victor No. 2 copper-nickel deposit (discovered in 1990) on the eastern rim of the Sudbury intrusion.
In Manitoba, Falconbridge continues to drill the recently discovered Williams Lake nickel
deposit along the southwestern extension of the Thompson Nickel Belt. In southeastern Manitoba, Canmine Resources Corporation has discovered the Maskwa nickel-copper deposit in the
Bird River region, near the site of the former Dumbarton mine.
In Québec, an aggressive exploration program on Falconbridge’s Raglan property in the Ungava
Nickel Belt, where production began in 1997, is discovering additional nickel-copper ore. Also
in Québec, Noranda discovered the deep Porphyry Mountain copper-molybdenum deposit at its
Gaspé Copper operation. This deposit contains some 200 Mt that average 0.73% copper and
0.08% molybdenum (with the copper and molybdenum values together corresponding to a
copper-equivalent grade of 1%) at depths of between 1000 and 1700 m.
The recently discovered Separation Rapids pegmatite deposit, some 60 km north of Kenora,
Ontario, and 60 km along strike to the east of the Tanco mine at Bernic Lake, Manitoba, is
being explored by Avalon Ventures Limited. This deposit is yielding attractive results. The
“Big Whopper” pegmatite on this property has been traced over a strike length of 1.2 km and
ranges from 15 to 80 m in thickness. The deposit contains at least 7 Mt containing 30-60% of
the mineral petalite (LiAlSi4O10) and 25-30% of a rubidium-rich potassium feldspar. The
deposit has lithium grades in the range of 1.3-1.7% Li2O and rubidium grades in the range of
0.25-0.35% Rb2O. Petalite is used in ceramics.
In Saskatchewan’s Athabasca Basin, exploration continues for high-grade uranium orebodies
such as the world-class Cigar Lake and McArthur River deposits that were discovered in 1981
and 1989, respectively. Nine or more new uranium mines in the Athabasca Basin, including
Cigar Lake and McArthur River, are currently being either developed for production or are in
the final approval process.
Diamond exploration continues to locate promising new diamondiferous kimberlite pipes in the
vicinity of the Ekati mine, the Diavik project, the Jericho project and the AK-5034 deposit.
Winspear Resources Ltd. and Aber Resources have discovered an attractive diamondiferous
kimberlite dike at Snap Lake, Northwest Territories. At Fort à la Corne, Saskatchewan,
80 kimberlites have been discovered, about half of them diamondiferous, including several
diamond deposits that are very large but low in grade. In Alberta’s Buffalo Hills, a joint
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
13
exploration venture of Ashton Mining Canada Inc. (42.5%), Alberta Energy Corporation (42.5%)
and Pure Gold Resources Inc. (15%) has discovered 23 kimberlite intrusions since early 1997,
with a number of other geophysical targets yet to be tested by drilling. Although relatively low
in grade, several of the kimberlites have potentially economic diamond values.
In the Yukon, work continues on the Kudz Ze Kayah, Wolverine and Wolf copper-zinc-leadsilver-gold deposits and on the Fyre Lake copper-cobalt-gold deposit. In addition to the ongoing
diamond exploration activities in the Northwest Territories, WMC International Ltd. continues
to drill the large Meliadine West gold deposit, which could produce as much as 400 000 oz of
gold annually for at least 10 years. Other attractive gold deposits are being further explored in
various parts of Canada. These include the Boston gold project (BHP Minerals Canada Ltd.),
the George Lake project (Kit Resources Ltd.) and the Meadowbrook project (Cumberland
Resources Ltd.), all of which are in the Northwest Territories.
2. Diamond Drilling
2.1
INTRODUCTION
Diamond drilling is an essential component of exploration for nearly all mineral properties in
Canada, from the anomaly investigation stage to the deposit delineation and deposit definition
stages. As such, diamond drilling statistics constitute a valuable indicator of recent levels of
Canadian mineral exploration activity.
2.2
OVERVIEW OF DRILLING ACTIVITY
2.2.1 Statistical Background
The Canadian Drilling Association (CDA) gathers monthly diamond drilling statistics from its
member companies. Available CDA statistics cover about 50-60% of total Canadian contract
diamond drilling activity. Although incomplete, they provide a reasonable and up-to-date indication of recent national mineral exploration trends. Quarterly drilling statistics by the CDA
are depicted in Figure 7.
In addition, two other drilling surveys are compared with the CDA data in Figure 8. They consist
of: total Canadian contract drilling, as reported annually to NRCan by drilling contractors and published in Statistics Canada’s catalogue no. 26-201; and the federal-provincial survey of mining and
exploration companies, which includes all metres drilled and expenditures reported by companies
for their “own account” (drilling they did themselves) and for contracted drilling work. Exploration
Figure 7
Surface and Underground Drilling in Canada, by Quarter, 1986-97
(000 metres)
1 000
900
Underground
800
Surface
700
600
500
400
300
200
100
0
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
Source: Canadian Drilling Association (CDA).
Notes: CDA data are incomplete because not all member companies report their drilling. Data for 1996 are even more incomplete because the survey
was never completed.
16
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 8
Comparison of Three Surveys of Canadian Diamond Drilling, 1989-97
(000 metres)
6 000
Underground
Surface
5 000
4 000
3 000
2 000
1 000
0
1989
1990
1991
1992
1993
1994
1995
1996
1997 a
Sources: Federal-provincial survey of mining and exploration companies (left bar in each cluster); contract diamond drilling survey (middle bar in each
cluster); Canadian Drilling Association (CDA) (right bar in each cluster).
a Only CDA data were available for 1997.
Note: All data include mine-site development drilling.
and development drilling have been aggregated in the federal-provincial survey to allow a fair comparison with the other two sets of statistics. Mine-site development drilling (mainly underground)
consists of drilling aimed at establishing replacement ore reserves at producing mines.
Although these three sources of statistics provide different annual results, the same overall
trends are observable in the three surveys over the period 1990-96.
2.2.2 Canadian Drilling Association Results
As can be seen from Figure 7, each of the four years (1988, 1989, 1990 and 1991) exhibited a
similar pattern of diminishing diamond drilling throughout the year, with the number of metres
drilled in the first quarter of each year being higher than the number of metres drilled in the
final quarter of the previous year. This general quarterly decline in drilling throughout the
years continued until the third quarter of 1992 when metres drilled in the fourth quarter
increased relative to the third quarter.
From 1988 to 1996, drilling peaked consistently during the first quarter of each year. The explanation is twofold: first, in each of those years, flow-through share funds from the previous year
were carried over into January and February; and second, much of the drilling must be done during the winter months on frozen lakes and on areas of muskeg that are generally inaccessible to
drilling equipment at other times of the year. The former is likely to become less relevant because
the “look-back” period for flow-through-share-financed exploration was extended from 60 days to
365 days in the 1996 federal budget. As a result, exploration companies now have more time in
which to spend flow-through share money that was raised during the previous calendar year.
The general pattern of decreasing quarterly drilling throughout the year in 1988, 1989, 1990 and
1991 contrasts with the pattern of 1986 and 1987 when diamond drilling levels in the second half
of the year were higher than in the first half because of the increasing availability of flow-through
share funding during the heyday of the Mining Exploration Depletion Allowance (MEDA).
The total metres drilled in 1993 were considerably higher than in 1992, with further increases
in 1994, 1995 and 1997 (Figure 7). The metres drilled during 1997 were 22% higher than the
metres reported in 1995 (the 1996 survey was never completed).
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
17
2.2.3 Exploration Drilling
In 1996, 3 193 617 m of surface exploration drilling were carried out in Canada (Figure 9,
Table 5), up by 21% from the 2 641 649 m drilled in 1995. Diamond drilling (3 040 573 m) constituted 95% of the total metres of surface drilling. Ontario, Québec, British Columbia and the
Northwest Territories, in decreasing order of importance, were the busiest provinces and territories, jointly accounting for 70% of total surface drilling activity (Figure 10). Underground
exploration drilling (both diamond drilling and other types of underground exploration drilling)
totaled 872 968 m, up by 38% from the 631 648 m drilled in 1995. Ontario (326 331 m), Québec
(265 908 m), British Columbia (92 224 m) and Manitoba (86 217 m) together accounted for 88%
of total underground exploration drilling.
In the case of surface diamond drilling, 62% of the total metres were drilled by senior companies and 38% by junior companies. Underground diamond drilling was principally undertaken
by senior companies who reported 95% of this activity. Of the total surface metres drilled (diamond drilling), 50% was undertaken in the search for precious metals, 33% for base metals, 8%
for nonmetals and 3% for uranium. Most of the underground drilling was carried out in the
search for precious metals (69%) and base metals (27%).
As shown in Figure 9, some 50% of the total diamond drilling activity was dedicated to general
exploration, while close to 20% was dedicated to mine-site exploration. The remaining metres
were reported under the mine-site development category.
Current dollar costs per metre of exploration drilling in Canada can be calculated for the period
1986-96 inclusive, using data from the federal-provincial survey of mining and exploration companies (Table 5). These costs may exceed the actual amounts paid to drilling contractors as
some companies may have included costs associated with drilling such as geological logging and
assaying of core. These average drilling costs include both surface and underground drilling
expenditures; costs for surface drilling are normally significantly higher than those for underground drilling.
Figure 9
Surface and Underground Diamond Drilling in Canada, by Type of Work, 1989-96
(000 metres)
4 000
General exploration
Mine-site exploration
Mine-site development
3 000
2 000
1 000
0
1989
1990
1991
1992
1993
1994
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
1995
1996
18
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
TABLE 5. SURFACE AND UNDERGROUND EXPLORATION DRILLING IN
CANADA, 1986-96
Other Drilling1
Diamond Drilling
Year
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Metres
Drilled
(000)
3
6
6
3
3
2
1
1
2
2
3
616
221
206
940
702
341
889
932
626
993
898
Total Cost
Cost Per
Metre
Metres
Drilled
Total Cost
Cost Per
Metre
($000)
($)
(000)
($000)
($)
69
82
77
74
76
75
75
76
70
87
83
55
262
211
297
241
234
139
282
213
280
169
3
18
10
9
12
13
6
12
12
11
12
62
71
50
32
52
56
47
46
59
43
71
248
509
477
291
281
174
140
146
184
260
324
579
950
509
399
982
789
765
780
068
543
823
385
544
466
471
575
133
544
879
592
960
047
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration
companies.
1 Drilling methods such as percussion exploration drilling, reverse circulation drilling for overburden, and
rotary drilling (such as used in petroleum exploration) employed in exploration for coal, potash, salt,
gypsum and similar layered mineral commodities.
Figure 10
Surface and Underground Exploration Diamond Drilling in Canada, 1996
by Province
(000 metres)
1 400
1 200
Underground
1 000
Surface
800
600
400
200
0
Ont.
Qué.
B.C.
N.W.T.
Nfld.
Man.
Sask.
Alta.
Yukon
N.B.
(000 metres)
N.S.
by Commodity
2 500
Underground
2 000
Surface
1 500
1 000
500
0
Precious metals
Base metals
Nonmetals
Other metals
Coal
Uranium
Iron
by Type of Company
(000 metres)
2 500
Underground
2 000
Surface
1 500
1 000
500
0
Producers
Juniors
Affiliates of producers
Others
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
Note: Exploration includes general plus mine-site exploration, which includes only the search for new mines.
Foreign
3. Claim Staking and Exploration
Intensity
3.1
INTRODUCTION
The area of new mineral claims staked in Canada in 1997 (Table 6) totaled some 44 million
hectares (ha), the largest area of new mineral claims ever recorded in this country and an
increase of 232% compared to 1996. The largest yearly totals of new mineral claim areas
recorded previously had been 33 million ha in 1992 and 27 million ha in 1993.
3.2
NEW CLAIMS STAKED AND CLAIMS IN GOOD STANDING
In 1997, the area of new mineral claims staked in Alberta was 37.2 million ha, which is more
than six times the area recorded in 1996 and 85% of the total area of new mineral claims in
Canada. While the total area of new claims staked in Canada increased by 30.7 million ha in
1997, it increased by 31.9 million ha in Alberta alone. Saskatchewan and Québec were the only
other two provinces to record an increase. Saskatchewan’s area of new mineral claims
increased by 103% over 1996 and Québec’s increased by 10%. The mining recorders of Alberta
and Saskatchewan have explained their provinces’ respective increases by a strong interest in
exploration for diamonds. Furthermore, there has been renewed interest in staking for uranium in Saskatchewan.
The areas staked in 1997 were down by 51% in Nova Scotia, by 43% in New Brunswick, by 34%
in the Northwest Territories, by 23% in British Columbia, and by 20% in Newfoundland and
Labrador. Smaller decreases occured in the Yukon, Ontario and Manitoba. In general, the
effect of low commodity prices, combined with the post-Voisey’s Bay staking rush slow-down,
had an impact on the overall level of staking activity. In the Northwest Territories, bad
weather conditions hampered staking activity.
TABLE 6. AREA OF NEW MINERAL CLAIMS1 STAKED IN CANADA,
1996 AND 1997
Province/Territory
Newfoundland
Nova Scotia
New Brunswick
Québec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Yukon
Northwest Territories
Total
1996
1997
(hectares)
(%)
(hectares)
(%)
417 575
424 815
93 760
954 967
903 488
196 900
469 040
5 328 000
997 740
514 483
2 956 017
3.1
3.2
0.7
7.2
6.8
1.5
3.5
40.2
7.5
3.9
22.3
334 075
208 191
53 760
1 050 629
855 584
191 330
950 253
37 200 000
765 257
459 507
1 953 191
0.8
0.5
0.1
2.4
1.9
0.4
2.2
84.5
1.7
1.0
4.4
13 256 785
100.0
44 021 777
100.0
Source: Provincial and territorial mining recorders.
1 Excludes coal.
Note: Percentages do not add to 100 due to rounding.
20
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
The total area occupied by claims in good standing in Canada amounted to approximately 5.5%
of the total land mass in 1997, compared to 3.9% in 1996 (Table 7). As predicted in the 1996
edition of this report, this increase is attributable to the staking rush for diamonds in Alberta.
Over 30% of the area of that province is now occupied by claims in good standing. Newfoundland and Labrador, the Yukon and Nova Scotia are the other Canadian jurisdictions that have
the largest proportion of their land mass occupied by claims in good standing, although the
Northwest Territories stands out in terms of the number of hectares covered by such claims.
TABLE 7. AREA OCCUPIED BY CLAIMS IN GOOD STANDING IN
CANADA, 1996 AND 1997
Province/Territory
Total Area
Area of Claims in
Good Standing
(hectares)
Area of Claims/
Total Area
(%)
1996
Newfoundland
Nova Scotia
New Brunswick
Québec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Yukon
Northwest Territories
40
5
7
154
106
64
65
66
94
48
342
Total Canada
572
549
344
068
858
995
233
119
931
345
632
000
000
000
000
000
000
000
000
000
000
000
4 777
457
344
2 246
2 927
1 752
2 378
4 370
4 378
1 706
13 091
025
401
048
875
599
120
236
000
664
406
150
11.8
8.2
4.7
1.5
2.7
2.7
3.6
6.6
4.6
3.5
3.8
996 646 000
38 429 524
3.9
Newfoundland
Nova Scotia
New Brunswick
Québec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Yukon
Northwest Territories
40
5
7
154
106
64
65
66
94
48
342
3 041
365
342
4 017
2 903
984
2 772
20 200
4 305
3 353
12 888
Total Canada
996 646 000
1997
572
549
344
068
858
995
233
119
931
345
632
000
000
000
000
000
000
000
000
000
000
000
309
504
256
412
808
959
802
000
000
476
558
7.5
6.6
4.7
2.6
2.7
1.5
4.3
30.6
4.5
6.9
3.8
55 175 084
5.5
Sources: Natural Resources Canada; provincial/territorial mining recorders offices.
Note: Data for Prince Edward Island are excluded.
3.3
EXPLORATION INTENSITY
There is considerable variation in the level of exploration expenditures across Canada’s provinces
and territories. For example, 1997 exploration expenditures amounted to $174 million (preliminary) in Ontario, but were essentially zero in Prince Edward Island. There is also great variation
in the land areas of individual provinces and territories. The smallest, Prince Edward Island, has
an area of only 5560 km2 while the largest, the Northwest Territories, covers 3 426 320 km2, or
more than one-third the area of Canada. Because of the size differences, it can be misleading to
compare provinces and territories on the basis of exploration expenditures alone.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
21
A more complete measure of exploration intensity can be obtained by looking at exploration
expenditures per unit of area. Newfoundland and Labrador, New Brunswick and Ontario
recorded the greatest exploration expenditures per hectare of this total area in both 1996 and
1997 (Figure 11). Alberta had the lowest spending per hectare for both years, although the
staking rush for diamonds resulted in a remarkable 81% increase from 1996 to 1997. Nova
Scotia is the other province that experienced a significant increase in the amount spent per
hectare.
Figure 11
Canada, Total Exploration Expenditures Per Hectare, by Province and Territory, 1996 and 1997
($/hectare)
2.50
1996
2.00
1997
1.50
1.00
0.50
0.00
Newfoundland
New
Brunswick
Ontario
Nova
Scotia
British
Columbia
Québec Saskatchewan CANADA
Yukon
Manitoba
Northwest
Territories
Alberta
Source: Natural Resources Canada, based on the National Atlas Information Service and the federal-provincial survey of mining and exploration
companies.
Note: 1997 exploration expenditures data are preliminary.
Although not all exploration expenditures in any jurisdiction are spent on existing mineral
claims (some expenditures are incurred on unclaimed land or on mining leases), general exploration expenditures (off-property) per unit of area of mineral claims in good standing constitute
another useful measure of exploration intensity. The data for 1996 (Figure 12) show that
Ontario, Québec and New Brunswick enjoyed the highest levels of general exploration expenditures per hectare of claims in good standing. For 1997, Ontario remained in first place ahead of
New Brunswick and Manitoba. Along with Manitoba, Nova Scotia experienced the most dramatic increase, while Québec, the Yukon, Ontario and New Brunswick all suffered significant
decreases compared to 1996. Once again, Alberta was at the lower end of the spectrum, a situation that can be explained by the huge increase in claims in good standing that the province
recorded in 1997 and that increasing exploration expenditures could not compensate for.
For Canada as a whole, exploration spending per hectare of claims in good standing decreased
substantially from about $21/ha in 1996 to about $12/ha in 1997. This decrease can be attributed to an increase in the area occupied by claims in good standing in Alberta and to a decrease
in total exploration expenditures in Canada.
22
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 12
Canada, General Exploration Expenditures Per Hectare of Claims in Good Standing,
by Province and Territory, 1996 and 1997
($/hectare)
60
50
1996
1997
40
30
20
10
0
Ontario
New
Brunswick
Manitoba
Québec
Nova
Scotia
Newfoundland
British
Columbia
Saskatchewan
CANADA
Northwest
Territories
Yukon
Alberta
Sources: Federal-provincial survey of mining and exploration companies; provincial/territorial mining recorders offices.
Notes: General, or off-property, exploration excludes mine-site exploration. “Claims in good standing” excludes mining leases. 1997 data are
preliminary.
4. Exploration for Diamonds in Canada
4.1
DIAMOND EXPLORATION HIGHLIGHTS
Diamond exploration activity in Canada continued at a rapid pace in 1997 and 1998. In April
1998, there were some 600 diamond exploration properties in Canada. The provincial/territorial
distribution of those properties is depicted in Figure 13.
There have been a number of notable diamond exploration/discovery events in Canada since
the 1997 edition of this report was prepared (pages 19 and 20 of that report contain a brief
summary of the evolution of diamond exploration in Canada).
New discoveries of kimberlite intrusions and of attractive diamondiferous kimberlites continue
to be made in the Northwest Territories. In the vicinity of the Ekati diamond mine, six additional diamondiferous kimberlites have been reported with diamond contents that appear to lie
within the range of diamond contents being mined at world mines. Three new interesting diamondiferous kimberlites have been discovered by De Beers on the AK property of Mountain
Province Mining Inc., near the 5034 deposit. A mini-bulk sample from a diamondiferous dike
at Snap Lake, in the Camsell Lake area, has yielded highly encouraging results. At the Diavik
project, a mini-bulk sample of the A-11 North kimberlite has yielded diamonds, the largest of
which is a 3.01-carat (ct) gem-quality stone.
Figure 13
Provincial/Territorial Distribution of Diamond Exploration Properties in Canada, 1993-98
(no. of properties)
250
200
April 1993
August 1994
November 1995
April 1997
April 1998
150
100
50
0
Northwest
Territories
Saskatchewan
Ontario
Alberta
Québec
British
Columbia
Source: Natural Resources Canada, based on MIN-MET CANADA database, and used under licence.
Manitoba
Newfoundland
Yukon
Territory
24
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Several diamondiferous kimberlites have been discovered in the Buffalo Hills of northwestern
Alberta where 23 separate kimberlites had been found by the end of March 1998 and a considerable number of promising geophysical targets remained to be tested. The diamond contents
of the most attractive of the Alberta kimberlites appear to be considerably lower than those of
the Northwest Territories’ deposits, but gem-size, gem-quality diamonds are present. The
available grades (based on very small-sized samples) do fall within the range of grades of the
world’s diamond mines. The potential economic significance of these Alberta discoveries will
not be clear until larger bulk samples are taken from them and a sufficient quantity of diamonds is recovered to permit diamond valuation.
Exploration continues in the Fort à la Corne region of Saskatchewan, to the east of Prince
Albert, where the first kimberlite discovery was made in 1988. Several companies that are
active there have discovered more than 80 kimberlite intrusions. Some of them are exceptionally large and a relatively large proportion, perhaps as many as half of them, are diamondiferous. The best available information indicates that their diamond contents are low, but some of
them are close to the diamond contents of the world’s lowest-grade diamond mines. Diamond
exploration continues in various other parts of Canada, but what is somewhat surprising is that
there is so little of this exploration going on in the extensive areas of Saskatchewan, Manitoba,
Ontario and Québec that would appear to offer discovery potential that is just as favourable as
the Northwest Territories was prior to the initial diamond discoveries there.
In March 1998, Diavik Diamond Mines filed a project description with the Government of
Canada for its proposed $875 million Diavik diamond mine at Lac de Gras. In 2002, when the
Ekati diamond mine and the Diavik mine are both in full operation, these two mines together
are expected to have a combined annual revenue of about $1.3 billion. This will place Canada
in fourth or fifth position in the world in terms of annual diamond production value. At the
time of writing, at least 29 diamondiferous kimberlite deposits had been announced in Canada
at five separate exploration properties that appear, from the information available, to be potential diamond mines. These deposits were all discovered in a time period of less than seven
years. Additional diamond mines from already-known diamond deposits and from likely future
diamond discoveries in Canada seem almost certain, and Canada can therefore expect to
become an even more important diamond producer.
4.2
STATISTICAL SUMMARY
Expenditures dedicated to exploration for diamonds in Canada by senior and junior companies
since 1989 are shown in Figure 14. The higher diamond exploration expenditures in 1993 and
subsequent years reflect not only an increase in the number of companies exploring for diamonds and an increased number of active diamond exploration projects, but also the high cost
of underground and large-diameter drill hole bulk sampling of various diamondiferous kimberlite intrusions discovered since 1991 in the Lac de Gras area. To bring a deposit into production
is also very costly. For example, BHP Minerals Canada Ltd. has likely spent a total of $900 million to date on the Ekati project from the exploration stage to the pre-production stage.
Over the six-year period 1993-98, a total of $744 million will have been spent on diamond exploration in Canada, representing between 15 and 20% of total exploration expenditures in each of
those years. Company spending intentions for diamond exploration in Canada for 1998 are
about $125 million, up from $93 million in 1997 (Figures 14 and 15), but still lower than the
record high of $154 million in 1996.
Exploration expenditures for diamonds were lower in 1997 in part because money spent by
BHP Minerals Canada Ltd. was, to a larger extent, directed toward mine development at the
Ekati project. In 1998, Diavik Diamond Mines is expected to spend a significant amount on its
advanced Diavik project. Also in 1998, the Buffalo Hills and Lethbridge properties in Alberta
are being intensely explored by the project operators, Ashton Mining of Canada Inc. and Pure
Gold Resources Inc., thus contributing to the expected $22 million to be spent on diamond
exploration in that province.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
25
Figure 14
Diamond Exploration Expenditures in Canada by Junior and Senior Project Operators, 1989-98
($ millions)
160
Junior companies
120
Senior companies
80
40
0
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
Note: 1997 data are preliminary estimates; 1998 data are company spending intentions as compiled in January 1998.
In 1996, 49 companies (39 juniors and 10 seniors) were operators of diamond exploration projects, down from the 61 operators (51 juniors and 10 seniors) reported in 1995 (Figure 16).
Although the number was lower, project operators spent a total of $154 million in 1996, up
slightly from the $147 million spent in the previous year. Junior companies accounted for 42%
of total Canadian diamond exploration expenditures in 1996 (up from 24% in 1995).
In 1996, companies spent $139 million on diamond exploration in the Northwest Territories,
which amounts to 90% of the total $154 million spent on the search for diamonds in all of
Canada during that year. Some $5 million (3%) of this total was spent in each of Ontario and
Saskatchewan and $3 million (2%) was spent in Québec. The remaining $2 million was spent
in Manitoba, Alberta, British Columbia, and Newfoundland and Labrador.
During 1996, three major project operators, each spending more than $30 million and active
principally in the Northwest Territories, contributed about 64% of total diamond exploration
expenditures in Canada. Advanced exploration work, managed by BHP Minerals Canada Ltd.,
took place in the Lac de Gras area of the Northwest Territories. It was decided, in 1997, to commit five pipes to production (Koala, Panda, Fox, Misery and Sable), with Koala expected to start
producing diamonds in 1998. Intense work was also performed on the pipes of the Diavik project operated by Diavik Diamond Mines, and production is anticipated for the year 2002. Lytton Minerals Limited also carried out important exploration work on the Jericho project. Most
of the diamond exploration expenditures were spent in the Slave geological province.
A preliminary estimate of $93 million in exploration expenditures for 1997 and a forecast of
$125 million for 1998 show that interest in diamond exploration will continue to be strong in
the near future. About 45 companies are project operators in each of those years; on average,
80% are juniors. For 1997, about 60% of the expenditures were reported by senior project operators, an amount comparable to the 58% of expenditures reported in 1996. For 1998, 70% of
intended expenditures were reported by senior companies.
26
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 15
Diamond Exploration Expenditures in Canada, by Province and Territory, 1994-98
1994
$138.4 million
1995
$147.4 million
Northwest Territories
$115.6 M (83.6%)
Northwest Territories
$132.6 M (90.0%)
Others
$0.9 M (0.6%)
Others
$0.4 M (0.3%)
Alberta
$1.5 M (1.0%)
Alberta
$2.5 M (1.8%)
Saskatchewan
$3.2 M (2.2%)
Manitoba
$2.5 M (1.8%)
Ontario
$2.9 M (2.1%)
Québec
$5.2 M (3.8%)
Québec
$3.5 M (2.4%)
Ontario
$5.6 M (3.8%)
Saskatchewan
$9.3 M (6.7%)
1996
$154.3 million
Northwest Territories
$138.8 M (90.0%)
1997p
$92.9 million
Northwest Territories
$79.0 M (85%)
Others
$1.1 M (1.2%)
Québec
$2.6 M (2.8%)
Others
$1.1 M (0.7%)
Saskatchewan
$3.0 M (3.2%)
Manitoba
$1.7 M (1.1%)
Saskatchewan
$4.5 M (2.9%)
Québec
$2.9 M (1.9%)
Ontario
$5.3 M (3.4%)
Alberta
$7.2 M (7.7%)
1998i
$124.6 million
Others
$0.6 M (0.5%)
Northwest Territories
$94.7 M (76.0%)
Québec
$2.1 M (1.7%)
Saskatchewan
$5.1 M (4.1%)
Alberta
$22.0 M (17.7%)
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
i Company spending intentions as compiled in January 1998; p Preliminary estimate.
Note: "Others" includes Newfoundland and either British Columbia or Manitoba.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
27
Figure 16
Junior and Senior Project Operators Active in Diamond Exploration in Canada, 1989-98
(no. of operators)
120
100
Junior companies
80
Senior companies
60
40
20
0
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
Note: 1997 data are preliminary; 1998 data are based on company spending intentions as compiled in January 1998.
4.3
ADVANCED PROJECTS2
The five diamond exploration properties described below are all in the Northwest Territories.
These properties account for a good proportion of the advanced exploration work that has been
performed in recent years in the search for diamonds in Canada.
4.3.1 Ekati Diamond Mine
BHP and its associates are developing the Ekati diamond mine for production to begin in the
fall of 1998. A total of 100 kimberlite intrusions have now been found on this property, including 23 that were discovered in 1997. The most interesting of the 1996 discoveries are the comparatively small Koala North and Beartooth kimberlites. Diamond contents and values for
these kimberlites are listed in Table 8. Of the twenty-three 1997 kimberlite discoveries, the
97-A, 97-B, 97-C and 97-D kimberlites are the most promising. The grades for these four kimberlites, with recovered diamond contents that range from 1.12 carats per tonne (ct/t) to
5.52 ct/t, are based on core samples that vary from only 57 kg to 668 kg in weight. Larger minibulk or bulk samples will be required to provide meaningful grades. Exploration continues on
this large property, and the potential for the discovery of additional diamond orebodies remains
excellent. Current mining plans, based on production from the Panda, Misery, Koala, Fox and
Sable deposits (Table 9), should support an initial mine life of some 17 years. An operation
with a life of at least 25 years, and probably longer, seems probable based on the other orebodies that have already been discovered.
2 The information provided in this section was current as of June 1998. The reader is cautioned that
reported grades may be based on samples that are not necessarily representative of the entire deposit.
28
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
TABLE 8. SELECTED DATA ON CANADA'S MOST PROMISING DIAMOND
DEPOSITS
Pipe
Total Tonnes Total Carats
Sampled
Recovered
Average
Grade
Average
Value
Average
Value
(carats/tonne)
(US$/carat)
(US$/tonne)
0.95
4.19
0.95
0.63
0.27
0.33
0.39
2.01
0.98
1.20
0.56
3.90
1.63
5.52
1.12
130
26
122
200
125
89
51
..
64a
79
..
..
..
..
..
124
109
116
126
34
29
20
..
63
95
..
..
..
..
..
BHP/BLACKWATER GROUP 1 /
LAC DE GRAS PROPERTIES
Panda
Misery
Koala
Koala North
Fox
Leslie2
Pigeon2
Jay 2
Sable
Beartooth
Point Lake
97-A
97-B
97-C
97-D
3 402
1 030
1 550
201.7
8 223
680
154
237.6
1 096
189.3
160
0.0669
0.4070
0.0572
0.232
3 244
4 313
1 465
126.58
2 199
233
60
476.8
1 070
227.09
90+
0.261
0.662
0.316
0.260
DIAVIK PROPERTY
A-154 South
A-154 North
A-418
A-21
A-11 North
2 900
71.72
3 000
30.5
29b
12 800
156.81
8 275
90
7.6
4.41
2.19
2.76
2.95
0.26
67
35
56
38
..
296
77
166
112
..
9 400c
10.53
10 539
7.34
1.12
0.697
60
..
67
..
JERICHO PROPERTY
JD/OD-1
JD/OD-3
AK PROPERTY
5034 (1st sample)d
5034 (2nd sample)e
Hearne
Tesla
Tuzo
104
55.8
62.6
60
48
257
101
205
25.9
108
2.48
1.81
3.28
0.43
2.24
55
..
..
..
..
136
..
..
..
..
199.7
226.7
1.14
301
344
0.06
0.18
0.35
..
..
..
..
..
..
CAMSELL LAKE
Snap Lake Dyke
BUFFALO HILLS PROPERTY
K-6
K-14
K-91
13.95
27.42
0.85
0.876f
4.86g
0.301
Source: Natural Resources Canada, from company reports.
. . Not available.
a The $64/ct value includes a gem-quality diamond weighing 9 ct. If this stone is excluded, the
average value is $48/ct and the average value per tonne is $47. b Includes a 3.01-ct gem
diamond. c A 15 000-t bulk sample was mined, but only 9400 t of it was processed.
d Eighteen stones weighing more than 1 ct, including gem-quality stones weighing 10.87, 8.43 and
6.03 ct. e Diamond content of the second sample taken by Monopros Limited (De Beers
Consolidated Mines) does not include diamonds that passed through a 1-mm 2 screen. f Probably
not a representative sample. Includes a clear yellow diamond weighing 0.76 ct.
g Includes a 0.6-ct diamond and more than five other diamonds larger than 0.18 ct.
1 The Blackwater Group's 49% interest in this project can be broken down as follows: Dia Met
Minerals Ltd., 29%; C. Fipke, 10%; and S. Blusson, 10%. 2 The Leslie, Pigeon and Jay deposits
are not currently scheduled for mining.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
29
TABLE 9. PRE-PRODUCTION MINING RESERVES FOR THE EKATI
DIAMOND MINE
Reserves
Classification
Panda
Pit
Proven (Mt)
Probable (Mt)
8.6
4.0
12.6
Total (Mt)
Grade (ct/t)
(diluted basis)
Average value
(US$/ct)
1.09
130
Misery
Pit
Koala
Pit
Fox
Pit
Sable
Pit
4.8
0.7
10.0
4.6
8.1
8.6
11.0
1.9
5.5
14.6
16.7
12.9
4.26
26
0.76
122
0.40
125
0.93
64
Panda
UG
Koala
UG
Total
–
0.8
1.0
1.8
43.5
22.4
0.8
2.8
65.9
0.97
1.63
130
122
1.09
84
Source: Dia Met Minerals Ltd. Annual Report 1996-1997.
– Nil; UG Underground.
4.3.2 Diavik Project
The Diavik project is operated by Diavik Diamond Mines Inc., which has a 60% interest in the
project. The company is a wholly owned subsidiary of the large multinational mining company
Rio Tinto Zinc PLC of London, England, as is Kennecott Canada Inc., which previously held Rio
Tinto’s 60% interest in the property. The remaining 40% of the project is owned by Aber
Resources Limited of Vancouver, British Columbia. Aber has put up 40% of the costs and
retains the right to market its 40% share of diamond production.
To the end of 1997, a total of 50 kimberlite pipes had been discovered on the Diavik property, of
which 20 are known to contain diamonds. Four pipes, A-154 South, A-154 North, A-418 and
A-21, currently appear to be the most promising. In March 1998, Diavik Diamond Mines filed
the project description for the Diavik mine with the federal government, thus commencing the
government’s environmental assessment process for this proposed $875 million (± 25%) project.
Diavik is located 300 km northeast of Yellowknife and 35 km southeast of the BHP Ekati diamond mining operation. The company hopes to receive the necessary approvals by the fall of
1999 and to begin construction soon thereafter, with production planned for 2002. This schedule is to be refined during the feasibility study that is now in progress. Annual ore production
of 2 Mt is planned (prefeasibility study), with a conventional diamond recovery plant using
heavy medium separation, followed by X-ray diamond recovery. The mine’s annual diamond
production will increase to the range of 6 million to 8 million ct, declining to 3 million to 4 million ct beyond year 15. The life of the operation is currently expected to be between 16 and
22 years. Mining and production figures and timetables are subject to revision upon completion
of the feasibility study, which is expected in the fourth quarter of 1998. When production is
achieved, direct employment for the project will be between 300 and 400.
The resources at Diavik comprise an estimated 123 million ct of diamonds, of which 104 million
ct, or 83% of the total resource, have been included in the current estimated mineable reserve.
The kimberlite pipes at Diavik are under shallow water adjacent to a 20-km2 island in Lac de
Gras. Temporary dikes will be required to isolate the pipes from the lake for mining. While
exact sequencing of the dike construction is not yet final, the prefeasibility mining plan contemplates the initial construction of a dike around the A-418 pipe and then, using the granite waste
that will be produced from the mining of this orebody, another dike will be constructed around
the A-154 South and A-154 North pipes.
A 29-t mini-bulk sample taken in 1998 on the recently discovered A-11 North kimberlite yielded
7.6 ct of diamonds (0.26 ct/t), including a 3.01-ct gem-quality diamond.
30
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Exploration of the Diavik property continues. In 1998, up to $9 million will be spent, including
up to $4.3 million for drilling on previously identified pipes other than the four main pipes.
4.3.3 Jericho Project
Lytton Minerals Limited and its various partner companies have discovered at least seven diamond-bearing kimberlites on their properties in the Northwest Territories. On the Jericho
property of Lytton and New Indigo Resources Inc., a 14 500-t bulk sample was extracted during
the winter of 1996/97 from underground workings in the JD/OD-1 kimberlite and hauled 30 km
by truck to Lytton’s bulk sampling plant located at the Lupin gold mine. A representative
9400-t sample of this material, covering all phases within the pipe, was processed to yield
10 539 ct of diamonds (1.12 ct/t) with an average value of US$60/ct. The remaining 5100 t were
not processed because of the predictability of the diamond grades that were obtained from the
9400 t that were processed. The largest diamond recovered weighed just over 40 ct; the largest
gem-quality diamond weighed 23.99 ct. An unusual number of larger diamonds were recovered.
The JD/OD-1 pipe has a surface area of 1.2 ha. Resources to a depth of 300 m are presented in
Table 10.
TABLE 10. RESOURCES OF THE
JD/OD-1 PIPE, JERICHO PROJECT
Resource
Classification
Tonnage
Grade
(Mt)
(ct/t)
Indicated
Inferred
5.0
1.1
0.93
1.0
Total
6.1
0.94
Source: Based on published corporate data.
An open pit to a depth of 180 m would recover a mineable resource of 3.8 Mt averaging 1.01 ct/t
with a stripping ratio of 4.2:1. Preliminary scoping studies, based on mining the higher-grade
phases first, suggest that the mining rate should be about 1650 tonnes/day (t/d) at a capital cost
of approximately $50 million.
The 1.8-ha JD/OD-3 kimberlite, which is located under a small lake some 7 km west of
JD/OD-1, has resources of 10.5 Mt, to a depth of 350 m, averaging 0.7 ct/t. This estimate is
based on the 7.34 ct of diamonds recovered from a 10.53-t large-diameter core sample (0.697 ct/t).
A 30-t mini-bulk sample that was taken in early 1998 is to be treated at Lytton’s plant located
in North Vancouver, British Columbia. A bulk sampling program, along with further delineation drilling, is planned for the JD/OD-3 pipe in early 1999. Exploration continues for additional kimberlites on the property, with many targets still to be tested by drilling in 1998.
4.3.4 AK Property
On the AK property, located 150 km southeast of Lac de Gras, Mountain Province Mining Inc.
(90%) and its partner Camphor Ventures Inc. (10%) have the AK-5034 kimberlite pipe that was
discovered in 1995. Drilling has indicated some 20 Mt of diamondiferous kimberlite to a depth
of 350 m. A 104-t mini-bulk sample of this kimberlite, which was taken with a large-diameter
drill, yielded 2.48 ct/t of diamonds. De Beers has valued the diamonds that are 7 points (0.07 ct)
or larger in size from this mini-bulk sample, which yielded a grade of 1.5 ct/t valued at
US$55/ct, or US$82.50/t.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
31
The Canadian subsidiary of De Beers, Monopros Limited, has entered into a joint exploration
venture with the two partners and can earn a 60% interest in the AK/CJ property by funding
exploration, undertaking a bulk sampling program on one or more kimberlites, completing a
feasibility study, and funding the development of a mine.
A second mini-bulk sample of the AK-5034 pipe was recently taken and processed by Monopros
Limited. It yielded 101 ct of diamonds, for a grade of 1.81 ct/t. The largest diamonds recovered
weighed 1.90 and 1.69 ct. Direct comparison of these results with those from the earlier 104-t
mini-bulk sample (completed in 1996) is not possible because there was no bottom cut-off in the
earlier results (all the diamonds recovered, large and small, were weighed), whereas Monopros
recovered only those diamonds that were sufficiently large to be caught on a 1-mm2 mesh
screen. Also, the previous sample was of drill core, which contrasts with the reverse circulation
drill sample gathered by Monopros.
In 1997, De Beers discovered an additional three diamondiferous kimberlite pipes on the property. The Telsa, Hearne and Tuzo pipes are all within 1.1 km of the AK-5034 kimberlite and are
under a lake, but close to shore. Mini-bulk samples taken from each of these pipes during the
winter of 1997/98 have all yielded attractive diamond grades (Table 8). Monopros anticipates
that additional ore tonnages that might result from these three new discoveries could significantly improve the economics of production from the property.
4.3.5 Camsell Lake Area
On a peninsula in the northwestern part of Snap Lake, Winspear Resources Ltd. (57.3%) and
Aber Resources Ltd. (42.7%) have discovered a kimberlite dike that was intersected by drilling
over a strike length of 1000 m and 500 m down dip. The dike has a true thickness that averages 2.47 m and dips at 12-15˚. Two holes drilled in 1998 intersected kimberlite material down
dip, another 1100 m further to the east.
A 199.7-t mini-bulk sample from the dike, collected from two surface pits located 235 m apart,
has yielded 226.7 ct of cleaned diamonds (1.14 ct/t) using a slotted screen measuring 1 x 0.9 mm
in processing, which is equivalent to a 1.2-mm2 mesh cut-off. The three largest stones recovered weigh 10.87, 8.43 and 6.03 ct, and are described as gem-quality. Eighteen of the diamonds
weigh more than 1 ct. The average value of the diamonds recovered was US$301.43/ct, or
US$343.63/t. With three large gem-quality diamonds included in this bulk sample, it is clear
that a significantly larger bulk sample will be required to obtain more representative values for
this deposit.
Drill hole data are limited, and a considerable amount of definition drilling will be required to
determine the size and average grade of the deposit, which is located 110 km south of the original BHP/Dia Met Point Lake discovery at Lac de Gras and roughly 60 km west of the AK property of Mountain Province Mining Inc., Camphor Ventures Inc. and Monopros Limited.
4.4
OTHER DIAMOND EXPLORATION PROJECTS
In addition to the five properties described in detail above, there are roughly 600 other diamond
properties in Canada. Of these 600 properties, the following currently appear to be the most
interesting (based on public information).
4.4.1 Buffalo Hills, Alberta
Ashton Mining of Canada Inc. (42.5%) is the operator of a diamond exploration project in the
Buffalo Hills of northwestern Alberta. The other partners are Alberta Energy Company
(42.5%) and Pure Gold Resources Inc. (15%). Since early 1997, a total of 23 kimberlite intrusions have been discovered on this property, several of them diamondiferous. The best results
obtained to date are those for the K-6, K-14 and K-91 kimberlites (Table 8). Although the
32
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
average diamond contents for these kimberlites are considerably lower than those for the 18
most interesting deposits currently known in the Northwest Territories, they are within the
grade range of the world’s diamond mines. The determination of diamond values for such small
samples would not be meaningful. A bulk sample in excess of 500 t is to be taken from the K-14
complex. Between 70 and 80 additional drilling targets are currently recognized on the Buffalo
Hills property where exploration is still in its early stages.
4.4.2 ICE Claims LI-201 Kimberlite
Kennecott Canada Inc. has the right to earn a 50% interest in certain claims jointly owned by
Lytton Minerals Limited and New Indigo Resources Inc. This agreement excludes the Jericho
property. Kennecott has discovered the LI-201 diamondiferous kimberlite (which is entirely
land-based) on the ICE claims. A 281.1-kg sample from this kimberlite has returned 60 diamonds that each weigh more than 0.15 ct.
4.4.3 Fort à la Corne, Saskatchewan
The first kimberlite discovery at Fort à la Corne (65 km east of Prince Albert) was made in
1988. Several companies have been exploring the region since that time and approximately 90
to 100 kimberlites have now been discovered; some of them are exceptionally large in size, with
the largest being 1.6 km in diameter.
A diamond exploration joint venture between Cameco Corporation (30%), Monopros Limited, a
subsidiary of De Beers (30%), Kensington Resources Limited (30%) and Uranerz Exploration
and Mining Limited (10% carried interest) includes 71 of these kimberlites, roughly half of
which are diamondiferous. The highest reported diamond contents are lower than those for
most of the kimberlites in the Northwest Territories and lower than those for all but one of the
three best diamondiferous kimberlites discovered to date in Alberta. The diamond contents for
the Fort à la Corne kimberlites that are available to the writer are equivocal and so are not
quoted here.
4.5
COMPARISON OF DIAMOND GRADES AND VALUES OF CANADIAN
DIAMOND DEPOSITS WITH WORLD MINES
Recoverable diamond grades for the 25 Canadian diamond-bearing kimberlites for which
unequivocal recoverable diamond content is publicly available appear to fall toward the highergrade range of world diamond mines (Figure 17). On the other hand, most, if not all, of the
currently known Canadian diamond deposits are on the small side relative to the orebodies of
the world’s largest diamond mines. Recoverable diamond values for currently known Canadian
diamond deposits also appear to fall towards the higher value range for world diamond mines
(Figure 18).
However, it is important to recognize that the sample sizes used for determination of diamond
contents are small, especially in the case of the four deposits for which the sample size is less
than 1 t (BHP 97-C, BHP 97-A, BHP 97-B and BHP 97-D - refer to Figure 19); consequently,
the actual recoverable diamond contents and values for some deposits are likely to turn out to
be considerably different once more appropriately sized bulk samples are taken.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 17
Recoverable Diamond Grades From World Diamond Mines and Canadian Diamond Deposits
(carats per tonne)
7
World mines
6
(1)
Canadian deposits
5
(2)
4
(3)
3
(4)
(5)(6)
2
(4)
(9)
(8)
(10)
1
(11)
(7)
(12)
(13)
(14)
(15)
Argyle
23rd Congress
Mbjui-Maji I
BHP 97-C
Diavik A-154 South
BHP Misery
International
BHP 97-A
Diavik A-21
Diavik A-418
First Sample AK-5034
AK-Tuzo
Diavik A-154 North
BHP Jay
Mir
Second Sample AK-5034
BHP 97-B
BHP Beartooth
Venetia
Snap Lake Dyke
Jericho JD/OD-1
BHP 97-D
Udachnaya
Koidu
Aikhal
Kimberley
Shengli
Yubileynaya
BHP Sable
BHP Panda
BHP Koala
DeBeers
Finsch
Wafangdian
Arkhangel
Jagersfontein
Jericho JD/OD-3
Orapa
BHP Koala North
Sytykanskaya
BHP Point Lake
Jwaneng
Dalnyaya
Catoca
Bultfontein
BHP Pigeon
Buffalo Hills K 91
BHP Leslie
Letlhakane
Premier
Letlhakane 2
Wesselton
BHP Fox
Diavik A-11 North
Mwadui
Dutoitspan
Buffalo Hills K 14
Zarnitsa
Majhgawan
Koffiefontein
Camute
Buffalo Hills K 6
Letseng
0
Source: Natural Resources Canada, based on published data.
(1) BHP 97-C based on a sample of only 0.057 t of drill core. (2) BHP 97-A based on a sample of only 0.067 t of drill core. (3) Diavik A-21 grade based
on a sample of only 30.5 t of drill core. (4) Two samples have been processed from the AK-5034 deposit and cannot be combined because a 1-mm 2
screen was used to remove small diamonds from the second sample weighing 55.8 t. The first sample weighed 104 t. (5) AK-Tuzo based on a sample
of only 48 t of drill core. (6) Diavik A-154 North grade based on a sample of only 71.7 t of drill core. (7) BHP Koala North based on a sample of only
201.7 t of drill core. (8) BHP Beartooth based on a sample of only 189.3 t of drill core. (9) BHP 97-B based on a sample of only 0.407 t of drill core.
(10) BHP 97-D based on a sample of only 0.232 t of drill core. (11) Jericho JD/OD-3 based on a sample of only 10.53 t of drill core. (12) Buffalo Hills
K-91 based on a sample of only 0.85 t of drill core. (13) Diavik A-11 North based on 29 t of drill core. (14) Buffalo Hills K-14 based on a sample of only
27.42 t of drill core. (15) Buffalo Hills K-6 based on a sample of only 13.95 t of drill core.
Figure 18
Recoverable Diamond Values for World Diamond Mines and Canadian Diamond Deposits
(US$/tonne)
800
World mines
600
Canadian deposits
400
200
Source: Natural Resources Canada, based on published data.
Zarnitsa
Letseng
Dutoitspan
Jagersfontein
Premier
Camute
BHP Pigeon
Koffiefontein
23rd Congress
International
Snap Lake Dyke
Diavik A-154 South
Koidu
Kimberley
Mir
Diavik A-418
Jwaneng
AK-5034
BHP Panda
Venetia
BHP Koala
Diavik A-21
BHP Misery
Wafangdian
Aikhal
Yubileynaya
Udachnaya
Shengli
Diavik A-154 North
Arkhangel
DeBeers
Jericho JD/OD-1
BHP Sable
Mbjui-Maji I
Sytykanskaya
Letlhakane
Letlhakane 2
Dalnyaya
Argyle
Finsch
BHP Fox
Orapa
Mwadui
Bultfontein
BHP Leslie
Catoca
Wesselton
Majhgawan
0
33
34
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 19
Grades of Selected Canadian Diamond Deposits
(carats per tonne)
7
6
(.057)
5
(sample size in brackets in tonnes)
(2900)
(1030)
4
(.067)
(30.5)
3
(3000)
(104)
(48) (71.7)
2
(237.6)
(55.8) (.407)
(189.3)
1
(199.7) (.232) (9400)
(1096) (3402) (1550)
(10.53) (201.7)
(160) (154)
(.85) (680)
(8223) (29) (27.4) (13.95)
Source: Natural Resources Canada, based on published data.
Buffalo Hills K-6
Buffalo Hills K-14
BHP Fox
Diavik A-11 North
BHP Leslie
BHP Pigeon
Buffalo Hills K-91
BHP Koala
North
BHP Point
Lake
BHP Koala
Jericho JD/OD-3
BHP Sable
BHP Panda
Jericho
JD/OD-1
BHP 97-D
Snap Lake
BHP Beartooth
BHP 97-B
BHP Jay
AK-5034
2nd Sample
AK-Tuzo
Diavik
A-154 North
AK-5034
1st Sample
Diavik A-21
Diavik A-418
BHP 97-A
BHP Misery
BHP 97-C
Diavik A-154
South
0
5. Regional Outlook
5.1
INTRODUCTION
This section presents comments from provincial and territorial officials on recent exploration
activity in their respective jurisdictions and gives an indication of what they expect for 1998.
Some of the exploration expenditure data mentioned by the different provincial and territorial
authorities may differ from those reported under Sections 1 and 6 of this report (official federalprovincial/territorial figures released by NRCan). The figures reported by Québec include
expenditures by the Québec Department of Natural Resources that are excluded from all
NRCan published totals and the junior/senior analysis is based on different criteria. The exploration survey for Saskatchewan is not based on the same set of definitions as was used for the
national survey.
5.2
NEWFOUNDLAND AND LABRADOR
Overview
Expenditures on mineral exploration in Newfoundland and Labrador in 1997 were $69 million,
a decrease of approximately 26% from the all-time high levels established in 1996 (Table 11).
All of the major exploration indicators reflect this decrease.
In 1997, approximately 90% of the mineral exploration dollars were directed towards basemetal exploration, with the remainder being spent on precious-metal exploration; 81% of the
1997 expenditures were in Labrador. In 1997, the senior Canadian and international mining
companies led the way in exploration efforts, with the junior sector and prospectors following a
close second, indicating a possible return to the pre-Voisey’s Bay exploration days. It is anticipated that this trend will continue in 1998.
TABLE 11.
NEWFOUNDLAND AND LABRADOR EXPLORATION STATISTICS, 1989-98
1989
1990
1991
1992
1993
1994
1995
1996
1997 p
1998f
(dollars)
Annual exploration expenditures
36 200 009
23 274 537
12 064 993
11 140 752
8 905 864
12 396 462
71 100 000
92 546 708
68 985 000
45 989 000
Field exploration expenditures
Base metals
Precious metals
Other
8 141 579
16 420 301
1 364 328
8 065 645
9 195 651
1 520 051
7 022 790
1 876 256
550 502
5 948 578
1 285 629
1 192 898
3 719 325
1 867 878
1 192 898
5 216 623
3 613 526
884 000
64 226 300
5 371 500
1 241 000
83 737 940
6 395 873
2 412 895
61 420 000
5 228 072
2 336 828
. .
. .
. .
22 256
37 084
248 707
280 750
15 299
168 815
13 363
126 766
11 000
100 000
(number)
Claim staking
Claims staked
In good standing
17 571
65 223
10 421
45 427
7 411
33 297
5 118
24 002
6 955
22 910
(metres)
Diamond drilling1
Production/development
Exploration
16 355
104 493
8 884
82 833
6 850
39 067
819
21 923
16 982
29 528
7 260
42 225
8 107
120 803
9 424
226 208
13 318
141 320
. .
. .
Total diamond drilling
120 848
91 717
45 917
22 742
46 510
49 485
128 910
235 632
154 638
150 000
Source: Newfoundland Department of Mines and Energy.
. . Not available; f Forecast; p Preliminary.
1 Based on a special provincial diamond drilling survey.
36
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Claim-staking in 1997 came in at less than 1996 levels, but maintained a more typical level of
13 363 claims after the 1995 staking rush sparked by the Voisey’s Bay discovery. At the end of
1997, there were 126 766 claims in good standing in Newfoundland and Labrador.
Diamond drilling reflected a healthy exploration year. The 154 638 metres of diamond drilling
for 1997 is still above the pre-Voisey’s Bay trends.
New Mines
Richmont Mines Inc. began commercial production at its Nugget Pond gold deposit on April 1, 1997,
after a very successful construction and site development phase. Approximately 34 800 oz of gold
were produced in 1997. The mine is expected to increase production during 1998 to 48 000 oz.
The project has an estimated life of four years.
Roycefield Resources Ltd., which acquired full ownership of the Beaver Brook antimony deposit
from Noranda Mining and Exploration Inc. in 1994, began underground mining in July 1997,
and milling commenced in December. Also in December, the company began testing a process
to convert antimony sulphide into the higher-priced antimony trioxide. The mine has reserves
of 2 388 078 t grading 4.08% antimony (using a 1.5% cut-off) in its East zone and 159 699 t
grading 5.28% antimony (using a 1.5% cut-off) in its Central zone. A downturn in market
prices for this product, however, dictated that the company suspend production in early 1998.
In 1997, Dimension Stone Inc. began exporting granite blocks from its quarry near Goobies, and
extracted test blocks from its site near Terrenceville. The company is also evaluating sites near
Gambo and Lewisporte.
International Granite Corporation and Ebony Granite Limited, associate companies, quarry
black gabbro in the Mount Peyton area of central Newfoundland. The companies began exporting blocks of stone from their Jumpers Brook quarry in 1996 to supply North Atlantic Stone, a
dimension stone manufacturing plant in Buchans. In January 1998, Cabot Granite Fabricators
Inc., a subsidiary of International Granite, finished constructing its slab and polishing facility
at the Jumpers Brook quarry. Initial shipments of products have been made and commissioning of the plant is ongoing.
Phoenix Minerals Corp. began producing barite from its operations at Collier Point, Trinity Bay,
in April 1998. The barite is mined using open-pit methods and is being trucked to Halifax
where it is processed and sold as a drilling mud to the offshore oil industry in eastern Canada.
Processing is expected to begin on site in August of this year. Forecasts by the company are
that production in 1998 will be valued at $4.5 million.
Development Stage Projects
Voisey’s Bay Nickel Company Limited continues exploration at Voisey’s Bay, with about
$20 million to be expended in 1998. Drilling to date indicates that the Ovoid deposit contains
31.7 Mt grading 2.83% nickel, 1.68% copper and 0.12% cobalt. The Eastern Deeps deposit contains 52.5 Mt grading about 1.36% nickel, 0.67% copper and 0.09% cobalt. The Western Extension and the Southeast Extension add approximately 32 Mt to the reserves.
Burin Minerals has completed an engineering review of the fluorspar mines and mill at
St. Lawrence and has completed the first stage of private financing. A feasibility study of a deepwater port at St. Lawrence concluded that the outer harbour is an ideal site capable of handling
40 000-t ships. The proposed production level of the operation at St. Lawrence will be approximately 180 000 t/y, and customers have signed a letter of intent covering 90% of this production
for the first two years. On July 24, 1998, the Government of Newfoundland and Labrador
announced that it would invest $10 million in wharf- and port-related facilities at St. Lawrence
pending the results of a $2 million project feasibility study to be completed by Burin Minerals Ltd.
The feasibility study includes the completion of a 28 000-m diamond drilling program in 1998 to
further upgrade existing fluorspar reserves at the Blue Beach North and Tarefare No. 2 deposits.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
37
United Bolero Development Corporation plans to reactivate the Buchans barite plant, which
operated in the 1980s, to produce barite for offshore drilling. The two tailings ponds at
Buchans contain approximately 1.5 Mt of recoverable material with an average grade of about
30% barite.
Torngait Ujanniavingit Corporation (TUC), a subsidiary of the Labrador Inuit Development
Corporation, quarries anorthosite at Ten Mile Bay near Nain, Labrador. In 1997, the company
increased shipments to 1000 m3, a significant increase from 1996. The company plans to
develop a second quarry in the Tabor Island area and to start construction of a stone plant in
Hopedale in early 1998.
Midatlantic Minerals Inc. proposes to start a dolomite and limestone operation at Aguathuna
on the Port au Port Peninsula. The company plans to develop an open-pit quarry and produce
various sizes of limestone/dolomite for export.
10324 Newfoundland Limited has submitted a proposal to mine the 100 000-t Ronan baritecelestite deposit. This project is currently under environmental review and has an anticipated
start date of September 1998. Processing of the barite, to be used in the offshore oil industry in
eastern Canada, will occur in nearby Aguathuna.
Shabogamo Mining & Exploration Limited is currently assessing the silica deposits in the
Labrador City area. After a diamond drilling program was completed in early 1997, the company entered into an agreement with SKW of Bécancour, Québec. The company is in the
process of obtaining a mining lease and completing environmental studies in preparation for
the start-up of mining operations.
Exploration
In October 1997, Donner Resources Limited (now Donner Minerals Limited) announced the
results of diamond drill hole 97-75 from its property located 90 km south of Voisey’s Bay. It contained a 1.1-m interval grading 11.75% nickel, 9.70% copper and 0.43% cobalt. Later in the
year, the results of a second hole (97-96) were announced as a 15.7-m intersection indicating
1.13% nickel, 0.78% copper and 0.20% cobalt. Donner has a joint-venture partnership with
Teck Corporation and Northern Abitibi Mining Corp., among others, on a large area of mineral
licences known collectively as Voisey’s Bay South. Drilling was suspended over the winter and
resumed in May. The 1998 exploration program for this project has a budget of $14.8 million.
On July 23, 1998, Major General Resources Ltd. and McWatters Mining Inc. signed a letter of
intent to allow development and production of the Hammerdown and Rumbullion gold deposits
located in central Newfoundland. Resource estimates by company geologists have outlined a
drill-indicated resource of approximately 356 000 oz of gold in 614 000 t grading 18.01 g/t gold
at a cut-off grade of 5 g/t gold. Mineable reserves will be calculated during a feasibility study to
be completed by McWatters. In addition, Major General Resources Ltd. also optioned to Rio
Algom Exploration Inc. about 600 claims around the Hammerdown deposits. These claims will
be explored for base metals.
In late 1997, Celtic Minerals Limited announced grades of 3.06% zinc, 0.61 g/t gold and 0.81 g/t
silver over a 10.84-m intersection on its Hungry Hill property. The intersection represents a
massive sulphide interval with local sections of altered volcanic clasts described as debris flow
breccias. On August 6, 1998, Celtic Minerals Limited announced the signing of a letter of intent
with Rio Algom Exploration Inc. whereby Rio can earn a 51% interest over a four-year period by
making $350 000 in cash payments and incurring $4 million in exploration expenditures.
Noveder Inc. has outlined an electromagnetic conductive zone on the Cabot property located
north of Baie Verte. The zone extends to either side of a copper-cobalt showing discovered by
PNL Ventures in 1997 for a distance of 600 m. Surface samples have returned values ranging
from 1.13% to 6.80% copper. A diamond drilling program has been completed.
38
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Buchans River Limited has a 100% interest in 758 claims around the former high-grade
Buchans zinc-lead-copper mine in central Newfoundland. A geological compilation of the entire
Buchans camp is ongoing. Diamond drilling is planned for the latter part of 1998.
Vulcan Minerals Inc. completed a seismic survey near Flat Bay in western Newfoundland prior
to a summer drilling program for petroleum. This company also holds mineral rights to both
base- and precious-metal targets throughout the province. Exploration programs are planned
on these properties during 1998.
Government Incentives
A total of $100 000 has been allotted by the Government of Newfoundland and Labrador for the
1998/99 fiscal year to provide grants and training for resident prospectors.
The Mineral Act and the Quarry Materials Act will be amended in 1998 and, when proclaimed,
the amendments will result in dimension stone being defined as a mineral with land tenure
administrated under the Mineral Act.
5.3
NOVA SCOTIA
Overview
In 1997, exploration expenditures in Nova Scotia were estimated at $8.9 million, up from
$6.9 million in 1996 and $2.8 million in 1995 (Table 12). Exploration levels in 1997 were the
highest since 1990 (at the end of the gold exploration boom in the 1980s that was fueled by
flow-through share financing). Exploration highlights in 1997 included exploration for gold,
base metals and industrial minerals such as gypsum, kaolin and silica sand. Current forecasts
predict a continuation in the trend of increasing exploration for 1998 with projected expenditures of $9.1 million.
Exploration drilling increased in 1997 with a preliminary estimate of 21 800 m drilled, compared with 15 600 m in 1996. A preliminary estimate of 22 691 new and re-issued claims for
1997 represents a decrease from the 1996 level of 34 265 claims.
TABLE 12.
NOVA SCOTIA MINERAL EXPLORATION STATISTICS, 1991-98
1994
1995
1996
1997 p
1998f
1991
1992
1993
Exploration expenditures (field +
overhead, general + mine-site) ($)
4 532 000
3 258 000
1 797 000
1 714 000
2 843 000
6 892 000
8 950 000
9 065 000
Claim staking (new and reissued)
(general + special licences) (no. of
claims)
18 777
12 229
10 759
14 614
16 407
34 265
22 691
18 000
Exploration diamond drilling (metres)
11 504
12 710
6 221
7 725
8 000
15 600
21 800
. .
Source: Nova Scotia Department of Natural Resources.
. . Not available; f Forecast; p Preliminary.
New Mines
Tusket Mining Limited and partner Knauf have delineated a gypsum resource exceeding 300 Mt
at their Murchyville deposit in the Musquodoboit Valley of central Nova Scotia. The companies
have received all necessary permits and approvals, completed preliminary site preparation, and
plan to commence shipments of gypsum in 1998. Work is still required at the load-out shipping
facility in Sheet Harbour.
40
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Lynx Minerals Corp. has acquired the mineral rights and purchased the surface rights for the
Lake Ainslie barite-fluorite deposit (1.7 Mt BaSO4, 0.86 Mt CaF2) from Conwest Exploration
Company Ltd. and has acquired the mineral rights for the Scotsville barite deposit. Lynx will
evaluate the viability of the deposits for various uses including mud-grade barite for the offshore oil and gas industry, fluorite by-products, calcium carbonate, and pharmaceutical-grade
barite.
Prospector Assistance Program
The Nova Scotia government embarked on a new Prospector Assistance Program (PAP) in the
fall of 1997. The PAP is a four-year, $600 000 program that will continue until the year 2001.
Funding is provided by the Canada-Nova Scotia Cooperation Agreement on Economic Diversification through the Atlantic Canada Opportunities Agency and the Nova Scotia Department of
Economic Development and Tourism. The program is designed to give assistance to prospectors
and has three components.
The training component provides funding for basic and advanced prospecting courses. These
courses are normally held at various locations in the province as demand warrants. In addition, this component will support the continuing education of prospectors through seminars,
workshops and field trips. Basic training courses in the fall of 1997 and spring of 1998 were
attended by 41 and 56 prospectors, respectively, and 12 prospectors received advanced training
in the spring of 1998.
The component of greatest interest to prospectors is prospector assistance. Through this component, prospectors can obtain funding to help in their search for minerals. Individual prospectors, or a prospector’s company, are eligible for up to a $5000 contribution from PAP as long as
the prospector also contributes funding to the project. Broadly speaking, projects from grassroots exploration to diamond drilling are eligible for support.
The third component is marketing assistance. The program encourages funding assistance to
prospectors to market their mineral properties to junior and senior mining companies in local
and national trade show venues. This component of the program will help fund individual
prospectors to travel to trade shows and display information about their properties. In addition, the PAP funding will assist with the expenses of renting display hardware and space.
5.4
NEW BRUNSWICK
Mineral Statistics
The 1997 value of mineral production (including coal) in New Brunswick is estimated to be
$936.6 million, representing a decrease of approximately 2% from the final value of $954.7 million for 1996. The decrease can be attributed to reduced production in the nonmetals sector, in
particular to half a year of lost production at the flooded Potacan Mining Company potash mine
in southern New Brunswick. The improved performance in the metals sector was not sufficient
to offset the drop in revenue from potash.
The value of metals production during the year was $660.6 million, which represents 71% of the
province’s value of mineral production. The price of zinc was the most significant factor affecting revenues in the metals sector as the average zinc price rose almost 29% between 1996 and
1997. In addition, the Caribou Mines Division of CanZinco Ltd. began operating in mid-1997
producing zinc and lead concentrates.
New Brunswick continues to rank first among Canadian provinces and territories in its value of
production for zinc, lead, bismuth and peat, and second for silver, antimony and potash.
New Brunswick’s mineral exploration statistics are shown in Table 13.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
TABLE 13.
41
NEW BRUNSWICK MINERAL EXPLORATION STATISTICS, 1990-97
Exploration expenditures
(general plus mine-site) ($ millions)1
Mineral claims recorded (no.)
Total claim equivalents in effect (no.)
(includes leases and agreements)
1990
1991
1992
1993
1994
1995
1996
1997
16.5
15.8
12.2
11.1
10.0
12.7
14.7
4 361
4 571
3 444
2 351
3 980
3 779
5 860
3 360
30 215
30 641
28 555
22 500
23 859
24 866
28 604
27 869
12.4a
Source: New Brunswick Department of Natural Resources and Energy.
a Preliminary survey results.
1 Current dollars; includes overhead expenses.
Exploration Highlights
Northern New Brunswick
Exploration expenditures in the northern half of the province for 1997 were approximately
$11.5 million, a decrease of approximately $800 000 over the previous year. The largest expenditures were made by Noranda Mining and Exploration Inc. ($6.1 million) and Chapleau
Resources Limited ($1.4 million).
The number of new claims recorded in the region was approximately 1937, while the number of
claims in effect was 17 545, slightly lower than in 1996.
In 1997, the active major companies were Noranda Mining and Exploration Inc., Teck Exploration Ltd., Inmet Mining Corporation, and Breakwater Resources Ltd. Collectively, these companies spent approximately $8 million. Other major companies holding ground but not actively
exploring included BHP Minerals Canada Ltd., Homestake Mining (Canada) Limited, and Falconbridge Limited.
Inside the Bathurst mining camp, Noranda spent approximately $5.6 million on its extensive
land holdings, which is $1.6 million less than in 1996. Much of Noranda’s exploration expenditures in 1997 have been in the Brunswick and Heath Steele belts, largely in proximity to its
mining properties.
In late 1996, Noranda drilled into a new discovery, called the Camel Back property, located in
the northern part of its Wedge-Indian Lake claim belt. The discovery hole 96-6, drilled in
December, intersected a 4.3-m section of massive sulphides grading 8.95% zinc, 3.94% lead,
0.08% copper, and 41.9 g/t silver, as well as a 12.3-m stringer zone grading 2.05% copper.
Subsequent holes showed that the massive sulphide lens is not very large but is in the right
stratigraphic position to be equivalent to the Brunswick Horizon. The Camel Back discovery is
significant for several reasons: (1) it was found as a result of the multiparameter airborne
survey in the part of the camp that previously was thought to have little exploration potential;
(2) Noranda has spent approximately $1 million in exploration on the area since the discovery
(notably, the cost of the entire airborne survey was less than $1 million); (3) the area is structurally complex but there is plenty of room along strike and down dip to find the continuation of
the discovery lens or brand new lenses; (4) the new discovery is not in the same structural block
or nappe as the Wedge deposit; and (5) several geophysical anomalies similar to the Camel
Back signature occur in the vicinity of this new showing.
Outside the Bathurst mining camp, Noranda spent approximately $520 000 exploring for porphyry copper/skarn and manto-style mineralization in and adjacent to the Aroostook-Matapedia
zone.
42
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
A number of junior companies, both listed and unlisted on the stock exchange, were active in
northern New Brunswick in 1997. Collectively, they spent about $3.5 million. The listed companies include: Cimarron Minerals Limited, Chapleau Resources Limited, Connecticut Development Corporation, Eastmain Resources Inc., Fancamp Resources Ltd., Major General
Resources Limited, Mountain Lake Resources Inc., Neary Resources Corp., Pathfinder
Resources Ltd., PGE Resource Corp., and Stratabound Minerals Corp. Unlisted companies
include: Bathurst Exploration Ltd., Black Bull Resources, Golden Bay Resources, Good Fellow
Enterprises Limited, Lewis Brook Resources, Log House Construction Ltd., Miramichi Minerals
Ltd., Northeast Exploration Services Limited, and Slam Exploration Ltd.
Other companies holding ground but who did not actively explore in 1997 include: Bathurst
Silver Mines, Brancote Canada Limited, Heron Mines Limited, Key Anacon Mines Limited,
Marshall Minerals Corp., Nebex Resources Ltd., and NovaGold Resources Inc. (including its
subsidiary Murray Brook Resources Inc.).
Although most of the exploration activity in northern New Brunswick in 1997 was concentrated
either within or immediately adjacent to the Bathurst mining camp, there continued to be significant activity in the western region in and around the Plaster Rock area.
Southern New Brunswick
Exploration in southern New Brunswick continued for various commodities, including
platinum-palladium, nickel-cobalt-copper, gold, antimony, and base-metal sulphides. It is estimated that approximately $900 000 was spent on exploration in this region in 1997. As of
December 1, the number of claims in effect in southern New Brunswick was 3555 and the number of new claims staked was 689. The number of claims in effect remained about the same,
but the number of new claims recorded declined by about 200.
Mineralization related to mafic and ultramafic intrusions received extensive exploration in
1997 with companies such as Wild Horse Resources Ltd. and Cobrun Mining Corporation working on their Mechanic Settlement and St. Stephen Nickel properties.
Among the juniors exploring for precious metals, including antimony, were companies such as
Chilean Gold Ltd., Southfield Resources Ltd., Fosters Resources Ltd., Pro-Max Resources Inc.,
PGE Resource Corp., Gammon Lake Resources, and Freewest Resources Canada Inc.
Besides the activity in the base- and precious-metals sector, exploration for industrial minerals,
particularly limestone and gypsum, involved several companies such as Havelock Lime, a Division of Goldcorp Inc., and Maritime Resource Research Limited.
Development Highlights
Metallic Minerals
In 1997, New Brunswick saw the opening of a new base-metal mine and the re-opening of
another. The Caribou Mine Division of CanZinco Ltd. (formerly East West Caribou Mining
Limited), a wholly owned subsidiary of Breakwater Resources Ltd., commenced production from
its two properties in mid-1997, with the first ore going through the mill in July.
At the Caribou underground mine, the existing concentrator has been extensively modified and
expanded since it last operated in 1990. It will now produce separate zinc and lead concentrates, rather than a bulk concentrate as in the past. The recommencement of operations
involved a capital expenditure of $58 million and the hiring of 208 employees. Zinc concentrate
is being shipped from the port of Belledune, while lead is being trucked to Noranda’s Belledune
smelter.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
43
At its other mine, the Restigouche deposit, which CanZinco started to prepare in late 1996, an
open pit has been developed and ore production began in the spring of 1997. All of the ore from
the Restigouche site is trucked to the Caribou mine site for processing. Extensive measures
have been put in place at Restigouche to protect the sensitive local environment.
Noranda continued mine production from its two properties in northern New Brunswick despite
having to deal once again with seismic activity at each site. At the larger Brunswick Mining
Division property, the company had already reduced target production to 9000 t/d from the previous target of 10 500 t/d; however, by the end of 1997, production was well over the 9000-t/d
mark and the average for the year was close to what was planned.
In 1997, Brunswick Mining Division announced its decision to convert its backfilling operations
from conventional rock fill to a paste fill system. In addition to offering environmental and cost
benefits, paste fill is expected to enable better ground control.
Zinc accounts for approximately 70% of Brunswick’s production. Lead, copper and silver comprise the remainder. Both the mine and the smelter ran uninterrupted throughout the year.
After a two-week shut-down in November 1996, Noranda’s other mine, Heath Steele, gradually
returned to its normal level of operation and was producing at its target rate of 2700 t/d by May
1997. However, in October, heightened seismic activity caused the suspension of mining operations in the B mine. Extensive rehabilitation measures were taken and production returned to
normal in November.
The company continues work on an extensive program to address environmental concerns associated with the site. A new water treatment plant was commissioned in October and work is in
progress on associated infrastructure. The company has budgeted an estimated $25 million
over a two-year period for environment-related projects.
In 1997, ADEX Mining Corporation received a consultant’s feasibility study for the development of the Mount Pleasant tin-indium-zinc-bismuth-tungsten deposit. The conclusions were
disappointing as the estimated capital costs were too high to justify a production decision at
this time. The company then began investigating alternatives that would reduce capital and
operating costs. Meanwhile, the major investor (Malaysian Smelting Corporation) remains
interested in the project.
Despite hopes that the antimony price would recover sufficiently in 1997 to allow a resumption
of operations at Lake George, the APOCAN Inc. property remained closed. High metal inventories in global markets continued to depress the price and, at year’s end, the mine was still in
care and maintenance mode.
Murray Brook Resources Inc., a wholly owned subsidiary of NovaGold Resources Inc., conducted bioleaching tests during the summer of 1997 on the copper ore presently stored at its
Murray Brook site. The results of the tests were sufficiently favourable that the company
intends to do further testing in 1998; if these tests are successful, there may be an eventual
resumption of copper mining in the pit.
Nonmetallic Minerals
In 1997, there were approximately 15 major nonmetallic mineral producers (excluding mineral
aggregate producers) working in New Brunswick who accounted for 24%, or $220.9 million, of
the total value of mineral production. This value represented a decrease of 27% from the 1996
value mainly because of a major event that took place at one of the largest contributors to the
nonmetallic minerals sector.
Potacan Mining Company (PMC) reported a serious water inflow of several thousand cubic
metres a day at its Cassidy Lake mine located 25 km south of Sussex. The company immedi-
44
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
ately embarked on a grouting strategy that officials hoped would be successful in reducing the
inflow to a manageable level. Unfortunately, the program failed to produce the desired results
and PMC’s parent company, the Potash Company of Canada (Potacan), announced on October 30, 1997, that it would be closing the Cassidy Lake mine with the subsequent loss of nearly
500 jobs.
Late in 1997, the Potash Corporation of Saskatchewan Inc. announced that it was initiating a
process to acquire the shares of Potacan. PCS intends to utilize the former Potacan mill facility
to add value to potash product shipped from its mining operations in Saskatchewan. Upon closing the deal, company officials indicated the possibility of expanding production at its other
Sussex area mine.
Exploration Incentive Programs
Mineral Exploration Stimulation Program (MESP)
In 1997, the Province of New Brunswick continued its support for the popular prospector incentive program called MESP (Mineral Exploration Stimulation Program). During the course of its
five-year existence, the program has provided more than $220 000 to assist prospectors in conducting grassroots exploration on their claim groups. In 1997, 39 grants were provided for a
total of $50 000; similar funding will be available for 1998.
New Brunswick Exploration Assistance Program (NBEAP)
Recognizing the need to stimulate junior mining sector activities in the province, a federalprovincial assistance program was initiated in 1994. Providing financial assistance of 50% of
project costs (to a maximum of $40 000 per company), the NBEAP (New Brunswick Exploration
Assistance Program) infused more than $1.2 million into the mineral exploration industry,
which resulted in another $5.5 million being spent by grant recipients. The Province of New
Brunswick will continue the NBEAP in 1998 and will underwrite its total cost of $350 000.
EXTECH-II
EXTECH-II is a five-year EXploration and TECHnology collaborative project between the Geological Survey of Canada and the New Brunswick Department of Natural Resources and
Energy (Geological Surveys Branch) that was initiated in 1994 in the Bathurst mining camp.
Its principal objective is to address problems of declining base-metal reserves by developing
integrated and multi-disciplinary approaches to exploration, and by improving the geoscience
knowledge base in the camp. In order to better understand the geological setting of sulphide
deposits and processes of sulphide formation and degradation, a host of projects have been carried out since 1994 that developed, tested and applied geological, geophysical and geochemical
methods for detecting buried sulphide deposits.
Airborne Geophysical and Geochemical Survey (Restigouche)
Following on the heels of a successful airborne multiparameter geophysical survey flown over
the Bathurst mining camp in 1996, a multiparameter airborne geophysical and multi-element
geochemical survey was conducted in 1997 in the northwestern part of the province. This
$540 000 survey, covering part of the Restigouche geological zone, represented Phase I of a proposed two-part program whose objective is to provide much-sought-after geoscience products
that will help stimulate exploration in this area while at the same time assisting the private
sector to evaluate the potential of northwestern New Brunswick. The 1996 Bathurst mining
camp survey resulted in more than $3 million in exploration activity and several targets being
identified for follow-up detailed groundwork. The exploration community is anxiously awaiting
the results of the 1997 survey that will be released in the third quarter of 1998.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
5.5
45
QUÉBEC
Overview
Preliminary data for total exploration and development expenditures in Québec in 1997
($154.6 million) indicate a 4.4% increase over 1996. Of the $154.6 million total, $115.8 million
was accounted for by off-property expenditures and $38.8 million by on-property expenditures.
In comparison with 1996, off-property expenditures decreased by 7% while on-property expenditures increased by 64%.
The reduction in off-property exploration expenditures is attributable to some extent to a withdrawal by senior companies, which invested only $39.7 million in 1997 (compared to $56.5 million in 1996). Faced with the substantial drop in the gold price, senior companies applied more
of their financial resources to the rationalization and consolidation of their mining operations.
Off-property expenditures by junior companies were $50.7 million in 1997, compared to
$45.3 million in the previous year, an increase of 12%.
The rise in on-property exploration investment in 1997 can be explained primarily by the desire
of senior companies to increase their knowledge of promising mineralized zones on existing
mining properties. Such development work precedes the feasibility study stage and any decision to bring new zones into production.
As in the past few years, the Northern Québec and Abitibi-Témiscamingue regions received
most of the exploration and development expenditures in 1997. Thus, more than 40% of exploration and mineral deposit development expenditures were directed to the Northern Québec
region last year, while some 33% of these expenditures went to the Abitibi-Témiscamingue
region.
In 1997, exploration and development expenditures allocated to the search for base metals
increased by 25% over 1996, rising from $55 million to $69 million. The corresponding expenditures in the precious-metals sector decreased by 7%. The latter nevertheless benefited from
$78 million in investment, accounting for more than 50% of total exploration expenditures. The
search for other minerals declined by 11% in 1997 relative to 1996, with recorded expenditures
of $8 million.
Exploration Highlights in 1997
In 1997, more than 20 135 claims were recorded, compared to 19 994 in 1996. There were also
41 958 renewals, as well as the issuance of 61 operating licences and 311 licences to explore for
surface minerals. In addition, diamond drilling totaled 968 032 m in 1997, compared to
1 013 309 m in 1996.
In the James Bay region, Virginia Gold Mines has discovered new gold showings on the La
Grande Sud property. The best values vary between 8.53 and 69.64 g/t gold over widths of 2 m
in one of the zones, while in another zone the best values were 6.75 g/t gold over 11.25 m. The
company estimates the geological inventory of the latter to be 2.1 Mt grading 2.89 g/t gold.
As a result of work on the La Grande Nord property (optioned from Virginia Gold Mines) in
1997, Noranda discovered new base-metal showings. The Sommet 4 showing consists of a
copper-silver-cobalt-nickel mineralization enclosed in locally hematized basalt along a structure
oriented 225°/60°, with best values of 55.24% silver, 25.75% copper, 3.43% cobalt and 1.88%
nickel. Approximately 60 m to the south, a breccia body of limited extent has yielded values
ranging from 18.57 to 41.92 g/t gold, from 2.7 to 14.37 g/t platinum, and from 1.24 to 13.78 g/t
palladium.
In the Rouyn-Noranda district, 75% of the exploration for polymetallic deposits was carried out
in the Abitibi belt between Brouillant and Matagami. The main exploration highlights were
46
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
the gold discoveries of Altavista Mines (La Reine Township), Ressources Coleraine (Perron
Township) and Santa Fe/Globex (Duparquet Township).
The recent discovery in the Normétal mining camp north of Rouyn-Noranda (the Perron project) brings a new perspective to gold exploration. The gold-bearing structure consists of three
concordant mineralized zones. The gold mineralization is associated with highly carbonatized
and sericitized zones containing biotite, varying amounts of pyrite and sphalerite, and numerous quartz vein injections. The mineralization is also characterized by the common occurrence
of visible gold. The gold values vary between 0.62 and 78.14 g/t with widths varying from 0.4 to
4.0 m. The best intersection returned a value of 12.22 g/t gold over 3.95 m. The geological
units hosting the mineralized zones have been traced for a distance of nearly 4 km.
In the Chibougamau district, McKenzie Bay Resources has signed a partnership agreement
with SOQUEM regarding its iron-titanium-vanadium property, the inventory of which is estimated to be 72 Mt grading 31.2% iron and 0.5% V2O5. The company has performed systematic
sampling and will undertake a drilling program to define the mineralized zones at depth.
Malarctic-Sud has discovered a porphyritic copper deposit in Fournière Township (grading
0.27% copper over 78 m). This is the first time in 20 years that exploration has been carried out
for this type of deposit near Val-d’Or. The area is now attracting more than 10 exploration companies.
The Urban-Barry belt has been little explored until quite recently. Because of the work done by
Murgor Resources, there has been an increase in mineral exploration activity in this region. In
association with Teck Corporation, Murgor Resources has defined a near-surface deposit containing probable resources of 0.56 Mt grading 7 g/t gold. Xemac, a junior company, has also
obtained impressive results in this area (13.5 g/t gold over 13.2 m).
Also worthy of mention are the Bonnefond project of Ressources Aur (2.2 g/t gold over 43.6 m)
and the Comtois project of Cameco-Osborne, a massive sulphide horizon. The Desjardins project, near Lebel-sur-Quévillon, has a mineralized zone identified over a length of more than
800 m and down to a depth of 600 m. With a cut-off grade of 3.0 g/t gold and a minimum horizontal width of 1.5 m, the geologic resource would be more than 2.0 Mt grading 5.15 g/t gold.
Public Financing of the Québec Mining Industry
Funds raised in the Québec capital markets for financing the mining industry totaled $110.1 million in 1997, representing a reduction of about 30% from 1996.
This decline can be attributed, on the one hand, to the sustained drop in the gold price in 1997
and, on the other, to the alleged fraud perpetrated by the Bre-X Corporation on the Busang
property in Indonesia that was exposed in late March 1997. Other events also tarnished the
image of the mineral exploration sector, particularly the Delgratia affair (sampling on a property in Nevada) and other administrative irregularities.
Although total financing for the mining sector declined in 1997, the proportion of funds directed
to the Québec mining industry increased substantially compared to 1996. More than $70 million was raised for investment in Québec, a 45% increase over 1996. On the other hand, a lower
proportion of the funds raised in 1997 was directed outside Québec. About $40 million was
invested outside of Québec in 1997, whereas more than $110 million was invested abroad in
1996.
The impact of the fraud in Indonesia very likely enabled the Québec mining industry to retain
more of the funds raised in the Québec capital markets.
The amounts raised under the flow-through share regime totaled $22.9 million in 1997, a
decline of 16% from 1996. The drop in the gold price had a negative effect on flow-through
share financing in 1997 (Tables 14 and 15).
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
47
TABLE 14. QUÉBEC, FLOW-THROUGH SHARE FINANCING AND EXPLORATION
EXPENDITURES, 1994-98
1994
1995
1996
1998 e
1997
($ millions)
Value of flow-through share issues
Exploration and development expenditures
Off-property
On-property
18.4
26.4
27.4
22.9
136.6
113.5
23.1
131.6
105.8
25.8
148.2
124.5
23.6
154.6p
115.8
38.8
. .
167.6
121.9
45.7
Source: Service de la recherche en économie minérale, Ministère des Ressources naturelles du Québec.
. . Not available; e Estimates derived from the survey conducted in the fall of 1997; p Preliminary data.
TABLE 15.
Taxable Income
QUÉBEC, $1000 FLOW-THROUGH SHARE INVESTMENT FOR SURFACE EXPLORATION1
Marginal Tax Rate
Federal
Québec
Total
Federal (1)
(%)
$40
$50
$60
$70
000
000
000
000
22.49
22.49
25.09
26.54
24.61
25.68
26.40
26.40
Tax Saving
Québec (2)
Total (1+2)
($)
47.10
48.17
51.49
52.94
225
225
251
265
431
449
462
462
656
674
713
727
Net
Investment
Cost
$1000 - (1+2)
After-Tax
Break-Even
Point2
($)
($)
344
326
287
273
414
392
354
341
Source: Ministère des Ressources naturelles du Québec.
1 New issues often comprise flow-through shares and common shares sold as units. In such cases, the tax deduction will be proportionate to the
number of flow-through shares included in each unit. 2 The break-even point takes into account current income tax provisions relating to capital
gains and the exemption available for them in Québec by means of the special account that shelters the deemed capital gain from taxation.
Notes: Flow-through shares for surface exploration entitle the holder to a deduction of 175% at the provincial level and 100% at the federal
level. The table reflects income tax provisions applicable for the 1996 calendar year for a Québec taxpayer who is an individual and who is not
subject to the minimum alternative tax. Marginal tax rates take into account provincial and federal surtaxes, the Québec tax reduction (2% of the
amount over $10 000 of tax payable net of non-refundable tax credits), and basic personal non-refundable credits of $1098 at the federal level
and $1180 at the provincial level. Issue expenses are not taken into account.
Tax Measures Favouring the Mining Industry
In 1997, the tax deductions provided under the flow-through share regime and the exemption
on deemed capital gains were extended to December 31 of the year 2000. Under these measures,
an individual can benefit from a deduction of up to 175% of his or her investment when the proceeds of the issue are invested in surface exploration in Québec. The maximum savings in
Québec income tax for an individual is $462 for each $1000 invested in flow-through shares
(Table 15).
The overall tax system governing Québec mining companies is competitive when compared with
tax systems in other provinces and other countries. Corporate income tax, mining taxes and
non-profit taxes make up the tax environment for mining companies in Québec.
The mining tax system in Québec is characterized by a refundable loss credit (“crédit de droits
remboursable pour perte,” or CDRPP), which is unique in Canada. This credit amounts to 12%
of actual losses. In addition, the system provides for a mining tax holiday for the first 10 years
of operation of a new mine located north of 55º N latitude.
In the budget speech of March 31, 1998, the Québec Minister of Finance announced new tax
measures to stimulate exploration in the northern areas of Québec. An additional 25% for
exploration will be allocated to the mining tax system for such work undertaken in the Near
North and Far North areas of Québec. This measure brings the deduction for exploration to
175%.
48
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
The Taxation Act will also be amended to improve the exploration deduction by 25% when such
expenditures are incurred in the northern areas of Québec.
Non-profit taxes, particularly payroll and capital taxes, are the most strongly criticized by the
industry. The 1998 budget announced a reduction in the payroll tax to take effect in July 1999.
This change will mostly benefit small capital companies, particularly a number of junior exploration firms. In addition, the capital tax on partnerships exploiting a mineral resource has
been reduced.
Other Mining Exploration Incentives
In the last budget speech, the Québec Minister of Finance announced that the Québec Department of Natural Resources would have access to $18 million over three years ($6 million per
year) to support studies and work aimed specifically at the discovery of new mineral deposits.
The Department’s financial assistance program for mining exploration was provided with an
annual budget envelope of $3 million for three years, beginning April 1, 1997. The objective of
this program is to provide financial and technical assistance to prospectors and exploration
companies. It has three components: assistance for independent prospectors, assistance for
companies, and the creation of regional mining funds.
The regional exploration funds are legally incorporated organizations governed by specific
agreements between regions and the Québec Department of Natural Resources. They have
access to an overall annual budget of $800 000. A maximum of $200 000 is available for each
fund covered by an agreement. There are currently three regional exploration funds covering
the Lower St. Lawrence, Saguenay and Gaspé regions. An agreement to create a fourth
regional fund for the Chaudière-Appalaches region is imminent.
In addition, to promote the search for new deposits in the northern areas of Québec, financial
assistance for companies is provided under the program for mineral exploration in Québec’s
Near North. Companies can be reimbursed for 50% of eligible expenditures up to a maximum
of $100 000 per project.
Late in 1996, SOQUEM and Capital d’Amérique CDPQ created Sodémex, a limited partnership. With initial capital of $7 million provided by the two partners ($3.5 million each),
Sodémex acquired the “PSIM” portfolio that had belonged to SOQUEM. In 1997, Capital
d’Amérique CDPQ undertook to invest a further $15 million to create Sodémex II. Following
the example of the first limited partnership, Sodémex II will acquire interests in small mining
companies that are active in Québec.
5.6
ONTARIO
Overview
Exploration activity in 1997 remained close to the high level attained in 1996 with gold the
primary target commodity. A total of 877 exploration programs were carried out across the
province.
Ontario’s preliminary estimate for general and mine-site exploration expenditures in 1997 is
$173.9 million, down moderately from $194.4 million in 1996. The 1998 forecast for exploration
dollars spent in Canada indicates that Ontario’s share would decline to $132.7 million. In 1996,
36% of general and mine-site field exploration dollars were spent on base-metal exploration and
59% on precious-metal exploration. In 1995, 32% of exploration dollars were spent on base metals and 63% on precious metals.
Exploration expenditures by senior mining companies are expected to account for 54% of total
expenditures in 1998, down from 68% in 1997 and 74% in 1996.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
49
Mine-site development expenditures for 1998 are forecast at $228 million, down from the
$260 million preliminary estimate in 1997 and $279 million in 1996. These data include
overhead expenditures. In 1996, 58% of mine-site development expenditures were spent on
precious-metal projects and 39% on base-metal projects. This compares to 61% for preciousmetal projects and 22% for base-metal projects in 1995.
There were 181 488 active claim units at the end of 1997, down slightly from the record level of
183 299 claim units in 1996. During 1997, a reported $53.8 million in exploration work was
recorded for assessment credits, up from $37.3 million in 1996. Most of this was spent on diamond drilling, as in previous years.
On the exploration front, gold continued to command substantial interest as the commodity of
choice for exploration in Ontario during 1997. Recent base-metal discoveries in the traditional
mining camps are attracting numerous companies to these areas. The search for diamonds continued in 1997 with the hunt concentrating in the Temiskaming, Wawa and James Bay Lowlands areas.
The 1997 forecast for capital expenditures on structures, machinery, equipment and mine-site
development by mining companies is estimated at $680 million, up 6% from the 1996 preliminary figure.
New Mines
Placer Dome Inc. brought the Musselwhite mine into commercial production in 1997 at a cost of
$190 million. The mine is located 500 km north of Thunder Bay and is expected to produce
200 000 oz of gold annually.
River Gold Mines, under an option agreement with Vencan Gold Corporation, began production
from the Edwards gold mine in 1997. This mine is located close to their Eagle River mine near
Wawa and should produce 15 000 to 20 000 oz of gold annually.
Glimmer Resources Inc. began commercial production in January from the Glimmer mine, located
near Kirkland Lake. Reserves are estimated at 275 000 oz at an average grade of 12.9 g/t gold.
Claude Resources acquired Madsen Gold in 1997 and continues to produce from the Madsen gold
mine. The company is refurbishing the mine and exploring the mine-site area south of Red Lake.
Mine Expansions
Placer Dome is continuing work on the $70 million Depth Development Program at its Campbell gold mine near Red Lake. The work includes a new shaft to access deep reserves.
Inmet Mining is spending $26.3 million to access and develop the Pick Lake ore zone from its
Winston Lake zinc-copper mine north of Schreiber.
Goldcorp’s Red Lake gold mine is increasing reserves by continuing exploration at the mine
despite a labour dispute. The company is reviewing plans for a project to increase reserves and
reduce costs that would take two years to complete at a cost of $115 million.
Inco Limited announced earlier this year that it will spend $177 million to develop a 6-Mt
nickel deposit at the Creighton mine near Sudbury. The deposit’s grade is estimated at 3.5%
nickel. Production from the deposit should begin by 2001.
Mine Development
Agrium Inc. of Calgary will spend $70 million to develop a high-quality phosphate deposit near
Kapuskasing in northeastern Ontario. The open-pit mine is expected to produce for 20 years
beginning in the summer of 1999. It will create about 100 permanent jobs.
50
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Falconbridge is continuing work on the Lockerby nickel-copper mine that re-opened in early
1996. Full production is scheduled for this year.
Inco continues to work on the McCreedy East project west of Sudbury. The mine began producing in 1996 and is scheduled for full production by 1999.
Advanced Exploration
Inco is working on the Sudbury area Victor nickel-copper deposit. The $72 million predevelopment program will culminate with a feasibility study in 1999.
Armistice Resources completed extensive drilling on its Virginiatown property in 1997 and continued to encounter several mineralized zones.
Kinross Gold completed a $1 million resource drilling program on its Vogel property near
Timmins in 1997.
Vedron Gold is continuing work on the Fuller property near Timmins after obtaining positive
results from a drill program earlier in 1997.
Pentland Firth conducted a drill program on its Marlhill deposit near Timmins in 1997 and
plans to continue work on the property.
Pentland Firth’s drilling on the Hammond Reef property near Atikokan indicated the open-pit
potential for mineralization at the property.
Madoc Mining Company continues to work on its Bannockburn gold property in southeastern
Ontario. It is currently shipping ore for processing to Noranda and St. Andrews.
Major Exploration Projects
Currie Rose Resources continued diamond drilling at the former Scadding gold mine in
Scadding Township. To date, four holes containing visible gold in the core have outlined a
steeply dipping zone south of the South zone.
Inco has announced the discovery of two new high-grade zones in the Sudbury camp: the Kelly
Lake deposit south of the South mine, and a new deposit north of the South mine. Inco plans to
spend $8.4 million exploring in the Sudbury camp.
Band Ore Resources is continuing its exploration programs on two of the company’s 100%-owned
properties in the Timmins camp. An updated resource calculation, including the results from
the aforementioned exploration programs, will be available in 1998.
Drilling by Cross Lake Minerals on its Sheraton-Timmins property has returned some encouraging base-metal values. Earlier results indicated high-grade lead-zinc-silver mineralization.
Holmer Gold Mines is active on its Bristol Township property near Timmins where it continues
to add to the gold mineralization.
Queenston Mining and joint-venture partner Franco-Nevada Mining have intersected gold on
the Princeton property in Gauthier Township near Kirkland Lake. They are conducting a
$2.5 million drill program and the inferred resource is 2.9 million short tons (st) of ore grading
0.18 oz/st of gold.
St. Andrew Goldfields Ltd. extended the gold mineralization on its West Porphyry zone property, west of Timmins, when the company announced drill results for 1997. Over 75% of the
drill holes on the West Porphyry zone intersected gold grades of 0.20 oz/st or greater.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
51
River Gold Mines has purchased the Mishi Gold project near Wawa. The main zone is reported
to contain open-pit mineable reserves of 772 000 t grading 3.3 g/t gold.
Patricia Mines continues to drill its Island Gold project, north of Wawa. The company is reporting that all of the intersected holes show visible gold mineralization.
Avalon Ventures’ exploration program on its Separation Rapids pegmatite property in the
Kenora region intersected significant thicknesses of mineralized pegmatite in all holes drilled
in its current program. Assays confirmed consistent mineralization of lithium and rubidium, as
well as anomalous values for tantalum and cesium.
Nuinsco Resources encountered gold anomalies in its drilling program on its Richardson Township property near Kenora. The company is continuing to work on the property.
Houston Lake Mining and Inca Mining will continue to explore their McLennan Claims-Dogpaw
group of properties near Kenora after encountering a new shear zone during their 1997 program. The assays on the zone range from 29.84 to 74.62 g/t gold.
Corona Gold and Teck Corporation are continuing their drill program on the Thunder Lake
West property in the Kenora area to determine its resource estimate. Earlier results outlined
an inferred mineral resource of 3.65 Mt grading 7.28 g/t gold.
Battle Mountain Gold continues to explore gold properties close to the Hemlo camp, including
the Golden Sceptre property. Surface work identified porphyry zones and the company is continuing to drill on the property.
Romios Gold Resources is conducting exploration work on the Lundmark-Akow Lakes gold
property near the Musselwhite mine in northwestern Ontario. Positive assay results released
late last year provided the impetus to continue exploration.
Cameco Gold began drilling on its Black Lake gold property in northwestern Ontario after completing an induced polarization (IP) survey in 1997.
Mineral Exploration Incentive Programs
The Ontario Prospectors Assistance Program (OPAP) provides financial assistance to qualified
individuals and companies involved in mineral exploration in Ontario. The grants provide
100% of approved eligible expenses to a maximum of $10 000 per individual per year. The
OPAP budget allocated for 1998 is $2 million. About 205 of 390 applicants will be approved for
OPAP assistance in 1998. In 1997, 215 of 357 applicants were approved for assistance.
5.7
MANITOBA
Overview
Mineral exploration expenditures during 1997 are estimated at $39.3 million, compared to
$41.2 million in 1996. Surface diamond drilling in 1997 is estimated at 358 000 m compared to
153 000 m in 1996. The total area of claims, exploration permits and special exploration permits recorded in 1997 was 922 419 ha (295 316 ha in 1996). The total area of mineral dispositions in good standing at the end of 1997 was 1 947 125 ha compared to 1 756 121 ha at the end
of 1996.
Exploration Highlights
Hudson Bay Mining and Smelting Co. Limited (HBMS) continued an aggressive exploration
program in its effort to find base-metal deposits in the Flin Flon, Snow Lake and Ruttan areas.
52
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
HBMS is proposing a business plan to extend the life of the Flin Flon mining and metallurgical
complex to the year 2012. In early May 1998, the company made public the discovery of the
Triple 7 zone located on the deeper extension of the Flin Flon/Callinan mine horizon. HBMS is
currently mining the Callinan deposit under an agreement with Callinan Mines Limited. Total
indicated and inferred geological resources of the Triple 7 zone are estimated at 13 Mt grading
2.71 g/t gold, 37.71 g/t silver, 3.32% copper and 5.78% zinc.
Falconbridge Limited continued its extensive nickel exploration effort in the William Lake area
on the Thompson Nickel Belt, 225 km southwest of Thompson. The company announced that it
has signed an option/joint-venture agreement with Minorco’s subsidiary, HBMS, whereby
HBMS has the right to earn a 50% interest in the William Lake Trend property and a 25-50%
interest in Falconbridge’s other holdings in the William Lake-Grand Rapids area by providing
substantial exploration funding over the next five years. Falconbridge remains the project
operator.
Aur Resources Inc. with partners Thunderwood Resources and Consolidated Abitibi Resources
stepped up exploration efforts in 1997 in the Flin Flon-Snow Lake and Lynn Lake belts.
Encouraging gold-copper mineralization was obtained from a drilling program at Leo Lake,
20 km east of Flin Flon.
Near Thompson, Inco Limited completed the surface exploration program at the Pipe 2 mine.
Significant new nickel mineralization was discovered below the 2400 level. Further exploration
at Pipe 2 will be from underground when a decision is made to re-enter Pipe for the purpose of
mining.
At Snow Lake, TVX Gold Inc. and partner High River Gold Mines Ltd. announced that gold
production for 1997 was 2843 kg, surpassing the goal of 2643 kg. Cash operating costs continued to decline. The exploration program conducted on the 3000-ft level confirmed the continuity of both the Dick and Ruttan zones from the 2300 level down to the 3150-ft level. The ore
zone structures remain open at depth and show every indication that they will continue below
the 3000-ft level.
At Lynn Lake, Black Hawk Mining made steady improvements at the Keystone Gold project
throughout 1997. The drop in production costs was attributed to ongoing improvements in
development and operations at the Farley Lake open pit.
On December 15, 1997, Rea Gold Corporation declared bankruptcy proceedings and shut down
the Bissett gold mine at Bissett in southeastern Manitoba only five months after pouring the
first gold. Early in April 1998, the Court-appointed receiver KPMG Inc. accepted a $14.3 million offer for the bankrupt Bissett operation from Harmony Gold Mine Co. of South Africa. The
sale of the mine was approved by the Court of Queen’s Bench on June 11, 1998.
Prospectors Assistance Program
The Government of Manitoba will reimburse 50% of the prospecting expenditures of qualifying
self-employed prospectors to a maximum annual grant of $7500 on pre-approved projects. In
fiscal year 1997/98, 40 applications for grants were received, of which 33 were approved. Twentynine projects were completed, resulting in the payment of $122 223 in provincial funding.
Mineral Exploration Assistance Program (MEAP)
The Mineral Exploration Assistance Program (MEAP) was established in the fall of 1995 to
increase exploration and stimulate activities that may lead to the development of new mines.
Funding of $1 million was allocated to the program for its first offering on October 1, 1995;
$3 million was offered for each of the following three fiscal years. Companies/individuals may
qualify for 25-35% of pre-approved eligible exploration expenditures up to a maximum of
$300 000 to $400 000 per recipient per fiscal year, depending on the region of exploration. In
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
53
consideration of the Northern Superior region’s remoteness, its high cost of operation and limited infrastructure, a higher percentage of assistance (35%) is offered to companies/individuals
exploring in this region of Manitoba. Since the program’s inception, 63 companies have participated under MEAP, representing 180 projects. Thirty-four of the 63 companies are recorded as
new to Manitoba. Proposed exploration expenditures during this period amounted to $39.9 million and allocated assistance funds totaled $9.5 million. To date, reported actual exploration
expenditures under the program total $22.8 million. This relates to $5.2 million in paid assistance funds and illustrates that every $1 million paid in assistance funds generates $4.4 million
in exploration expenditures. All program funds for 1998/99 are committed.
Land Use
Program activities for land use in 1997 were centred on the implementation of the Network of
Special Places Action Plan. An intensive candidate site selection process for identifying protected lands was conducted through the MELC (Mineral Exploration Liaison Committee) industry-government land use committee process. Industry consensus was achieved on many sites,
and no valid mineral dispositions were compromised as a result of the process.
Also in 1997, several Wildlife Management Areas were evaluated for mineral potential and candidate sites for the endangered spaces campaign were identified.
A new land access map outlining encumbrances for mineral exploration in Manitoba was prepared and released in November 1997.
5.8
SASKATCHEWAN
Overview
The annual survey of mineral exploration expenditures carried out by the resident geologists
indicated that mineral exploration expenditures in 1997 were $43 million, an increase of $8 million (23%) over figures recorded in 1996 (Table 16). Expenditures for uranium rose by 37%,
continuing an upswing that began in 1993, while those for base metals nearly doubled. Exploration expenditures in 1998 are estimated to be $39 million, reflecting a leveling off of uranium
exploration activity and a decrease in that for gold and base metals. These figures exclude uranium, base-metal and gold test mining and underground exploration costs of $269 million in
1997 and estimated expenditures of $298 million in 1998.
TABLE 16.
SASKATCHEWAN EXPLORATION EXPENDITURES, 1988-98
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998 e
($ millions)
Precious metals
Base metals
42
6
20
7
11
7
5
6
6
4
2
4
4
4
8
4
7
5
4
9
3
6
Uranium
Other
20
–
21
2
12
2
10
3
8
4
7
11
11
10
13
4
17
6
27
3
27
3
Total
68
50
32
24
22
24
29
29
35
43
39
Source: Resident Geologists' Survey, Saskatchewan Department of Energy and Mines.
– Nil; e Estimated.
Note: "Other" includes some industrial mineral activity, but predominantly diamond exploration.
54
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
The total number of metallic mineral dispositions in good standing at the end of 1997 increased
to 4014 (covering 3.0 million ha) compared to 3422 (covering 2.8 million ha) at the end of 1996.
In 1997, 2194 new dispositions were recorded, marking a threefold increase in the number of
new dispositions and doubling the number of new hectares under disposition to 1 103 790 when
compared to 1996. The increase in the amount of land under disposition in 1997 primarily
reflects the strong interest in uranium exploration in the Athabasca region, which was spurred
on by junior exploration companies. Diamond exploration in south-central Saskatchewan and
continued interest in base-metal exploration in the Flin Flon, Attiti-Kisseynew and Wollaston
Domain areas of northern Saskatchewan also contributed to the increase in the amount of land
under disposition. The number of dispositions for industrial minerals (potash, coal, and alkali
minerals) has remained fairly constant, compared to previous years, covering an additional
285 000 ha located primarily in central and southeastern Saskatchewan.
Uranium
The year saw a continued increase in uranium activity, although the average spot price for uranium fell. Ten companies, including some that are joint-venture consortiums, continued to
explore for uranium in the Athabasca Basin. While discovery potential remains high, no significant new finds were reported last year.
The Joint Federal-Provincial Panel on Uranium Mining Development in northern Saskatchewan
recommended the approval of the $360 million McArthur River and the $410 million Cigar Lake
projects. Following approval by the Atomic Energy Control Board, construction has started at
McArthur River. Cogema completed first-phase construction at the $250 million McClean Lake
project and, with the licensing of the JEB Tailings Management Facility (TMF), expects to be in
production by the second half of 1998. McArthur River’s proven reserves are 72 600 t of uranium (189 million lb U3O8) at an average grade of 15.9% uranium (18.7% U3O8) and a resource
of 87 600 t of uranium (227.8 million lb U3O8).
Following the depletion of ore reserves stockpiled from the Deilmann open pit at Key Lake,
McArthur River will provide feed for the Key Lake mill, which produces about 5423 t of uranium (14 million lb U3O8) per year. With the approval of the JEB TMF, ore from the Cigar
Lake project will be processed at McClean Lake’s expanded mill. At Midwest, mining will be
integrated with the development of the McClean Lake orebodies. These projects ensure that
production at the Key Lake and McClean Lake mills will last until 2020 and 2038, respectively.
In 1997, Cogema maintained Cluff Lake’s production at 2020 t of uranium (5.3 million lb
U3O8). The mill started continuous operation in October 1995 and ran at full capacity in 1997.
Production should drop off after 1998. The Dominique-Peter mine, and the Dominique-Janine
underground and extension open-pit mines, provided 1997 ore for this expansion. At Rabbit
Lake, which continues to operate at less than full capacity, 1997 production increased again to
about 4616 t of uranium (12 million lb U3O8). Ore was produced in 1997 from the Eagle Point
underground mine and the D zone, which was exploited as the third Collins Bay open pit. Mining will continue until reserves are depleted early in the next century.
Gold
With the exception of Claude Resources Inc.’s Seabee mine, the province’s gold sector is in
decline. Since its opening in November 1991 to the end of December 1997, the Seabee gold
mine produced in excess of 307 000 oz of gold and processed more than 1 Mt of ore. Mill
throughput totaled 211 481 t for an average of 580 t/d. This was a 9% increase over 1996. By
year-end, a $3.5 million shaft and hoist, to a depth of 395 m, was fully operational. In a February 1998 report to the company, A.C.A. Howe International estimated reserves in the proven
and probable categories of 590 000 t at an average grade of 9.98 g/t (0.29 oz/st) gold.
Elsewhere, the picture is not so bright. Cameco reported that production from the Contact
Lake mine was 53 000 oz of gold, down from over 60 000 oz produced in 1996. This decrease
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
55
was attributed to lower-than-expected ore grades that resulted in reduced production levels and
higher unit costs. Underground drill programs have failed to replace mined reserves and the
operation is expected to close in mid-1998.
Production at the Komis mine, which is operated by a subsidiary of Golden Rule Resources Ltd.,
fell far short of feasibility estimates in the last four months of 1996. Following a new ore
reserve calculation and an assessment of mine economics resulting from the change to an exclusively shrinkage stope mining method, the mine closed. The Jolu mill, 60 km to the south, continued to operate until August using stockpiled Komis ore.
While these mines illustrate that gold discoveries can be made in the province, fewer than
10 companies conducted exploration programs. Most of these efforts were in the La Ronge and
Glennie domains.
At Laural Lake, Claude Resources has increased resources from 425 000 t grading 11.3 g/t gold
(0.33 oz/st) to 1 500 000 t grading 13.7 g/t gold (0.4 oz/st) (uncut). The execution of a spring
1998 underground sampling program depends on the gold price. Greater Lenora Resources
Corporation was not active this year at its Goldfields project near Uranium City. Kristo Gold
Inc. will not reprocess gold from the copper-gold tailings of the old Anglo-Rouyn mine at present
prices.
Base Metals
Base-metal exploration expenditures nearly doubled from $5 million in 1996 to $9.4 million in
1997. Hudson Bay Mining and Smelting Co. Limited (HBMS) will complete a $7.5 million
Phase I underground exploration program at Konuto Lake. If the orebody is confirmed, the
company will invest approximately $40 million more over 18 months to bring the Konuto project into production. The mine, with geological reserves of 1.44 Mt grading over 6% copper and
2.5 g/t gold, is expected to operate for five or six years. Most of the 1997 production from
HBMS’s Callinan mine came from the North and East zones in Manitoba, although mining the
Saskatchewan side of the North zone did begin this year.
Base-metal exploration, involving less than 10 companies, continued in Shield and subPhanerozoic terranes west and southwest of Flin Flon. Leader Mining International Inc. delineated increased open-pit mineable resources of 79 Mt grading 1% equivalent copper (i.e., 0.69%
copper, 0.017% cobalt, 0.16 g/t gold and 0.39 g/t silver) at Knife Lake in a greenstone belt identified as a higher metamorphic grade, northward extension of the Flin Flon volcanics. A $6 million exploration program sought to enlarge the Knife Lake deposit and define deep volcanogenic
massive sulphide deposit targets and other base-metal prospects with potential in the same
domain.
In the Wollaston domain, Far West Mining Ltd. continued its exploration program for zinc-lead
mineralization in the vicinity of the George Lake deposit, and Noranda drilled recently discovered copper-silver showings near Janice Lake.
The Clearwater nickel project, a joint venture between Uranerz Exploration and Mining Limited (operator) and Kensington Resources Ltd., postponed a second drill program in the Clearwater Anorthosite Complex of the Western Craton because of poor ice conditions. Three companies are involved in two nickel-copper-cobalt plays in the Archean Tantato domain north of
Lake Athabasca. One play has sub-Athabasca Group targets.
Diamonds
The amount of land under disposition for diamonds declined to less than 400 000 ha. This compares with some 4 million ha under disposition at the height of the diamond boom in 1994.
Three companies staked a total of 232 508 ha in the Wood Mountain area of southern
Saskatchewan in October 1997.
56
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
On Kennecott Canada Inc.’s Candle Lake properties, which were optioned from the War Eagle
Mining Company and Great Western Gold Corporation, the company plans to use a large drill
to complete a 22.7-t bulk test from two cased holes drilled in 1997 to the top of kimberlite
#C29/30. On kimberlite #C28, the company completed eight diamondiferous drill holes. If
results from the bulk test on kimberlite #C29/30 are positive, the company may proceed to take
a bulk sample from kimberlite #C28.
The Fort à la Corne diamond project is a joint venture between Uranerz Exploration and Mining Limited (operator), Cameco Corporation, Monopros Limited (a wholly owned subsidiary of
DeBeers Consolidated Mines Ltd.) and Kensington Resources Ltd. The 1997 Fort à la Corne
exploration program focused on further evaluating higher-grade kimberlite bodies. Drilling
consisted of two rotary drill holes and three reverse circulation airblast and under-ream
(RCA/UR) drill holes. The results of macrodiamond analyses of mini-bulk samples (68.045 t)
taken from the 1997 drilling are expected by year-end.
Shore Gold Inc. has a 100% working interest in a 4662-ha diamond project at the south end of
the Fort à la Corne kimberlite trend where two kimberlites have been identified. The “western”
kimberlite has a promising, visually distinct, higher-grade zone near the top of the
kimberlite/sediment sequence. A Phase II drill program took a mini-bulk sample of several
tonnes while continuing the program of definition and exploratory drilling.
Mining Lands Initiatives
To maintain the competitiveness of Saskatchewan in the resource sector and ensure relevant
regulations are in place to address evolving exploration technology, a number of regulations will
be reviewed this year, including The Quarry Regulations 1957, The Subsurface Mineral Regulations 1960, and The Alkali Mineral Regulations 1954. Consultation with industry remains a
critical part of all regulatory reviews. Revisions to The Mineral Disposition Regulations, 1986
are expected this year following additional consultation with industry.
The pilot project of digitizing disposition maps is in its final stages and it is anticipated that all
maps will be converted and available to the public in digital form by year-end. To assist companies and individuals in their mineral exploration and development plans, a document outlining
provincial and federal regulatory requirements for mineral exploration and development is
being prepared. The Department of Energy and Mines is also working with Natural Resources
Canada to establish a one-window approach to collecting mineral statistics and is actively
involved in a number of integrated land-use planning projects whereby mineral assessment of
the area is undertaken prior to land designation. The Treaty Land Selection process is continuing smoothly, and the Department has reviewed all outstanding Crown Reserves initially identified under the Treaty Land Entitlement process and has re-opened those that were no longer
required.
5.9
ALBERTA
Exploration Review
Diamond exploration continues to be the driving force in Alberta’s mineral sector. The Department of Energy received a record number of permit applications in 1997, surpassing the totals
of the previous staking rush in 1992/93. In 1997, there were 4135 applications for permits filed
with the Department covering an area of over 37 million ha. This brought the total lands under
permit or application to over 45 million ha, or almost 90% of the available Crown lands.
Ashton Mining of Canada, with partners Pure Gold Minerals and Alberta Energy Company
(AEC), continue to explore on their 11 million ha block of permits in the Buffalo Head Hills in
northern Alberta. By the end of the 1997/98 winter drilling season, Ashton had discovered
23 kimberlites, many of which were diamondiferous. In initial sampling, two of the more
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
57
promising pipes were K-14 and K-91. K-14 produced a rough grade of 36 ct/100 t from a sample
of 8.17 t, while K-91 produced 80 microdiamonds and 12 macrodiamonds from 117 kg of core.
Through various drilling methods, Ashton has collected bulk samples from these two kimberlites. The smaller 40-t sample from K-91 was sent to Ashton’s North Vancouver laboratory for
processing, while the 450-t sample from K-14 was stored awaiting the installation of a sample
treatment plant on site. Work continues this summer on a number of previously discovered
pipes and other anomalies.
New Claymore Resources has significant mineral holdings in the area surrounding the Ashton
discovery. The company has entered into joint-venture agreements with a number of other companies including Abaddon Resources, Lucero Resource Corporation, Everest Mines and Minerals, Primero Resources, and Blackrun Ventures, and they have conducted airborne geophysics
over much of the area. New Claymore is proceeding with a drilling program on the northern
part of the Buffalo Head Hills this summer.
Monopros Limited started the first diamond-related staking rush in Alberta in late 1992. After
finding the Mountain Lake diatreme in 1993, however, the company diverted its efforts to other
parts of Canada. Monopros has now returned to exploration in the province through a joint
venture with Troymin Resources. Troymin has a number of permit blocks around the
Ashton/Pure Gold/AEC discoveries.
A number of other independents and junior companies are also conducting work on lands
throughout the province. Birch Mountain Resources continues to explore the metallic potential
of its properties north of Fort McMurray, having conducted geochemical and aeromagnetic surveys in 1997. Tintina Mines has also conducted extensive exploration and assessment work on
holdings in this area, concentrating on black shale sequences containing large, low-grade metal
enrichment zones situated around volcanic centres.
It is expected that exploration activity in Alberta in 1998 will be the highest it has been in
many years with diamond exploration expenditures possibly reaching $20 million to $25 million.
Sayers Securities Limited reported that the oil and gas industry raised $318.3 million through
flow-through shares in 1997. This was a 14.8% rise from the 1996 level of $277.2 million.
Flow-through shares appear to continue to be a popular method of raising equity funds for the
industry. The level of financing indicates that the changes introduced in the March 6, 1996,
federal budget did not have a substantial negative impact on the use of flow-through shares.
5.10
BRITISH COLUMBIA
Summary and Outlook
The new and more comprehensive federal-provincial survey format has resulted in a significant
change in the reporting of exploration expenditures in British Columbia (B.C.). Table 17 compares both the “old” and “new” survey-based results covering 1996 and 1997 expenditures and
1998 projected spending.
By either survey base, this chart indicates that B.C.’s exploration spending during the last two
years (1996 and 1997) and its projected spending in 1998 is around $100 million, fluctuating by
±10% year on year. The difference between the “old” and “new” figures is explained by the
newly included exploration spending category covering engineering, economic and feasibility
studies.
The new federal-provincial survey projects $119 million of exploration spending in 1998 (Table 17).
When this exploration survey was conducted at the end of 1997 and the beginning of 1998,
many companies provided exploration projections “subject to” raising financing in the spring of
58
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
TABLE 17. BRITISH COLUMBIA, ANNUAL EXPLORATION
SPENDING AND PERCENT CHANGE, 1996-98
1996
Actual
1997
Preliminary
1998
Projected
Old survey
% change
$ million
105
. .
97
–8
103
+7
New survey
% change
$ million
. .
. .
113
. .
119
+5
Source: British Columbia Ministry of Employment and Investment Statistics.
. . Not available.
1998. At that time, increases in gold and copper price levels were expected to occur. Prices
have remained low and the tracking of the first half of 1998 exploration activities by the B.C.
Mineral Development Office (MDO) in Vancouver indicates that spending may be down considerably. Mid-year estimates indicate that total exploration expenditures may be 25% to 50% of
the projected $119 million.
New Mining Initiatives in British Columbia
In recognition of the challenges facing the mining industry, and after consulting with industry,
labour, other government ministries and stakeholders, the Government of B.C. announced four
new mining initiatives on April 21, 1998:
•
The Mining Rights Amendment Act, recognizing the right to mine, and assuring access to
mineral tenures, the right to compensation when tenures are expropriated for parks, and
timely permitting;
•
The Mineral Exploration Code, creating a one-agency approach for permit approvals, and
applying environmental protection standards designed specifically for exploration;
• Creating a Mining Advocate position; and
•
Introducing a refundable Mineral Exploration Tax Credit worth up to $9 million annually.
In addition, the new mine allowance that provides a one-third gross-up of capital costs for new
mines in B.C. for mineral tax purposes was extended to all new mines that begin production
before January 1, 2010, rather than 2000.
The high mineral endowment of B.C.’s Cordillera and the existence of both high-grade mines
such as Eskay Creek (1-2 oz/st, 34-68 g/t) and large-volume developments such as Kemess
(45 000 t/d for over 15 years) will continue to attract exploration dollars to B.C. Therefore, as
mineral commodity prices rise, exploration spending is expected to accelerate.
The proof of a successful exploration process lies in the development of new mines. The provincial government has assisted in some cases with loan financing for mineral developments and
infrastructure that have totaled more than $175 million over the past year and a half. Three
new mines, Golden Bear, Mt. Polley and Huckleberry, came on stream last year and a fourth,
Kemess, has begun production. Its official opening is expected later this year. In addition, the
completion of an on-site mill at the Eskay Creek mine will further increase the province’s value
of mineral production.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
59
Statistical Analyses
The analyses of 1996 and 1997 exploration activities and the anticipated expenditures in 1998
highlight four points:
• Lower gold and copper price levels, sustained from the latter part of 1997 through to midyear 1998, have had an impact on exploration spending.
•
B.C. may be experiencing a trend towards reduced grassroots or generative exploration
spending, which would adversely impact a long-term, sustainable mining industry. The
MDO has estimated that the share of total exploration dollars on generative projects
dropped from 12% in 1996 to 6% in 1997. While the share of grassroots spending may
increase in 1998, the dollar level may remain the same as in 1997.
•
Alternately, 15 years of recorded B.C. exploration spending shows that it is highly variable
from one year to the next. To a large extent, exploration activity is driven by gold and copper (base-metal) price levels and financial incentives. In the event that these price levels
increase, and with recently announced government incentives, exploration can be expected
to increase over the longer term, maintaining a viable mining economy. To a lesser extent,
increases in lead, zinc, silver and coal price levels will also improve exploration spending in
B.C.
•
B.C. has over $25 billion in known mineral inventory associated with currently active
advanced exploration projects, and is in a reasonably competitive position internationally to
attract sustained exploration activity.
Table 17 shows an 8% reduction in exploration spending from 1996 to 1997 (from $105 million
to $97 million). Coinciding with this decrease is a reduction in both claim staking and the issuing of Free Miner Certificates (Figures 20 and 21).
In the first five months of 1998, both claim units staked and Free Miner Certificates issued are
lower than those during the same period in the previous three years. These lower activity levels may persist, along with lower mineral price levels, for the balance of 1998; however,
Figure 20
Mineral and Placer Claim Units Staked in British Columbia, 1995-97
(no. of claims staked)
45 000
Placer claim units
40 000
Mineral claim units
35 000
30 000
25 000
20 000
15 000
10 000
5 000
0
1995
1996
Source: British Columbia Ministry of Energy and Mines, Mineral Titles Branch.
1997
60
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
increased exploration might also take place since the bulk of claim staking is carried out during
the summer months and there may be a near-term response to the new government incentives
being implemented during the summer of 1998.
Figures 22 and 23 show exploration spending by deposit type and by region in 1996 and 1997.
As indicated in Figure 22, the majority of spending in both years was focused on metals discoveries,
rather than on coal and industrial minerals. This further supports the fact that exploration
Figure 21
Free Miner Certificates Issued in British Columbia, 1995-97
(no. of certificates issued)
8 000
Companies
7 000
Senior citizens
6 000
Individuals
5 000
4 000
3 000
2 000
1 000
0
1995
1996
1997
Source: British Columbia Ministry of Energy and Mines, Mineral Titles Branch.
Figure 22
Exploration Spending by Deposit Type in British Columbia, 1996 and 1997
($ millions)
50
1996
45
1997
40
35
30
25
20
15
10
5
0
Porphyries
Veins
Massive sulphides
Coal
Skarns
Industrial minerals
Source: British Columbia Ministry of Energy and Mines, Geological Survey Branch (Information Circular 1998-1).
Other
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
61
spending in B.C. is heavily dependent on gold and copper (or base-metal) price levels. Although
the right-most bar (see “other” category) on this chart is the smallest, it represents an important indicator of metals diversity in B.C. since it includes significant spending on magmatic
nickel deposits. Comparing the two years, spending on porphyry targets is down and spending
on skarns is up. This reflects the search for higher-grade deposits during a period when gold
and copper price levels are low.
Figure 23 shows a significant increase in spending in the Cranbrook region and a decrease in the
Smithers region between 1996 and 1997. While metallogenic potential is well known in both
regions, the Cranbrook region is more road accessible, which helps to lower exploration costs
when financing is tight. This region also holds potential for another Sullivan-type deposit.
The next three diagrams are future oriented, comparing 1997 expenditures with those projected for
1998. Figures 24 and 25 contain information from the new federal-provincial survey. Although
interpretation of this information is limited in the first year of the survey, after a few years of
scrutiny, the ratios of “Exploration to Deposit Appraisal to Mine Complex Development” and “offmine-site to on-mine-site” spending are expected to be valuable indicators of industry activities.
Total exploration, deposit appraisal and mine complex development spending is expected to
drop by 14% from $163 million in 1997 to a projected $140 million in 1998. Figure 24 shows
deposit appraisal spending increasing substantially (by $15 million) and spending on mine complex development decreasing (by $30 million). Since the change in deposit appraisal is
accounted for by only five projects, and that of mine complex development by only four major
projects, it is apparent that significant volatility can be expected in year-on-year expenditures
in each of these categories. The broadly based dollar decrease ($8 million) in the exploration
category reflects the actions of many companies and is consistent with the MDO’s mid-year
forecast of decreased exploration in 1998.
Figure 25 indicates that most of the exploration dollars spent on general exploration and
deposit appraisals in B.C. went to “off-mine-site” projects. This indicates that most exploration
dollars are targeted at either new deposits or rejuvenating old mining camps and shelved mineral deposit inventories.
Figure 23
Exploration Spending by Region in British Columbia, 1996 and 1997
($ millions)
50
1996
45
1997
40
35
30
25
20
15
10
5
0
Smithers
Kamloops
Prince George
Cranbrook
Source: British Columbia Ministry of Energy and Mines, Geological Survey Branch (Information Circular 1998-1).
Vancouver &
Island
62
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 24
Exploration and Development Spending1 in British Columbia, 1997 and 1998 (Projected)
($ millions)
90
1997
80
1998
70
60
50
40
30
20
10
0
Exploration
Deposit appraisal
Mine complex
development
Source: British Columbia Ministry of Energy and Mines.
1
Categories defined by new exploration survey.
Figure 25
"On" and "Off" Mine-Site Spending in British Columbia, 1997 and 1998 (Projected)
($ millions)
1997
80
1998
70
60
50
40
30
20
10
0
Exploration off
Exploration on
Deposit appraisal off
Deposit appraisal on
Source: British Columbia Ministry of Energy and Mines.
Figure 26 also compares 1997 spending with that projected in 1998. If a decline in the
number of companies completing grassroots spending persists (as indicated by the two lowerexpenditure categories), then fewer generative projects over a number of years could lead to an
unsustainable mining economy.
In Figure 26, the total number of companies surveyed are grouped into five categories according to their total expenditures. There is an appreciable fall-off in spending (between 1997 and
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
63
Figure 26
Number of Companies in Each Category of Exploration Spending in British Columbia,
1997 and 1998 (Projected)
(no. of companies)
90
80
1997
70
1998
60
50
40
30
20
10
0
$1000
to $100 000
$100 000
to $500 000
$500 000
to $1 million
$1 million
to $5 million
$5 million
to $17 million
Source: British Columbia Ministry of Energy and Mines.
1998) in the two lowest expenditure categories. This reflects a definite drop in grassroots or
generative spending compared with more advanced exploration and development projects in the
three highest spending categories.
Taking a long-term view, the analysis of the last 15 years of exploration spending (1983 to 1997)
plus projected 1998 expenditures shows that exploration in this province is highly variable
year-on-year and correlates with gold and copper price levels and financial incentives. This is
illustrated in Figure 27. The two price series (gold and copper) are shown as lines and both
exploration spending and flow-through share financing are shown as bars. Minimum to maximum annual spending has ranged widely from $66 million to $229 million, and the average
annual spending at $121 million has a standard deviation range of ±$51 million.
An analysis of this time series data reveals that exploration expenditures are most highly correlated with financial incentives and then gold and copper (or base-metal) price levels, in that
order. The correlation coefficients of exploration spending with flow-through share financing,
the gold price and the copper price are .59, .45 and .41 respectively. The correlation coefficient
between flow-through share financing and the gold price is .63, indicating that increasing gold
prices encourage companies to take advantage of financial packages. This is one of the reasons
that the B.C. government has implemented the Mining Exploration Tax Credit.
Two important “natural” factors give strong assurance for long-term exploration successes in
B.C. The first is the province’s endowment of highly diversified mineral deposit terranes (in
terms of metals and industrial and energy minerals), and the second is the substantial mineral
endowment of the Cordilleran crust. These strengths are indicated in Figure 28, which shows
the estimated “in-ground values” (i.e., IGV = grade x tonnage x price) of B.C.’s advanced exploration projects (metals and coal only). Prices used in the calculations were $300/oz of gold,
$5/oz of silver, $0.75/lb of copper, $4/lb of molybdenum, $0.25/lb of lead, $0.45/lb of zinc and
$40/t of coal. Note that the Prosperity gold-copper project is missing from the chart since its
total in-ground value of $5.4 billion ($2.8 billion of gold and $2.6 billion of copper) would plot at
over two times the height of the current chart.
This “mineral inventory,” which totals $25 billion (at today’s lower commodity prices), only represents advanced projects that are currently being explored. In addition, B.C. hosts substantial
64
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 27
Correlation of Exploration Expenditures and Flow-Through Share Financing with Gold and
Copper Price Levels, 1983-98
Exploration and
Flow-Through Share
Financing
($ millions)
Exploration
Gold ($/oz)
Flow-through share financing
Copper ($/lb x 300)
Gold and Copper Prices
(refer to legend)
350
500
450
300
400
250
350
300
200
250
150
200
150
100
100
50
50
0
0
1983
1985
1987
1989
1991
1993
1995
1997
Source: British Columbia Ministry of Energy and Mines.
Figure 28
In-Ground Value of British Columbia's Advanced Exploration Projects At June 1998 Prices
($ millions)
2 500
2 000
Coal
Lead
Copper
Zinc
Molybdenum
Silver
Gold
1 500
1 000
500
0
1
2
3
4
5
6
7
Porphyry
8
9
10
11
12
13
14
15
Massive
sulphide
16
17
18
19
20
Vein
21
22
23
24
Skarn
25
26
Coal
Deposit Types
Source: British Columbia Ministry of Energy and Mines, Statistical Section and Geological Survey Branch (Information Circular 1998-1).
Note: The Prosperity project (gold, $2832 million; copper, $2634 million) is not shown since it would distort the graph.
27
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
65
additional values in its other less advanced current exploration activities and other known
resources of “shelf inventory.” The implications are that the province has considerable mineral
inventory that is internationally competitive, and that B.C. should continue to attract and
retain globally oriented exploration companies.
New Mines, Operational Expansions and Development-Stage Projects
Two new open-pit porphyry copper-molybdenum-gold mines (Mt. Polley and Huckleberry), one
heap-leach gold operation (Golden Bear), and one significant mill expansion (Eskay Creek)
highlighted metal mine developments in 1997. The total capital cost for these projects was
approximately $284 million, and about 430 jobs were created.
In addition, final phases of construction at the Kemess South porphyry gold-copper mine in the
Toodoggone district are almost complete and production has begun. This mine is owned and
operated by Kemess Mines Inc., a wholly owned subsidiary of Royal Oak Mines Inc. The capital
cost of this project, which includes a new 380-km, 230-kilovolt electric transmission line, is estimated at $470 million.
The three location maps (Figures 29, 30 and 31) separate two groups of revenue producers,
i.e., the operating metal and coal mines of Figure 29 and the industrial mineral operations of
Figure 30, from the advanced exploration and development projects of Figure 31. In order to
complete the picture, two additional maps locate the less advanced coal and metal exploration
projects of Figure 32 (i.e., where only preliminary grades and tonnages have been estimated, if
at all) and the industrial mineral developments and intermittent mining projects of Figure 33.
Note that detailed descriptions of current activities covering all of B.C.’s mining operations and
exploration projects are documented in British Columbia’s Mineral Exploration Review 1997,
Information Circular 1998-1, prepared by the Ministry of Employment and Investment’s
Energy and Minerals Division.
Figure 29
Metal and Coal Mining Operations in British Columbia, 1997
Metal
Coal
Source: British Columbia Ministry of Energy and Mines.
66
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 30
Industrial Minerals Operations in British Columbia, 1997
C assiar (Jd,A b)
S erpentine Lake (Jd)
Fort N elson (S )
C ypress (S )
B oundary Lake (S )
Ab
At
Ba
Do
Fc
Fr
Fs
Gr
Gy
Jd
Ls
Asbestos
Aggregate Ma
Mb
Barite
Mt
Dolomite
Pu
Fireclay
S
Fullers Earth
Flagstone Sh
Si
Granite
Wo
Gypsum
Ze
Jade
Limestone
Magnetite
Marble
Magnesite
Pumice
Sulphur
Shale
Silica
Wollastonite
Zeolite
Fort St.
ohnJ
Stewart
M cM ahon (S )
P ine R iver (S )
Smithers
G iscom e (Ls)
e
D ahl Lake (Ls) Princ
George
K ingfisher (M b)
N azko (P u,A t)
R evelstoke (Fs)
Falkland (G y)
H arper
R anch
(Ls)
R ed Lake (Fr)
M oberly (S i)
H orse C reek (S i)
P arson (B a)
E lkhorn (G y)
P avilion (Ls)
Kamloops
B enson Lake (Ls)
Texada (Ls)
G illies B ay
B lubber B ay
Im perial
Campbell Riv
er
S quam ish
(G r)
C raigm ont (M a)
Vancouver
G ranite
Island
(G r)
Victoria
E ast
A nderson
R iver
S um as
R ock
(G r)
S
um
as
(S h)
C reek
Fireclay
(D o)
(Fc) S kagit
Valley
(G r)
E lkhorn (G y)
B eaverdell
(G r)
Cranbrook
C raw ford B ay (D o)
K ootenay S tone (Fs)
Lost C reek (Ls)
C om inco (S )
Source: British Columbia Ministry of Energy and Mines.
Figure 31
Metal and Coal Advanced Exploration and Development Projects
in British Columbia, 1997
Porphyry (and related)
Massive Sulphide
Vein
Manto
Coal
[ ] Mine Under Construction
Source: British Columbia Ministry of Energy and Mines.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 32
Metal and Coal Exploration Projects in British Columbia, 1997
Source: British Columbia Ministry of Energy and Mines.
Figure 33
Industrial Minerals and Intermittent Projects
in British Columbia, 1997
Source: British Columbia Ministry of Energy and Mines.
67
68
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Metal Exploration Projects
Advanced Exploration Projects
The largest exploration program was on the Prosperity porphyry gold-copper deposit where
approximately $5 million was spent. Other large programs (of over $3 million) included
Specogna, Getty Copper and Polaris-Taku. Several significant bulk sampling projects were
carried out, for example, on the Pellaire, Telkwa and Debbie projects.
The Tulsequah Chief, Bronson Slope, Red Chris, Red Mountain, Prosperity, Telkwa and Willow
Creek projects are in the environmental assessment process. The Cirque and Mt. Milligan goldcopper porphyry deposits have received Mine Development Certificates and await production
decisions. Several other advanced projects are in the feasibility stage (e.g., Cariboo Gold
Quartz, Specogna [Harmony], Getty North Copper, Hearne Hill, Isk, J+L, Silvertip [Midway],
Giant Copper, and Polaris-Taku).
Exploration Projects
In addition to the advanced exploration projects, a large number of generally lower-budget programs took place, comprising an estimated 6% of total exploration expenditures in 1997. The
majority of these projects targeted gold-enriched porphyry copper and porphyry-related gold
deposits, polymetallic massive sulphide deposits, and vein deposits (epithermal and mesothermal). The remainder targeted metalliferous concentrations in skarns and mantos, and less traditional deposits such as ultramafic-hosted nickel and redbed copper.
Although most of the programs were focused in and around areas with mines, mines under construction, or new showings and existing infrastructure, several new, relatively low-budget
regional programs were conducted throughout the province. The diversity of targets from large,
world-class deposits to smaller but profitable targets, and the profitability of these smaller,
higher-grade deposits, such as Eskay Creek and Snip, continue to make B.C. a good place to
explore.
The less advanced metals and coal exploration projects are located on Figure 32.
Coal Exploration Projects
There were at least five coal exploration programs in 1997 that took place outside existing mine
leases. Expenditures are estimated at approximately $1.8 million. Predictions for stronger
thermal coal markets have led to renewed interest in coal deposits close to existing infrastructure, or in the case of Tsable River, close to tidewater. There is also a trend in demand away
from hard coking coals to weak and semi-soft coking coals. Exploration was dominated by the
Telkwa coal project, although significant programs were carried out at Willow Creek in the
northeast and by Fording Coal Limited in the southeast.
The Tulameen program is an example of an opportunity for small players to move into the coal
business, especially when larger companies drop coal licences because they are no longer interested in the prospective ground. Markets such as cement plants exist for small quantities of
thermal coal in B.C. and Washington State.
Industrial Mineral Exploration Projects
Industrial mineral projects and intermittent mining situations are both numerous and diversified (in terms of the number of different mineral commodities being looked at). In 1997, industrial mineral exploration expenditures are estimated at approximately $3 million. Figure 33
locates many of the industrial mineral projects.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
69
Advanced Exploration Projects
Whitegold Resources Corporation conducted extensive field and laboratory programs on its Isk
wollastonite property on Zippa Mountain in the Iskut River area. Quinto Mining Corporation
Ltd. and IMP Industrial Park Mining Corporation continued market studies for graphitesericite and graphite from their Lumby and Black Crystal (near Slocan) properties, respectively.
Anglo Swiss Resources Inc. continued sampling and evaluating the economic potential of the
Blu Starr/Blu Moon sapphire properties and other prospects in the Slocan Valley. Okanagan
Opal Inc. continued small-scale test mining and marketing of precious opal from the Klinker
locality near Vernon during 1997. A new precious opal find, hosted in vesicles of the Kamloops
Group basalt, was made by Lloyd Nelson in the Vernon area.
Mining companies, as well as individual prospectors, are evaluating new dimension stone properties. A pilot plant to recover short-fibre asbestos from the Cassiar Asbestos tailings (16 Mt)
has been assembled by BC Chrysotile Corporation. The company operated the plant for four
days in late October producing 8 t of product, enough for its market testing.
On Texada Island, Consolidated Vananda Gold Ltd. constructed a processing mill and has
approval to process a 10 000-t bulk sample of magnetite from the Paxton pit area. The mill will
initially produce magnetite as a heavy medium for use in the coal industry. Magnetite has also
been successfully tested as a sandblasting abrasive; it may be a substitute for silica sands in
this application.
Exploration Projects
Many other less advanced industrial mineral projects were conducted, including projects targeting future production of bentonite, feldspar, feldspathic sand, glass wool insulation, silica sand,
barite, diatomite, fluorite and other minerals.
Initiatives for Exploration and Mining in British Columbia
Mining Initiatives
In April 1998, the B.C. government announced four new mining initiatives aimed at creating
jobs and investment in this sector.
•
The Mining Rights Amendment Act, recognizing the right to mine, and assuring access to
mineral tenures, right to compensation when tenures are expropriated for parks, and timely
permitting;
•
The Mineral Exploration Code, creating a one-agency approach for permit approvals, and
applying environmental protection standards designed specifically for exploration;
•
Creating a Mining Advocate position; and
•
Introducing a refundable Mineral Exploration Tax Credit worth up to $9 million annually.
New Provincial Government Structures
In February 1998, the provincial government re-established a separate Ministry of Energy and
Mines.
Also established within the past few months is the Ministry of Energy and Mines’ Mineral
Development Office in Vancouver. Its mission is “to attract, stimulate and promote mineral
exploration, development and investment in British Columbia.” Accordingly, the office acts as a
point of contact and source of technical information for the exploration and mining industry.
70
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Further, in recognition of the Province’s goal of creating greater certainty for industry and
investors, as well as for the First Nations, a new Aboriginal Relations Branch was established
in January, located in the Ministry of Energy and Mines. Staff are dedicated to addressing
First Nations’ issues as they pertain to mineral and energy resource development.
Financial Assistance
Also significant are the government financings tied to new mine development, which have
totaled over $175 million in the past 18 months. Numerous other government incentives have
assisted, or are assisting, the viability and business health of this sector. For example, the Job
Protection Commission, reporting to the Job Protection Commissioner, assists in preventing
mine closures during periods of adverse business conditions and mineral commodity markets.
Another initiative called “Power for Jobs” is a program that gives discounts in electricity rates
in return for new investment and new jobs. Companies are invited to bid on power rates that
are amenable to their proposed mineral developments.
Within the land-use programs, over 80% of B.C.’s land usage has been, or is currently being,
planned. With the approval of each new plan comes greater certainty of areas open to exploration where active programs can take place, with assurances that tenures will not be withdrawn for park purposes.
The Prospectors Assistance Grant Program, budgeted at $500 000, was designed to promote
grassroots prospecting. Forty-seven grants were awarded in 1997 and an additional $40 000
was issued to six industry organizations to help them deliver training programs for prospectors.
Geological Survey
The Geological Survey Branch’s projects focused on regions where significant mineral potential
is indicated. (These include Gataga North, Devono-Mississippian massive sulphide deposits in
northern B.C., Toodoggone Southeast-McConnell, Babine, Sitlika, Kootenay Terrane [Eagle
Bay] and Yahk-Creston.) A new project is investigating the existence of and potential for
Carlin-type deposits. A modest new project examined the province’s nickel potential. Results of
these programs are expected to encourage base- and precious-metal exploration in these areas
and elsewhere. Several smaller-scale projects were carried out on coal and industrial minerals.
The most immediate indicator of the success of these programs is the acceleration in claimstaking activity at the time that new geological information is released.
The Geological Survey Branch also plays an important role in bringing exploration people
together through the “Pathways 98” meeting, an international forum held in Vancouver in
January each year.
Conclusion
As shown in Figure 34, the mining and minerals industry comprises 17% of the provincial
business economy (1996 GDP calculation). In recognition of the importance of the mining sector to British Columbia’s economy, it is a key objective of the provincial government to maintain
and encourage a sustainable mineral sector.
This requires vibrant and effective exploration programs and development projects. With the
province’s new mining initiatives and an “in-ground mineral inventory” of over $25 billion from
currently active advanced exploration projects alone, the province is competitively positioned
among the world’s top mining jurisdictions to continue to attract exploration dollars.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
71
Figure 34
Business Sector Gross Domestic Product (GDP) in British Columbia, 1996
Utilities
9%
Mining and minerals
17%
Non-residential
construction
16%
Agriculture
and fishing
5%
Forestry and
logging 6%
Food and beverages
manufacturing 6%
Residential
construction
7%
Other durable
manufacturing 10%
Other non-durable
manufacturing 12%
Wood manufacturing
12%
Sources: British Columbia Ministry of Energy and Mines; British Columbia Statistics (Ministry of Finance).
5.11
NORTHWEST TERRITORIES
1997 Mineral Production Summary
The low gold prices took their toll on production in the Northwest Territories (N.W.T.) in 1997,
leading to the closure of two gold mines. However, the N.W.T. maintained an 8% share of
Canada’s gold production in 1997, compared to 8.2% in 1996. The total N.W.T. share of Canadian metal production value was up to 4.7% from 4.4% in 1996 due to an increase in the basemetal (zinc and lead) production share. The N.W.T. produced 16.5% of Canada’s zinc, 14.7% of
its lead and 1.5% of its silver.
The total value of metal shipments from the N.W.T. increased to $535 million in 1997 from
$521 million in 1996. Gold and zinc remain the primary metallic products of the N.W.T.
The N.W.T. remains the fourth largest gold producer in Canada, despite a decline in its total production value from $221 million in 1996 to $200 million in 1997, representing 37.3% of the total
value of N.W.T. metal production. Part of this decline may be attributed to a lower realized gold
price in 1997. Zinc is still the most valuable metal commodity produced in the N.W.T. with a 1997
value of $310 million, representing 57.8% of total N.W.T. metal value. The N.W.T. is Canada’s
third largest zinc producer. Lead shipments decreased in value to $21 million, compared with
$30 million in 1996. Silver production in the N.W.T. remains minor with a total value of
$3.8 million in 1997.
1997 Exploration Summary
Total exploration spending in the N.W.T. decreased in 1997 for the first time in the last seven
years to $152 million from $195 million in 1996. The N.W.T. ranked second in Canada for total
expenditures.
A total of 2291 claims covering 2 million ha were staked in 1997. The number of claims in good
standing at the end of December 1997 was 15 456 claims covering 12.9 million ha, a net decrease
of 1705 claims. Ninety-seven new mining leases were issued in 1997, for a total of 977 mining
leases in good standing at the end of the year covering 0.4 million ha. A total of 84 prospecting
permits were issued in 1997, with 549 permits in good standing at December 31, 1997, covering
11.5 million ha.
72
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Slave Province: Diamonds
BHP Diamonds Inc. and Dia Met Minerals Ltd. began construction of mine infrastructure at
their Lac de Gras project. The project was named the Ekati mine in October and production is
expected to begin in the latter part of 1998. Five pipes are scheduled for development over the
17-year mine life. These are the Fox, Koala, Misery, Panda and Sable pipes. Exploration work
in 1997 discovered 23 additional pipes; 100 pipes are now known to exist on the property. Sampling and delineation drilling were conducted on the Beartooth and Koala North pipes. Initial
results showed microdiamonds comparable to those of Koala and Panda. Future bulk sampling
of these relatively small pipes is likely.
Diavik Diamond Mines and Aber Resources Ltd. began an $80 million prefeasibility study of
the Diavik project considering the four pipes: A-154 North, A-154 South, A-418 and A-21.
Reserves were re-evaluated as the result of a 1996 3000-t bulk sample from A-418 and largediameter core (LDC) drilling in A-154 South and A-21. Five LDC holes were drilled into each of
the two pipes. In July 1997, an updated resource was issued (Table 18).
TABLE 18. RESOURCE INFORMATION FOR THE DIAVIK PROJECT,
JULY 1997
Pipe
Resource
Resource
Classification
(Mt)
A-154 North
A-154 South
A-418
A-21
11.5
11.4
8.9
5.5
Indicated/inferred
Measured
Measured
Indicated/inferred
Grade
Value
per Carat
(ct/t)
(US$)
1.9
4.6
3.8
2.7
35
63
60
. .
Source: N.W.T. Department of Resources, Wildlife and Economic Development, based on
company data.
. . Not available.
Resources are cut off at sea level, a depth of approximately 400 m. A-154 South and A-418 have
an additional 10% inferred resource below this cut-off.
In addition, an LDC hole drilled on the A-10 pipe recovered four diamonds, totaling 0.11 ct,
from 6.66 t of kimberlite. Further work is planned for this pipe. Exploration drilling resulted
in the discovery of four pipes: the A-840, the T-107, the diamondiferous A-11 North pipe, and a
pipe on the boundary of the Diavik/BHP claim groups.
Ground geophysical surveys were conducted over 75 other targets, and till sampling continued
across the property.
Lytton Minerals and New Indigo Resources Inc. continued their evaluation of the JD/OD-1 pipe
on the Jericho property north of Contwoyto Lake. Nine thousand, four hundred and one tonnes
(9401 t) of a 15 000-t bulk sample were processed at a pilot plant located at the Lupin mine.
The sample yielded 10 539 ct with an average grade of 1.18 ct/t with a range of 0.30 to 1.96 ct/t.
Sixty-seven diamonds larger than 5 ct were recovered, including one non-gem-quality stone of
41 ct and a gem-quality stone of 23.89 ct. A sample of 6550 ct was appraised by the Central
Selling Organization (CSO) and evaluated at an average value of US$61.71/ct.
A preliminary study suggests that the JD/OD-1 pipe could be profitably mined with a 1650-t/d
operation. Lytton and New Indigo also collected a 10.53-t mini-bulk sample from the JD/OD-3
pipe, located 7 km west of JD/OD-1. Kimberlite was sampled using PQ diamond drilling and
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
73
returned 7.34 ct for an average grade of 0.697 ct/t. Delineation drilling of the pipe outlined a
preliminary resource of 10.5 Mt to a depth of 350 m.
Sampling and evaluation of geochemical and geophysical targets took place across the Jericho
property.
Monopros Ltd. became the operator on the AK and CJ claim group, where it can earn a 60%
interest from Glenmore Highlands Inc., Mountain Province Mining Inc. and Camphor Ventures
Inc. Monopros collected 3600 till samples, mapped surficial geology, and flew 14 500 line-km of
closely spaced heliborne geophysical survey over the southern AK claims. These data, when
combined with previously known indicator mineral trains, led to the discovery of the Tesla pipe,
1.8 km northwest of the AK-5034 pipe. A total of 109 microdiamonds were recovered from
66 kg of core, with 8 not passing a 0.5-mm2 mesh screen.
Two further pipes, the Tuzo and Hearne pipes, were discovered within 2 km of AK-5034. A total
of 324 diamonds were recovered from 132 kg of Hearne kimberlite; 33 of these did not pass a
0.5-mm2 mesh screen. Two of these were 0.2 ct each; twelve others exceeded 0.1 ct. A total of
403 diamonds were recovered from 124 kg of Tuzo kimberlite, including 36 larger than a
0.5-mm2 mesh screen. Thirteen stones larger than 0.1 ct were recovered, including a 1.56-ct
stone. Mini-bulk sampling on all pipes is planned for the 1997/98 winter season.
Slave Province: Gold and Base Metals
Kit Resources Ltd. spent an estimated $6 million over several properties in the Back River
area. At the iron-formation-hosted George Lake gold deposit, a 143-hole, 15 450-m drill program was completed to confirm the previously determined resource of 3.16 Mt grading 13.4 g/t
gold. A feasibility study was initiated in June to examine the economics of on-site versus offsite ore processing for a future mine. H.A. Simons Ltd. is undertaking a new resource calculation due to the changing gold market. The geological resource has been estimated at 1.4 Mt
grading 13.8 g/t gold.
At Goose Lake, Kit Resources conducted a 26-hole, 4030-m drill program. Gold assay results from
some holes include 214.39 g/t gold over 2.26 m, 28.34 g/t over 2.41 m, and 12.28 g/t over 13.92 m.
Kit Resources also drilled 15 holes (1620 m) on the Boot Lake property, and made a discovery at
Llama Lake, 6 km west of the George Lake property.
Echo Bay Mines Ltd. drove and mapped a ramp at the Ulu project in the High Lake volcanic
belt, and began underground drilling on the project. Work was suspended in the summer of
1997 due to low gold prices.
BHP Minerals Canada Ltd. proceeded with underground exploration at the Boston project in
the Hope Bay volcanic belt. A preliminary gold resource of 93 000 kg (3 million oz) has been
released.
BHP Minerals also conducted regional exploration at the Windy and Wolverine camps, 30 km
north of Boston. Diamond drilling was undertaken on a number of claims.
Quest International Resources Corporation spent $1.5 million at the Damoti Lake project,
located in the Indin Lake volcanic belt. A 21-hole late winter drill program discovered a new
gold zone in the Bif Island area and expanded the Horseshoe zone. A summer program of
52 holes (8000 m) of diamond drilling was undertaken to further define the Horseshoe zone
resource. Mineralization up to 274 m in depth was discovered, with high-grade intersections
including 57.2 g/t gold over 5.71 m and 41.0 g/t over 14.52 m. The Horseshoe zone represents
3% of the iron formation on the property, and the geological resource is currently estimated at
7899 kg of contained gold. A fall drilling program as well as engineering and environmental
studies were planned for late 1997.
74
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Royal Oak Mines Inc. undertook a deep drilling project at the Colomac mine and associated
showings. The discovered gold mineralization included intersections of 11.3 g/t gold over 6.36 m
and 12.0 g/t over 43.3 m. At the Cass deposit, drilling returned wide intersections of 5-8.5 g/t
gold.
GMD Resource Corp. spent $5.2 million at the Discovery gold mine project in the Yellowknife
volcanic belt. A total of 80 000 m of diamond drilling in 86 holes was completed. Definition
drilling was used to create a new resource for the Ormsby zone. Exploration drilling intersected volcanic and sediment-hosted quartz veins in the Ormsby area. Significant gold intersections include 110.36 g/t gold over 2.9 m, 69.64 g/t over 5.79 m, and 17.5 g/t over 14.02 m.
High-grade channel samples were collected along a 121-m ramp into the deposit. In addition,
40 line-km of ground magnetics, 20 line-km of very low frequency electromagnetics (VLF-EM)
and 1:2400 mapping were completed around the deposit.
Kivalliq Region
Comaplex Minerals Corp. drilled for gold in the Noomut project area, east of South Henik Lake.
Drilling was concentrated in the Esker zone, in which gold mineralization is associated with
quartz veins within gabbro dikes. Drill intersections included 8.18 g/t gold over 13.27 m and
2.35 g/t over 70.95 m. The Esker zone lies within a structure sub-parallel to the Napartok,
Ironside and River zones of sheared, gold-bearing iron formation.
Cumberland Resources Ltd. drilled 13 600 m in 65 holes at its wholly owned Meadowbank
River project, 65 km north of Baker Lake. Four iron formation-hosted gold zones were tested.
The Third Portage zone has been extended beyond the previous resource estimate of 3.4 Mt
grading 6.5 g/t gold. Extension has been to the west and at depth, and remains open. This
drilling has also extended the near-surface resource potential. The Bay zone, a flat-lying, nearsurface zone, was discovered during the 1997 drilling program. Intercepts up to 37.37 g/t gold
over 4.3 m have been described. Preliminary engineering studies conducted at the end of 1996
suggest that 90% of the Third Portage zone could be mined using open-pit methods with a stripping ratio of 7.1:1.
At the Goose Island zone, 800 m south of the Third Portage zone, Cumberland intersected gold
mineralization at 425 m below surface, grading 15.44 g/t gold over 3.2 m. Preliminary calculations for the Goose Island zone give a resource estimate of 977 000 t grading 11.46 g/t gold.
Mapping on a scale of 1:5000 and 40 line-km of ground magnetometer survey were also undertaken. New resource calculations and metallurgical and engineering studies are under way.
Cumberland also drilled 22 holes totaling 2633 m on the Meliadine East property, 20 km north
of Rankin Inlet, which is jointly owned with Comaplex. Geological mapping and 112 line-km of
ground magnetometer survey were undertaken across the property. Frost boil, till sampling
and lithogeochemical surveys were undertaken.
WMC International Inc., in a joint venture with Cumberland and Comaplex, drilled 103 holes
totaling 32 770 m on the Meliadine West property, 30 km northwest of Rankin Inlet. The
Tirirunak Central zone consists of two parallel mineralized zones, the Upper Contact zone and
the Lower Shear zone, with an estimated gold content of over 35 000 kg. Drilling in 1997 has
extended the Upper Contact zone, including intersections of 33.77 g/t gold over 9.0 m and
65.29 g/t gold over 2.69 m. In the Lower Shear zone, intersections of 11.9 g/t gold over 11.6 m
and 23.5 g/t gold over 2.3 m were found.
Further drilling on the F zone and Wolf zone also returned good gold intersections. In addition,
1:5000 scale mapping and 2250 line-km of ground magnetic survey were carried out, and
2500 till samples were taken for gold grain analysis.
WMC plans to spend $5.9 million in 1998 for further diamond drilling and engineering as part
of a prefeasibility study on the Tirirunak, Wolf and F zones. A further 3000 m of drilling are
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
75
planned for another segment of the Meliadine structural trend, including the Arseno Lake, VG
Lake, Maggot Lake and Farwest showings. Grab samples from these zones taken in 1997
returned good gold values.
Baffin Island Region
International Capri Resources Ltd. drilled three zinc-lead showings on Baffin Island in 1997. It
also conducted ground electromagnetic and magnetometer surveys over the three properties,
plus 1:1000 scale mapping and soil sampling.
At the Fault Scarp showing, located near Keltie Bay, four holes totaling 72 m were drilled.
At the Nanuk volcanogenic massive sulphide occurrence on Ilikok Island, four holes totaling
156 m were drilled. The best intersection was 0.66% copper, 0.65% nickel and 13.03 g/t silver
over 1.1 m. The nearby CP claim block was also prospected.
Two holes totaling 26 m were drilled in the 3-2 showing (formerly called the Burning Bush) on
Cumberland Peninsula. On the nearby SNOWY claims, prospecting and ground electromagnetic and magnetometer surveys were performed. Further prospecting between the Nanuk and
the 3-2 showings was undertaken.
Bear Province
Fortune Minerals Limited drilled 72 holes for a total of 10 500 m on the cobalt-bismuth-goldcopper-tungsten NICO property located near the Snare hydro-electric complex, 160 km northwest of Yellowknife. Significant polymetallic mineralization was intersected over a zone of
between 45 and 139 m in width. The best combined grades are 2.0 g/t gold, 0.320% copper,
0.281% cobalt, 0.496% bismuth and 0.643% WO3 over 3.28 m.
The drilling program tested the Bowl, East and John zones. Fortune reports an initial resource
calculation for the NICO property based on 25 drill holes and trench samples. The resource calculation estimates 69.9 Mt grading 0.534 g/t gold, 0.073% bismuth, 0.069% cobalt, 0.065% copper and 0.028% WO3. The Bowl zone has been further subdivided into a gold-rich resource of
9.8 Mt grading 3.385 g/t gold, a cobalt-bismuth-rich resource of 31.8 Mt grading 0.120% bismuth and 0.113% cobalt, and a copper-rich resource of 7.6 Mt grading 0.30% copper.
The deposit is amenable to open-pit mining techniques. Studies by Lakefield Research suggest
that ore could be processed on site. Further resource calculations are in progress.
Fortune drilled 5000 m in 16 holes at the Sue-Dianne deposit, 20 km north of NICO. Drilling
was undertaken to increase the previous resource estimate of 8.16 Mt grading 0.8% copper and
5.52 g/t silver. Good intersections for copper and silver were found, plus molybdenum, bismuth
and copper. The deposit remains open at depth and along strike.
Rhonda Mining Corporation drilled 114 holes totaling 7905 m on the Esker zinc-lead property,
80 km south of Kugluktuk. Eighteen holes returned an average grade of 7.1% combined zinclead over 2.95 m. Rhonda also drilled the Harley copper-gold project, 60 km south of Kugluktuk. Average intersections of up to 2.55% copper plus 61.38 g/t gold over 3.6 m and 2.40% copper plus 99.10 g/t silver over 4.10 m were seen.
Cordilleran Orogen and Inner Platform
Darnley Bay Resources Limited contracted an 18 000 line-km aeromagnetic survey over the
Darnley Bay gravity anomaly, exploring for Norilsk-style copper-nickel-platinum group elements mineralization. In 1998, Darnley Bay plans to undertake the second phase of this exploration, including ground geophysics and rock sampling.
76
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
San Andreas Resources Corp. carried out underground and surface exploration work at the
Prairie Creek zinc-lead-silver deposit. The work included detailed channel sampling on the
870, 930 and 970-m levels, mapping of the vein structure, drill core examination and sampling.
The southern claim group was mapped at a 1:2000 scale.
Current metallurgical research includes a detailed mineralogical study of vein ore, plus scoping
tests to determine whether heavy liquids may be used to pre-concentrate ore prior to mill processing. An independent resource estimate of 1.846 Mt grading 12.5% zinc, 10.1% lead and
161 g/t silver was prepared for Zone 3.
5.12
YUKON
Overview
Exploration expenditures in 1997, at $35 million, were down from the $54 million spent in
1996. The exploration season was very successful, highlighted by a combination of new discoveries, positive results from several advanced projects, and a significant amount of claim staking
as a result of grassroots exploration programs.
Mine development expenditures were $23 million, compared to the $54 million incurred in
1996. Development expenditures were incurred at the Yukon’s three operating mines in 1997:
the Faro lead-zinc-silver mine, the Brewery Creek gold mine, and the Mt. Nansen gold-silver
mine. Development work also took place at the Minto copper-gold-silver project and a number
of other projects that are in the final stages of permitting.
The number of quartz claims (hard rock mining) reached a new historical high of 72 723, with
9628 new claims recorded in 1997.
Production Summary
Brewery Creek Mine
The Brewery Creek mine was opened by Viceroy Resource Corporation in November 1996 and
has proven to be a technical success. The mine successfully produced gold during its first winter of operation by utilizing heap leach technology in the extremes of a cold northern climate.
Gold production during the first two months of operation, November and December 1996,
totaled 316 kg (10 175 oz). A total of 2251 kg (72 387 oz) of gold were produced in 1997. A total
of 13.3 Mt grading 1.44 g/t gold of mineable reserves remained as of March 1998. The eight
low-grade oxide gold deposits at Brewery Creek are distributed over a 7-km linear trend underlain by Cretaceous Tombstone Suite quartz-monzonite sills and Devono-Mississippian
greywacke of the Earn Group.
Mount Nansen Mine
In 1997, B.Y.G. Natural Resources produced 617 kg (19 829 oz) of gold and 3068 kg (98 654 oz)
of silver from its Mt. Nansen mine, which also opened in November 1996. Milling operations at
the shear zone-hosted vein deposit were temporarily shut down in November 1997 to increase
water treatment capacity and rectify water balance problems in the tailings pond. The mine
resumed full production in early 1998.
Grum Mine
Anvil Range Mining Corporation shut down production from its Grum open-pit lead-zinc-silver
mine near Faro, Yukon, in December 1996. In August 1997, Anvil Range started a $15 million
stripping program at the Grum deposit, which contained open-pit mineable reserves of 16.9 Mt
grading 3.0% lead, 4.9% zinc, 47 g/t silver and 0.7 g/t gold prior to mining, which began in 1995.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
77
Production resumed and lead and zinc concentrates were shipped starting in November 1997,
until the mine ceased operations in January 1998. The future status of the now-dormant mine
site is uncertain. The Grum sedimentary exhalative deposit is one of several known orebodies
distributed in an arcuate belt along the south flank of the Anvil Range batholith in central
Yukon.
Placer Mining Industry
The Yukon placer mining industry continued to be an important part of the Yukon’s economy in
1997. A total of 183 operations, directly employing 700 people, mined in 10 major placer mining
areas. The unglaciated Klondike, Indian River, West Yukon (Fortymile, Sixtymile and Moosehorn Range) and Lower Stewart River tributaries produced approximately 80% of the total,
while the remainder was produced from the variously glaciated Clear Creek, Mayo, Dawson
Range, Kluane and Livingstone areas.
The Yukon’s 1997 placer gold production total of over 116 000 crude oz was up approximately
6% over 1996; however, due to the drastic drop in the world market gold price, the total value of
this gold was just over $42 million, compared to nearly $46 million for 1996. The reason for
this may be that some producers were forced to sell stockpiles of placer gold to offset its lesser
value in order to pay production costs.
The number of placer mining operations in outlying (non-traditional) areas has increased in
recent years, with renewed mining on Henderson Creek, Canadian Creek and other parts of the
Dawson Range. Teck Corporation, which operated one of the largest placer mines in the Yukon
on Gold Run Creek in the Klondike, ceased production in September after 10 years of mining.
Over 90 000 oz were credited to this mine over its 10-year production life.
1997 Advanced Development Summary
Minto Explorations received a positive Screening Report from the Regional Environmental
Review Committee in April 1997 for the Minto copper-gold-silver project and signed a cooperation agreement with the Selkirk First Nation. The porphyry deposit hosts open-pit mineable
reserves of 6.51 Mt grading 2.13% copper, 0.62 g/t gold and 9.3 g/t silver. In anticipation of
receiving its Class “A” Water Licence, which was signed in April 1998, Minto Explorations
began site construction. The remaining 12.8 km of access road were upgraded, the camp and
mill sites were excavated, peripheral access roads were constructed, and two grinding mills
were moved to the site. Minto Explorations is in a joint-venture agreement with Asarco Inc. to
develop the project.
Western Copper Holdings Limited continued engineering studies on the Carmacks copper project. The project hosts an open-pittable 14.1-Mt oxidized porphyry copper-gold deposit grading
1.01% copper and 0.51 g/t gold. The project, which is being reviewed under the Environmental
Assessment and Review Process (EARP), is slated to recover copper using solvent extractionelectrowinning technology. Western Copper cleared and grubbed the access road, leach pad site
and plant site in 1997. A bulk sample was also extracted to conduct column tests on run-ofmine ore that may allow the elimination of a crusher in the mine plan, resulting in substantial
capital and operating cost reductions.
Cominco Ltd. announced in August 1997 that the Sa Dena Hes zinc-lead mine may re-open by
mid-1998; however, by mid-December, it announced that current market conditions did not support re-opening the mine. Preparations for a possible start-up included upgrading the haul
road, camp renovations, recommissioning of power plants, and rehabilitation of mine openings.
The mine, formerly operated by Curragh Resources, ceased operation in December 1992. Highgrade zinc-lead-silver skarn zones were mined. The Sa Dena Hes mine is owned jointly by
Cominco Ltd. (25%), Teck Corporation (25%) and Korea Zinc Co., Ltd. (50%), with Cominco as
the operator of the project.
78
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
The Kudz Ze Kayah project of Cominco Ltd. received a positive screening report under the
Canadian Environmental Assessment Act (CEAA) in mid-December 1997. No production decision has been made. The ABM volcanogenic massive sulphide deposit, the first major discovery
in the Finlayson Lake district, hosts open-pit mineable reserves of 11 Mt grading 5.9% zinc,
0.9% copper, 1.5% lead, 130 g/t silver and 1.3 g/t gold. Cominco conducted exploration geochemistry and geophysics programs on the property in 1997.
The former producing mines of United Keno Hill Mines Limited were placed on care and maintenance during 1997 while the company focused on renewing its water licence, which was
signed in 1998, and obtaining financing to re-open. The 30 veins in the Keno and Galena hills
have produced over 200 million oz of silver in the past 70 years. Underground mineable
reserves, mostly in the Bellekeno and Silver King veins, stand at 415 000 t grading 1145 g/t silver, 7.5% lead and 5.6% zinc. Late in 1997, United Keno Hill and NDU Resources announced a
binding merger agreement between the two companies that was completed in 1998. NDU contributes two substantial mineral deposits, the Marg polymetallic volcanogenic massive sulphide
deposit and the Blende Mississippi Valley-type zinc-lead-silver deposit, while United Keno Hill
contributes the mineral deposits outlined above and the mine infrastructure at Elsa.
New Millenium Mining Ltd., whose principal asset is the Dublin Gulch deposit 51 km north of
Mayo, announced positive results from a feasibility study on this Fort Knox-style deposit, which
hosts open-pit mineable reserves of 50.4 Mt grading 0.93 g/t gold. In 1997, the company completed the feasibility study, continued environmental monitoring and baseline studies, and
underwent a comprehensive review of the project for permitting under the CEAA.
Base-Metal Exploration Highlights
Base-metal exploration highlights include the discovery of volcanic hosted massive sulphides
(VMS) in Mississippian pyritized felsic tuffs of Pelly-Cassiar Platform at the Wolf property of
Atna Resources. The discovery hole intersected 6.9% zinc, 2.8% lead and 138.6 g/t silver over
25.2 m and resulted in an immediate increase in exploration activity in this belt of rocks. The
continuing evaluation of massive sulphide deposits of Yukon-Tanana Terrane in the Finlayson
district at the Wolverine project, which is jointly owned by Atna Resources and Boliden Limited, and Columbia Gold’s Fyre Lake deposit was successful in expanding reserves. At the
Wolverine project, a new massive sulphide body in the Sable zone, approximately 2 km southwest of the Wolverine-Lynx deposit, was intersected by exploratory drilling. Similarly, the Ice
occurrence owned by Expatriate Resources in the Campbell Range Belt was further delineated
by drilling.
In the northern Yukon, Blackstone Resources and Glenhaven Resources made a significant discovery of stratabound nickel-zinc at the Taiga project. There, the Devono-Mississippian Earn
Group argillites and shales host stratabound mineralization that yielded a 5.3-m drill intersection grading 1.42% nickel and 0.70% zinc.
Precious-Metal Exploration
Gold exploration was conducted mainly in the area of the mid-Cretaceous Tombstone suite
intrusive belt that spans central Yukon from Dawson in the west to MacMillan Pass in the east.
Tombstone suite intrusive rocks host the Fort Knox deposit in Alaska, the Brewery Creek mine
near Dawson, and the Dublin Gulch deposit north of Mayo. Focused exploration programs in
that belt included: the Brewery Creek mine site, the 66 000-ha Oki Doki project of International Kodiak Resources north and east of the Brewery Creek mine, and the Scheelite Dome
project of Kennecott, subsequently optioned by La Teko Resources. Several reconnaissance programs also took place in the belt in 1997 and the largest resulted in more than 1100 claims
being staked by Viceroy Resource Corporation.
The largest gold exploration program in the Yukon was conducted on the Goddell Shear property in the Mt. Skukum area 85 km south of Whitehorse. Omni and Trumpeter Yukon Gold Inc.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
79
each hold a 35% interest in the property and Arkona Resources holds 30%. Exploration on the
Goddell shear zone, in the mid-Cretaceous Carbon Hill Granite, was investigated by extension
of the underground adit by 182 m, and by more than 8500 m of underground drilling in 37 holes.
An indicated reserve of 824 594 t grading 7.15 g/t gold was calculated from drill results. These
exploration highlights illustrate continued confidence in the Yukon’s mineral potential and
illustrate that much of the territory remains under-explored.
Exploration and Development Forecast for 1998
The Yukon Chamber of Mines conducted a survey of exploration companies doing work in the
Yukon during 1998. A total of 25 companies responded with expenditure forecasts. Total forecast expenditures are $14 million for exploration and approximately $1 million for development. These estimates are usually the minimum figures and can optimistically be expected to
increase if results are positive. These numbers are down considerably from last year’s expenditures.
Yukon Government Programs
The Yukon government currently has three programs to encourage the development of the
Yukon’s mineral and energy resources: the Yukon Mining Incentives Program (YMIP), the
Yukon Industrial Support Policy (YISP), and the Energy Infrastructure Loans for Resource
Development Program.
Yukon Mining Incentives Program
The Yukon Mining Incentives Program is designed to promote and enhance mineral prospecting, exploration and development activities in the Yukon. The program’s function is to provide
a portion of the risk capital required to locate and explore mineral deposits. Grassroots programs (Prospecting and Grubstake categories) are conducted on open ground (Crown land) and
Target Evaluation programs are conducted on newly discovered prospects and targets covered
by mineral claims, placer prospecting leases and claims, and coal licences and leases. Technical
assistance is offered to prospectors upon request. Technical program funding for 1997/98 was
$378 000. The number of grants approved in each category was 16 in the Grassroots programs
and 15 in the Target Evaluation programs.
Yukon Industrial Support Policy (YISP)
The Yukon government recognizes the lack of infrastructure in many regions of the Yukon.
This policy supports the development of an infrastructure base that encourages private-sector
investment in the Yukon. The Yukon government may enter into a development agreement
with the resource development sector for projects that require road improvement or construction, energy supply, grid connections, or related training programs for Yukon residents. No
development agreements were approved for 1997.
Energy Infrastructure Loans for Resource Development Program
This program assists the resource development sector in the Yukon by helping to defer the capital cost of building energy infrastructure. The program provides loans to companies to help
them create infrastructure to meet their energy needs. No projects were approved under this
program in 1997.
6. Historical Review of Mineral
Exploration Spending in Canada
6.1
INTRODUCTION
This section presents an historical review of patterns of exploration spending based on results
from the federal-provincial survey of mining and exploration companies.
6.2
HISTORICAL SUMMARY
Figure 35 depicts (in constant 1997 dollars) Canadian exploration expenditures over 30 years
from 1969 through 1998. Above-normal exploration expenditures in the 1980-82 period
resulted from high prices for gold, silver and copper over much of that period. Exploration
expenditures declined somewhat in 1983, but generally rose from 1984 to 1988 as a result of
the introduction by the federal government, in 1983, of the Mining Exploration Depletion
Allowance (MEDA). MEDA was replaced in 1989 and 1990 by the Canadian Exploration Incentive Program (CEIP). By 1987 and 1988, exploration expenditures had reached unprecedented
high levels because of MEDA and the high gold prices that had existed until the end of 1987.
However, exploration fell dramatically after 1988. Exploration expenditures decreased between
1989 and 1992, when they reached their lowest level since 1967.
Exploration activity picked up in the 1993-96 period. Exploration expenditures increased by
118% over the 1992-96 period and the 1996 level was the highest since 1988. Although data
Figure 35
Exploration Expenditures in Canada by Junior and Senior Companies, 1969-98
(1997 $ millions)
1 800
Junior companies
1 600
Senior companies
1 400
1 200
1 000
800
600
400
200
0
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
Notes: Total exploration expenditures for 1975-81 are overstated by an average of about 17% relative to earlier and later years because of changes to
the methodology used by Statistics Canada over the years. Overhead expenditures are included. Data for 1997 are preliminary; data for 1998 are
company spending intentions as compiled in January 1998.
82
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
from the 1997 preliminary estimate and the 1998 forecast survey indicate lower levels of expenditures of $804 million and $767 million respectively, they still represent a relatively strong
level of exploration activity. The relatively higher expenditures since 1992 have been driven
principally by important discoveries of diamond deposits, leading some companies to invest in
advanced exploration or deposit appraisal projects, and recently, in 1997 and 1998, in mine
development activities. Canada’s first diamond mine, the Ekati mine at Lac de Gras in the
Northwest Territories, is scheduled to start producing in late 1998. Since 1993, expenditures
dedicated to diamond exploration have accounted for between 15 and 20% of total Canadian
exploration expenditures.
In late 1994, the nickel-copper-cobalt discovery at Voisey’s Bay, Labrador, a result of exploration
for diamonds in that area, attracted the attention of many mining companies, particularly
junior exploration companies. This deposit is potentially the most important base-metal find in
Canada in decades. The resulting flurry of exploration activity in the area had a strong impact
on expenditures, particularly in 1995 and 1996.
6.3
METAL PRICES AND EXPLORATION LEVELS
In Section 1 of this report, metal prices were shown to be an important factor in determining
the level of exploration activity (Figure 5). For example, between 1993 and 1995, copper,
nickel and lead prices increased by over 60%, while zinc and gold prices increased by 14%.
Over the same time period, exploration expenditures increased by over 40%. However, since
early 1995, metal prices have generally been on a downward trend as reflected by NRCan’s
Monthly Metals Price Index (Figure 36). After peaking in January 1995, the index fell 35% by
June 1998 to a level not seen since early 1987. Exploration expenditures peaked in 1996, fell in
1997, and are expected to be somewhat lower in 1998 than in 1997.
The current price weakness generally reflects world production in excess of world demand and
has been worsened by the fallout from the Asian crisis, which has dramatically cut demand for
primary materials in Asian countries. Market fundamentals for most metals are expected to
remain weak in 1998. However, some analysts expect zinc prices to firm somewhat in the second half of 1998, and some are predicting that copper prices may recover by year-end because of
a drop in refined copper output due to a shortage of concentrate feed to smelters. The longer-
Figure 36
Exploration Expenditures and Monthly Metals Price Index, 1989-98
Exploration
($ millions)
900
Metals Price Index
Metals Price Index
240
800
220
700
200
600
180
500
160
400
140
300
120
200
100
100
0
1989
1990
1991
1992
1993
1994
1995
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
1996
1997
80
1998
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
83
term outlook for copper remains bleak because of expected over-capacity due to a number of
large low-cost projects coming on stream. The outlook for nickel, with current prices around
US$2.00/lb, is uncertain. Nickel markets are being hit with continued high levels of Russian
exports, expected production increases (adding to an overall world supply surplus), and flat
demand exacerbated by slowing Asian consumption.
The outlook for gold prices is also uncertain. Prices fell during 1997 because of the increased supply that came on the market through producer hedging, fund short selling, and central bank sales.
These factors are still causing concerns about oversupply, which are preventing any rally in price.
In addition, the strengthening of the U.S. dollar against other currencies has meant higher gold
prices in domestic currency terms in the major consuming and producing regions outside the
United States. This has inhibited demand, but has not discouraged cutbacks in production.
6.4
EXPLORATION AS PART OF TOTAL MINING INVESTMENT
General exploration, mine-site exploration, mine-site development, other capital expenditures
(structures, machinery and equipment), and repairs totaled $5 billion in 1996, up from $4.7 billion in 1995 (Figure 37). Between 1992 and 1996, the total capital and repair investment
increased by almost 50%. In 1997, total capital and repair expenditures returned to the same
level as in 1995 ($4.7 billion). For 1998, these expenditures are expected to decline further to
approximately $4.4 billion. As for the total exploration expenditure component, it has generally
represented about 15% of total mining investment.
6.5
EXPLORATION EXPENDITURES BY PROVINCE AND TERRITORY
Table 19 shows current dollar expenditures on mineral exploration in Canada by province and
territory for the 1986-98 period. Table 20 reports the same information, but in constant 1997
dollars. Table 21 presents these data as percentages.
Figure 37
Total Exploration Expenditures Relative to Total Capital and Repair Expenditures in Canada, 1989-98
($ millions)
Other capital expenditures
and repairs
6 000
Total exploration expenditures
5 000
4 000
3 000
2 000
1 000
0
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Sources: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies; Statistics Canada.
Notes: 1997 data are preliminary estimates; 1998 data are company spending intentions as compiled in January 1998. Overhead expenditures are
included. "Other capital expenditures" includes expenditures on on-property development, structures, machinery and equipment.
84
MINERAL EXPLORATION EXPENDITURES IN CANADA, BY PROVINCE AND TERRITORY, 1986-98 (CURRENT DOLLARS)
Province/Territory
1986
Field Work Only
1987
1988
1989
1990
1991
1992
Total Exploration1
1993
1994
1995
1996
1997 p
1998f
($ millions)
Newfoundland
Nova Scotia
New Brunswick
Québec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Yukon Territory
Northwest Territories
12.3
17.2
10.8
241.4
136.8
26.3
36.8
3.0
63.1
27.9
35.8
27.7
41.6
9.1
415.5
308.1
40.0
63.5
2.5
142.6
29.0
59.0
37.7
46.7
13.8
328.2
343.6
30.0
61.1
4.3
196.8
38.6
66.5
36.2
21.4
13.6
185.0
217.8
37.0
63.3
6.2
186.6
15.1
45.7
23.3
11.0
16.5
196.4
152.6
41.2
42.2
10.7
226.5
18.4
36.0
12.1
4.5
15.8
138.1
109.7
29.7
31.5
6.6
135.7
16.5
31.6
11.1
3.3
12.2
94.1
77.4
32.0
25.9
5.4
71.6
9.7
42.7
8.9
1.8
11.1
106.1
75.6
27.4
53.1
7.3
66.0
19.2
100.7
12.4
1.7
10.0
130.3
113.0
40.5
50.6
9.4
85.0
25.7
149.5
71.1
2.8
12.7
123.4
129.7
32.6
43.8
10.6
79.4
39.3
172.2
92.5
6.9
14.8
137.2
194.9
41.2
50.6
10.8
104.9
46.4
194.5
69.0
9.0
12.2
140.3
173.9
39.3
55.5
19.1
96.8
37.2
151.9
46.0
9.1
8.4
153.6
132.7
42.1
46.2
33.0
103.1
36.8
156.4
Total field work
(excluding overhead)
611.4
1 138.6
1 167.3
703.5
660.3
439.2
323.5
410.1
540.5
608.1
776.9
722.4
705.8
Total exploration2
(including overhead)
723.3
1 300.0
1 350.0
827.9
774.7
531.8
385.3
477.3
628.1
717.6
894.8
804.2
767.4
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
f Forecast; p Preliminary estimate.
1 "Total exploration" includes related overhead expenditures. 2 For the years 1986-88, totals with overhead were calculated by multiplying the field expenditures by the ratio total/field
from Statistics Canada.
Note: Numbers may not add to totals due to rounding.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
TABLE 19.
TABLE 20.
MINERAL EXPLORATION EXPENDITURES IN CANADA, BY PROVINCE AND TERRITORY, 1986-98 (1997 DOLLARS)
Province/Territory
1986
Field Work Only
1987
1988
1989
1990
1991
1992
Total Exploration1
1993
1994
1995
1996
1997 p
1998f
($ millions)
16.2
22.6
14.2
317.6
180.0
34.6
48.4
3.9
83.0
36.7
47.1
34.8
52.2
11.4
521.7
386.8
50.2
79.7
3.1
179.0
36.4
74.1
45.3
56.1
16.6
394.0
412.5
36.0
73.4
5.2
236.3
46.3
79.8
41.6
24.6
15.6
212.4
250.0
42.5
72.7
7.1
214.2
17.3
52.5
26.0
12.3
18.4
218.9
170.1
45.9
47.0
11.9
252.4
20.5
40.1
13.1
4.9
17.1
149.8
119.0
32.2
34.2
7.2
147.2
17.9
34.3
11.9
3.5
13.1
100.8
82.9
34.2
27.7
5.8
76.7
10.4
45.8
9.4
1.9
11.7
112.2
80.0
29.0
56.2
7.7
69.9
20.3
106.6
13.0
1.8
10.5
136.3
118.2
42.4
52.9
9.8
88.9
26.9
156.4
72.5
2.9
13.0
125.7
132.2
33.2
44.6
10.8
80.9
40.0
175.4
93.0
6.9
14.9
137.8
195.8
41.4
50.8
10.9
105.3
46.6
195.5
69.0
9.0
12.2
140.3
173.9
39.3
55.5
19.1
96.8
37.2
151.9
45.8
9.0
8.3
152.9
132.1
41.9
46.0
32.8
102.6
36.6
155.7
Total field work
(excluding overhead)
804.5
1 429.5
1 401.5
807.6
735.9
476.6
346.4
434.0
565.3
619.7
780.6
722.4
702.6
Total exploration2
(including overhead)
951.7
1 632.1
1 620.8
950.4
863.4
577.0
412.7
505.1
657.0
731.3
899.0
804.2
763.8
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
f Forecast; p Preliminary estimate.
1 "Total exploration" includes related overhead expenditures. 2 For the years 1986-88, totals with overhead were calculated by multiplying the field expenditures by the ratio total/field
from Statistics Canada.
Note: Numbers may not add to totals due to rounding.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Newfoundland
Nova Scotia
New Brunswick
Québec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Yukon Territory
Northwest Territories
85
86
Province/Territory
1986
Field Work Only
1987
1988
1989
1990
1991
1992
Total Exploration
1993
1994
1995
1996
1997 p
1998f
(%)
Newfoundland
Nova Scotia
New Brunswick
Québec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Yukon Territory
Northwest Territories
Total
2.0
2.8
1.8
39.5
22.4
4.3
6.0
0.5
10.3
4.6
5.9
2.4
3.7
0.8
36.5
27.1
3.5
5.6
0.2
12.5
2.5
5.2
3.2
4.0
1.2
28.1
29.4
2.6
5.2
0.4
16.9
3.3
5.7
4.4
2.6
1.6
22.3
26.3
4.5
7.6
0.7
22.5
1.8
5.5
3.0
1.4
2.1
25.4
19.7
5.3
5.4
1.4
29.2
2.4
4.6
2.3
0.8
3.0
26.0
20.6
5.6
5.9
1.2
25.5
3.1
5.9
2.9
0.8
3.2
24.4
20.1
8.3
6.7
1.4
18.6
2.5
11.1
1.9
0.4
2.3
22.2
15.8
5.7
11.1
1.5
13.8
4.0
21.1
2.0
0.3
1.6
20.7
18.0
6.5
8.1
1.5
13.5
4.1
23.8
9.9
0.4
1.8
17.2
18.1
4.5
6.1
1.5
11.1
5.5
24.0
10.3
0.8
1.7
15.3
21.8
4.6
5.7
1.2
11.7
5.2
21.7
8.6
1.1
1.5
17.4
21.6
4.9
6.9
2.4
12.0
4.6
18.9
6.0
1.2
1.1
20.0
17.3
5.5
6.0
4.3
13.4
4.8
20.4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
f Forecast; p Preliminary estimate.
Notes: The percentages from 1986-88 are calculated on field work only, but those from 1989-97 are based on total expenditures, which include related overhead.
Numbers may not add to totals due to rounding.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
TABLE 21. MINERAL EXPLORATION EXPENDITURES IN CANADA, BY PROVINCE AND TERRITORY, 1986-98
(PERCENT DISTRIBUTION)
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
87
From 1986 to 1992, Québec, Ontario and British Columbia were the most actively explored
provinces/territories. In 1993, for the first time since 1982, exploration spending in Ontario
and Québec combined fell below 40% of the Canadian total, having peaked at 64% in 1987. In
1994 and 1995, the Northwest Territories was the most actively explored jurisdiction in
Canada. In 1996, the Northwest Territories ranked just below Ontario with exploration expenditures of $194.5 million, compared to $194.9 million for Ontario. The high levels of diamond
exploration expenditures have helped maintain the Northwest Territories’ national contribution
at over 20% starting in 1993. These are the highest percentages for the Northwest Territories
since Canadian exploration statistics were first collected in 1946. Before 1993, the Northwest
Territories had ranked either fourth or fifth nationally.
In 1993 and 1994, Ontario fell to third place behind the Northwest Territories and Québec.
However, from 1994 to 1997, the situation improved for Ontario. As mentioned above, Ontario
led the nation in exploration expenditures in 1996, and preliminary estimates indicate that it
did again in 1997.
Activity has also resumed strongly in British Columbia with an expected 39% increase in exploration expenditures over the 1993-97 period. In 1997, Ontario, the Northwest Territories and
Québec led the country in exploration expenditures. For 1998, the Northwest Territories followed by Québec and Ontario are expected to be the most explored jurisdictions in Canada. As
a consequence of the Voisey’s Bay exploration rush, Newfoundland and Labrador also improved
its national ranking from eighth in 1994 to fifth in 1995 and 1996, with 10% of total Canadian
exploration expenditures. In each year since 1995, between 80% and 90% of Newfoundland and
Labrador’s exploration expenditures were directed at Labrador.
6.6
EXPLORATION EXPENDITURES BY TYPE OF COMPANY
Figure 38 depicts exploration expenditures (field work plus overhead) by type of company for
1990 to 1997 (preliminary) and 1998 (intentions). Producers and their affiliates usually represent 80-85% of the total senior companies category. In constant 1997 dollar terms, exploration
by producing companies and their affiliates peaked in 1987 and 1988, declined until 1992, and
then increased again until 1996. In reality, the period of decline may not be as large as it
appears because considerable contributions were made in the 1986-88 period by junior companies to joint-venture projects operated by senior companies. These contributions were counted
as part of senior companies’ spending, thus overstating senior expenditures and understating
junior expenditures during the 1986-88 period. Expenditures by senior companies have continued to increase during 1996, thus showing a total increase of about 78% in constant dollar
terms for the 1992-96 period. Expenditures by senior companies are expected to decline in both
1997 and 1998.
Exploration expenditures by junior companies followed the same pattern as those by senior companies (Figures 35 and 38), peaking in 1987 and 1988, and then decreasing until 1992 (the lowest amount since 1980). Junior company expenditures have risen constantly since 1992, reaching $316 million in 1996 (a 45% increase over the $218 million recorded in 1995) and an expected
$298 million in 1997 and $312 million in 1998. The change in exploration trends by junior companies is attributable to a variety of factors. The exploration rush for diamonds that began in
1993, and which has been sustained since that time, accounted for about one third of total junior
exploration expenditures in 1993 and 1994, 20% in 1995 and 1996, and about 10% in 1997 and
1998. Roughly 5% of all junior exploration expenditures for each of the years 1995, 1996, 1997
and likely 1998 are a result of the Voisey’s Bay nickel-copper-cobalt discovery in late 1994.
In 1983, junior companies accounted for about 15% of total Canadian exploration expenditures
but, by 1987, this proportion had increased to more than 51%. In 1988, expenditures by the
juniors began to decline. The decline continued through 1992, when the lowest amount since
1980 was recorded. Junior expenditures accounted for: 21% of total exploration expenditures
in 1992; around 30% in 1993, 1994 and 1995; 35% in 1996; and likely 37% and 41% respectively
for 1997 and 1998.
88
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 38
Exploration Expenditures in Canada, by Type of Company, 1990-98
(1997 $ millions)
1 000
800
600
400
200
0
(1) Companies with
a producing mine
in Canada
(2) Affiliates
of (1)
(3) Oil companies
excluding
(1) and (2)
(4) Foreign
companies
excluding (1),
(2) and (3)
(5) Juniors
(6) Others
(7) Total
Canada
Source: Compiled by Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
Notes: The years 1990 to 1998 are represented in each group. The left bar represents 1990; the right bar represents 1998. 1997 data are
preliminary estimates; 1998 data are company spending intentions as compiled in January 1998. Overhead expenditures are included. The
company classification system is explained in the Appendix.
6.7
EXPLORATION EXPENDITURES BY TYPE OF COMMODITY SOUGHT
Exploration for precious metals (95% of which was for gold) peaked in 1987 (Figure 39) and
subsequently declined as the availability of flow-through share capital decreased and as the
gold price declined after the end of 1987. Expenditures for precious metals rose again during
1993, 1994, 1995 and 1996, years in which the gold price was up.
After reaching a low in 1986, exploration expenditures for base metals increased until 1990.
They declined again in 1991 through 1993. During 1992, the decrease in precious-metal exploration was much more severe than that in base-metal exploration. Consequently, total expenditures for base-metal exploration exceeded those for precious metals for the first time since 1983.
By October 1993, the inflation-adjusted prices of nickel, copper, zinc and lead were at all-time
lows. They then recovered quite strongly, leading to increases in base-metal exploration expenditures. In fact, between 1993 and 1996, base-metal exploration increased by 88%.
In 1987 and 1988, exploration expenditures for all non-petroleum mineral commodities other
than base and precious metals (Figure 39) accounted for only about 3% of total Canadian exploration expenditures. In 1989 and 1990, expenditures directed at other mineral commodities
(excluding uranium) more than doubled in percentage terms, but did not actually increase significantly in constant dollar terms. In 1991, expenditures for “other” (excluding uranium) reached
a low in both percentage and constant dollar terms. They increased again in 1992, both in percentage and dollar terms, and they increased significantly in 1993 to reach between 25% and
27% of the total expenditures for four years in a row ($128 million in 1993, $176 million in 1994,
$198 million in 1995, and $220 million in 1996). The search for diamonds contributed the most
to the increase in the level of expenditures in this “other” minerals and metals category.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
89
Figure 39
Exploration Expenditures in Canada, by Commodity Sought, 1975-96
(1997 $ millions)
1 400
1 200
Precious metals
1 000
Base metals
800
Uranium
600
Others 1
400
200
0
1975 1977 1979 1981 1983 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies.
Includes ferrous metals, other metals, nonmetals (including coal and diamonds), and "not specified."
Notes: Overhead expenditures are included. Data were not compiled by commodity for 1976, 1978, 1980, 1982 and 1984. For 1975, 1977, 1979, 1981
and 1983, only a precious-metal/base-metal breakdown is available.
1
6.8
EXPLORATION AND DEVELOPMENT EXPENDITURES BY
FOREIGN-CONTROLLED FIRMS
Foreign companies have long recognized Canada’s mineral potential and have been contributing
significantly to both mineral exploration and development in Canada. The survey of mineral
exploration, deposit appraisal and mine complex development expenditures reveals that, since
1989, foreign-controlled companies have accounted for about 27% of spending on mineral exploration in Canada and for a similar proportion of development expenditures.
In 1997, foreign firms spent $203 million (Figure 40) on mineral exploration in Canada, some
$63 million less than they did in 1996. A good proportion of this decrease can be explained by
an increase in development expenditures, particularly in the diamond sector where major foreign investments were shifted from exploration to the development of deposits. (A large
amount of work was required to prepare the Ekati diamond mine, which has a large Australian
ownership component, for production.) Exploration expenditures by foreigncontrolled companies are expected to drop slightly to $199 million in 1998. In terms of development expenditures, spending by foreign firms reached $224 million in 1997 and is forecast to
reach $259 million in 1998, an increase of 16% that once again can be explained largely by
investments in the diamond sector.
The actual amounts spent by foreign firms on exploration and development in Canada are likely
higher than those reported in the survey because many foreign firms do not have a controlling
interest in the Canadian-based partnerships in which they participate. As a result, expenditures
from these partnerships are reported to the survey under the name of the controlling Canadian
partner (project operator) and are counted as expenditures of Canadian companies.
90
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 40
Mineral Exploration and Development Expenditures in Canada by Foreign-Controlled Firms, 1989-98
(1997 $ millions)
500
Exploration
400
Development
300
200
100
0
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Source: Natural Resources Canada, based on the federal-provincial survey of mining and exploration companies, and on Statistics Canada's CALURA
database.
Note: 1997 data are preliminary estimates; 1998 data are company spending intentions as compiled in January 1998.
7. Canada’s Standing As A World
Exploration Target
7.1
INTRODUCTION
In 1996 and 1997, and most probably again in 1998, Canada remained one of the world’s top
mineral exploration targets, ranking second (after Australia) in each of those three years, thus
continuing the close contest of the past three or more decades between those two countries.
The United States, based on the limited and
Figure 41
poor-quality exploration statistics available
for that country, appears to have been a
Top Three Country Destinations of Mineral
strong contender for first place up until
Exploration Capital from Worldwide Sources,
about 1980, but has been consistently in
1972-97
third position since then.
Based on official Canadian and Australian
government surveys of company exploration
expenditures, Canada ranked first every
year from 1981 through 1990, and was probably also first in 1991. Canada ranked second, after Australia, from 1992 through
1997 (Figure 41). In 1997, and most likely
in 1998, Australia and Canada continued
their close contest for the world’s top destination for exploration capital from worldwide sources. In fact, 1997 exploration
expenditures in each of Australia and
Canada were again much greater than those
in any other single country. This is expected
to continue to be the case in 1998.
7.2
DISCREPANCY BETWEEN
EXPLORATION SURVEY
RESULTS
The confusion concerning Canada’s relative
share of worldwide non-petroleum mineral
exploration activity continues. The results of
the proprietary annual survey of worldwide
mineral exploration expenditures prepared
by the Metals Economics Group (MEG) of
Halifax, Nova Scotia, which represents a
partial survey, has generally ranked Canada
considerably lower than does the more comprehensive federal-provincial survey of mining and exploration companies. MEG ranked
Canada first in 1991, third in 1993, fifth in
1994, third in 1996, and fifth again in 1997
(after Latin America, Australia, Africa, and
Rank
Year
First
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Australia
Australia
Australia
United States
Canada
United States
Canada
Australia
United States
Second
Canada
Canada
Canada
Canada
Canada
Canada
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Canada
United States
United States
Canada
United States
Canada
United States
United States
Australia
Third
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
Canada
Canada
Australia
Australia
Australia
Australia
Canada
Canada
Source: Natural Resources Canada, based on official Canadian
and Australian statistics and the best available data for the United
States.
Notes: Australian expenditures were 6.5% higher than those for
Canada in 1983 and 3.3% higher in 1991; however, correcting
the reported Australian totals for substantial mine development
expenditures, which are not included in Canadian statistics, ranks
Canada first in 1983 and 1991. No data are available for the former Soviet Union.
92
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Pacific-Southeast Asia). This relatively low ranking is partly because Canada, a single country
of 10 million km2, is being compared with multi-country continental areas such as Latin America (20.5 million km2) and Africa (30.3 million km2). Also, Latin America and Africa each have
total values of mineral production that are considerably higher than that of Canada, so it would
hardly be surprising if more were spent on mineral exploration in these areas than in Canada.
Canada’s actual position in terms of exploration expenditures, compared to single countries
rather than geographic areas, was first in 1991 and second, after Australia, from 1992 to 1997
inclusive. No other single country comes close to matching Canada, especially when all exploration expenditures, including those of the smaller junior companies that are not included in
the MEG survey, are taken into account.
The MEG survey of exploration budgets for 1997 covers almost all countries. The survey is
invaluable because Canada and Australia are the only two countries in the world that have official, comprehensive, government-run surveys of non-petroleum mineral exploration expenditures. Therefore, despite being incomplete, the MEG survey provides the only source of information for all other countries of the worldwide exploration activities of the world’s larger
companies.
The only exploration expenditure statistics available in the public domain for the United States
for the years 1970 through 1979 are rough estimates by Schreiber and Emerson3 and, as a
result, the relative position of the United States among the top three contenders for global
exploration investment (Figure 41) is especially uncertain for the years 1970-79. U.S. exploration statistics for the 1980-91 period are from incomplete annual surveys that were carried
out by the American Bureau of Metal Statistics (ABMS) on behalf of the Society of Economic
Geologists. However, the ABMS survey no longer provides useful exploration expenditure statistics. Therefore, since 1992, the MEG survey, with its limitations, has been the only source of
aggregate exploration statistics for the United States as well.
Statistics provided by Canada’s annual federal-provincial survey of mining and exploration
companies provide a much more complete source of information for ranking Canadian exploration activity than does the MEG survey, as do similar statistics gathered and published by
the Australian Bureau of Statistics for ranking Australian activity. More than 98% of the companies that are sent Canadian exploration survey questionnaires return those questionnaires
completed. It is unlikely that any of the companies that fail to respond have significant mineral
exploration programs. Hence, it is likely that more than 99% of total exploration expenditures
of all the companies surveyed are gathered by this federal-provincial survey.
7.2.1 Differences Between Canadian and Australian Statistics
Official Canadian and Australian exploration expenditure statistics are not completely comparable because Australian exploration statistics include some costs that are excluded from Canadian statistics. Canadian exploration statistics have excluded all expenditures at producing
mines directed at the search for extensions, to depth and laterally, of the orebodies being mined.
Such expenditures have been included in “development expenditures.” On the property of an
existing mine, only exploration for a new mine (additional deposit) has been counted as exploration expenditures in Canada. In Australia, on the other hand, all expenditures involved in
the search for additional ore on production leases, including expenditures on such work in producing mines, are included in exploration expenditures, whereas in Canada at least some of
this work would be counted as “development.”
As a result, Australian exploration expenditure statistics are somewhat inflated relative to
Canadian exploration expenditure statistics. This is demonstrated by the fact that, over the six
3 Schreiber, Hans and Emerson, Mark, 1984: North American Hardrock Gold Deposits: An Analysis of
Discovery Costs and the Cash Flow Potential, Engineering and Mining Journal, October 1984, pp. 50-57.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
93
fiscal years 1990/91 to 1995/96 inclusive, exploration expenditures on production leases averaged 22.1% of total exploration expenditures in Australia, while in Canada, over the eight calendar years from 1990 to 1997 inclusive (including “preliminary” 1996 and “company spending
intentions” 1997), “on-property” or “mine-site” exploration averaged only 12.9% of total exploration expenditures. Also in Canada, such expenditures can be anywhere on a company’s entire
property surrounding its mines, and not only on ground equivalent to the more restricted Australian “production leases.” If Canadian “on-property” exploration expenditures were reported
and compiled using the Australian system, some of these Canadian expenditures would not be
included as “production lease” expenditures, but as exploration expenditures not on production
leases, so that the Canadian percentage would be significantly lower than 12.9% and the percentage difference would be greater than 22.1% in Australia minus the 12.9% in Canada.
These percentages differ for many reasons. What is clear is that, because of structural reporting differences, aggregate mineral exploration expenditures reported for Australia are higher,
by an unknown but significant amount, relative to how the same exploration expenditures
would be reported in Canada. Therefore, in recent years, exploration expenditures in Australia
have not actually exceeded exploration expenditures in Canada by as much as a simple comparison of each country’s respective statistics would suggest.
The value of Australian production of non-petroleum minerals is roughly one third greater than
that of Canadian production. For this reason alone, it would be expected that annual exploration
expenditures in Australia would normally exceed annual exploration expenditures in Canada.
7.2.2 Differences Between Official Canadian Exploration Statistics and Metals
Economics Group Exploration Statistics for Canada
The annual exploration statistics produced by MEG substantially understate both annual
exploration expenditures in Canada and the share of worldwide exploration activity directed at
Canada. There are several reasons for this. First, MEG’s 1997 exploration expenditure totals
account for only about two thirds of total exploration expenditures in Canada. In 1997, this
survey covered only 84 companies exploring in Canada, a number that is substantially less
than the 617 companies that were actively engaged in mineral exploration in Canada that year.
For the survey years 1993 to 1995, MEG used increasing exploration budget cut-offs to limit the
universe of companies it had to survey. The exploration budget cut-off was US$1 million for
1993 and prior years. This was raised to US$2 million in 1994, and then to US$3 million in
1995. It decreased to US$2.9 million in 1996, and remained at US$2.9 million in 1997.
Because of the relatively high cut-offs (US$2.9 million, equivalent to C$4 million in 1997), the
MEG survey has consistently and substantially under-estimated exploration activity in both
Canada and Australia. This has been because, at least until recently, the contribution made by
junior exploration companies has been so much greater in Canada and Australia than it has
been in all other countries. Canada and Australia both have hundreds of smaller producing
companies and non-producing (junior) companies that individually have spent less on exploration annually than the MEG cut-off but that, as a group, have accounted for, and still account
for, a substantial amount of domestic exploration activity in these two countries.
In 1997, MEG reported aggregate exploration budgets for Canada of US$435.9 million on the
basis of 84 company returns. In addition to the 84 larger companies that it surveyed, MEG surveyed another 71 companies that expected to explore in Canada in 1997 but were to spend less
than US$2.9 million on exploration worldwide that year. These smaller company exploration
totals were reported by MEG in a table of companies with individual exploration expenditures
of less than US$2.9 million worldwide (the MEG cut-off value), so they were not included in
MEG’s worldwide exploration totals. The 71 companies reported exploration spending intentions for Canada of US$61.7 million (C$84.5 million) in addition to the US$435.9 million for the
84 companies counted by MEG. A company-by-company comparison of the companies surveyed
by MEG for 1997 with individual company spending intentions for Canada from the 1997 federalprovincial survey of mining and exploration companies shows that in addition to the 84 companies
94
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
plus 71 companies surveyed by MEG, another 462 companies with exploration expenditures in
Canada were not covered by the MEG survey. According to Canadian federal-provincial statistics, the 462 companies covered by the federal-provincial exploration survey, but not by MEG,
planned to spend US$199.4 million exploring for the commodities included in the MEG survey.
This amount, plus the US$61.7 million for 71 smaller companies surveyed by MEG but not
included in its totals because they spent less than US$2.9 million worldwide, add up to an
additional US$261 million, relative to the MEG total of US$435.9 million for exploration in
Canada. Of the US$199.4 million of exploration dollars in Canada not picked up by MEG,
some US$47.1 million was to be spent by 12 companies that each had reported to the federalprovincial survey planned 1997 exploration expenditures in Canada greater than the 1997
MEG survey cut-off of US$2.9 million. None of these 12 companies appear to have been
surveyed by MEG. This means that MEG should probably have reported exploration expenditures in Canada of roughly US$483 million for companies with exploration expenditures of
US$2.9 million or more, instead of US$435.9 million.
Furthermore, the MEG survey does not cover exploration for all of the mineral commodities
actually sought by companies. For example, the most recent worldwide exploration statistics
for uranium, compiled by the International Atomic Energy Agency, indicate that uranium
exploration in Canada accounted for roughly 30% of the US$107 million of uranium exploration
expenditures worldwide. The 1997 MEG survey has Canada accounting for only 10.8% of
worldwide exploration spending of US$4.03 billion for the commodities covered by the MEG
survey, which is much less than the 30% for uranium. But for a comprehensive exploration
comparison for all mineral commodities worldwide, exploration expenditures for all of the other
mineral commodities not covered by the MEG survey, chiefly the industrial minerals (other
than diamonds, which are included by MEG), iron ore, bauxite and coal would have to be
included in addition to those for uranium.
Another difficulty with the MEG survey is that exploration expenditures compiled by that survey are not comparable across all companies. In addition to including surface exploration
expenditures, some companies are including the search for extensions to orebodies in producing
mines in the budgets that they report to MEG, but others are not. Other companies are including the costs of feasibility and engineering studies, but most companies are not. Because of
these inconsistencies in what is included, it is difficult to assess the validity of comparisons by
MEG of exploration expenditures across countries, or the validity of comparing MEG totals for
exploration in Canada to exploration expenditure totals from the federal-provincial exploration
survey (which has clearly excluded both the search for new ore in producing mines and in
deposits committed for production, as well as expenditures on feasibility studies and engineering studies at such properties).
As already discussed, some MEG rankings compare total exploration budgets in individual
countries such as Australia, Canada and the United States with those in vast geographical
regions such as Latin America, Africa, Pacific-Southeast Asia and “Rest of World.” Some of
these comparisons are arbitrary and therefore constitute misleading comparisons. Latin America, for example, consists of more than 20 separate countries that jointly have an area on two
continents that is more than double that of Canada, the United States or Australia taken individually. The area of Africa is triple or more the areas of each of these three important mining
countries. Both Latin America and Africa have mineral industries with annual values of nonpetroleum mineral production approximately double that of Canada and, therefore, it would not
be unexpected for total Latin American exploration expenditures to be double those of Canada,
yet when all companies are taken into account, including companies with worldwide exploration expenditures lower than US$2.9 million, this is probably not the case.
The relative positions of countries in world exploration as reported by MEG have shifted from
one year to the next, in part because of the changing methodology used by MEG, not only
because of changing exploration expenditure cut-offs, but also because of MEG’s separation (in
1995) of Africa from “Rest of World.” Until 1995, “Rest of World” had an area about 10 times
that of Canada, 10 times that of the United States, and about 12 times that of Australia.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
95
The separation of Africa from “Rest of World” in 1995 resulted in a 30% decrease in the area of
“Rest of World” and, consequently, in a substantial decrease in exploration expenditures for
“Rest of World” as follows: in 1994, the MEG exploration survey reported that “Rest of World”
accounted for 15% of total world exploration expenditures of US$2.050 billion, that is, for
US$308 million; in 1995, a redefined “Rest of World” accounted for only 6.7% of total world
expenditures of US$2.690 billion, or US$180 million. This change helped shift Canada’s world
position in terms of exploration activity (according to MEG) from fifth in 1994 to third in 1995.
However, if Canada, the United States and Mexico, as well as the Central American portion of
Latin America, had been combined by MEG into a region called North America, then North
America would have been consistently first in terms of worldwide exploration activity for the
past few decades. This indicates some of the problems of comparing exploration expenditures
for individual countries with expenditures combined by geographical region.
8. Globalization of the Mining Industry
8.1
INTRODUCTION
This section provides an overview of Canadian exploration activity abroad. It also highlights
the domestic and foreign components of the larger-company exploration market in Canada.
The information in this review4 was current as at December 31, 1997.
8.2
THE GLOBAL MARKET FOR MINERAL EXPLORATION
During 1997, the worldwide market for precious-metal, base-metal and diamond exploration
was expected to grow by 11% to $7.0 billion (US$5.1 billion), up from $6.3 billion (US$4.6 billion) in 1996.
Global trends in worldwide mineral exploration activity are based on data for the world’s larger
companies,5 defined here as those with annual exploration budgets greater than $4 million
(US$3 million). In 1997, there were 279 such companies, up from 223 in 1996 and only 154 in
1995. During 1997, the larger companies were expected to undertake programs worldwide
worth $5.5 billion (US$4.0 billion), which represents about 80% of the global market for mineral exploration.
8.3
LARGER CANADIAN-BASED COMPANIES
In 1996, mining companies listed on Canadian stock exchanges raised over $6 billion in equity
financing.6 As a result, the number of Canadian-based companies that planned to spend more
than $4 million on exploration around the world grew to 141 during 1997, up from 94 in 1996
and only 55 in 1995. Many of these larger companies have no substantial revenues from mineral
production, and they rely entirely on the stock market to finance their exploration programs.
In 1997, the larger Canadian-based companies planned to spend $1.9 billion on mineral exploration in both Canada and elsewhere around the world, up from $1.4 billion in 1996. In contrast, the larger companies based in Australia, the source of the second-largest exploration programs in the world, planned to spend about $1.4 billion worldwide, about half of it at home.
Canadian-based companies now control 35% and the dominant share, by far, of the exploration
4 Section 8 is based on an article from the 1997 Canadian Minerals Yearbook, published by Natural
Resources Canada.
5 Most of the information on the larger-company exploration market worldwide is based on Corporate
Exploration Strategies: A Worldwide Analysis, published annually by the Metals Economics Group,
Halifax, Nova Scotia.
6 Keither J. Brewer and André Lemieux, Canada’s Global Position in Mining - Canadian Financing of the
International Mining Industry, Metals Finance 4th International Conference, Toronto, May 7-9, 1997,
Natural Resources Canada, Ottawa, 53 pp.
98
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 42
Exploration Budgets of the World's Larger Companies, by Country of Origin, 1992-97
Companies with Worldwide Budgets of at Least $4 Million (US$3 Million)
For Precious-Metal, Base-Metal or Diamond Exploration
(constant 1997 $ billions)
(percent)
6
40
__
Canadian company share of worldwide budgets
35
Foreign company budgets worldwide
5
30
Canadian company budgets worldwide
4
25
3
20
15
2
10
1
5
0
0
1992
1993
1994
1995
1996
1997
Source: Natural Resources Canada, based on Corporate Exploration Strategies: A Worldwide Analysis, Metals Economics Group, Halifax, Nova Scotia.
Notes: Worldwide exploration budgets of companies that intended to spend less than $4 million (US$3 million) annually are excluded. Worldwide
exploration budgets for other commodities such as uranium or industrial minerals are also excluded.
programs planned by all of the world’s larger companies, up from 28% in 1996 (Figure 42). In
1997, the larger Canadian-based companies had worldwide exploration budgets with a mean of
$13.7 million and a median of $6.4 million.
At the end of 1997, companies of all sizes listed on Canadian stock exchanges held interests in a
portfolio of more than 8000 exploration or producing properties7 (Figure 43) located in more
than 100 countries around the world. Most of this portfolio is at the exploration stage.
Canadian companies are continuing to assume increasing amounts of geological and country
risk abroad. The ratio of exploration properties to the total number of exploration and producing properties held outside Canada has increased steadily since the early 1990s. In late 1992,
that ratio was 0.82 for Latin America, 0.79 for Africa, 0.78 for Europe and the former Soviet
Union (FSU), and 0.67 for Asia-Pacific. By late 1997, it had increased to 0.93 for both Latin
America and Africa, to 0.88 for Asia-Pacific, and to 0.86 for Europe and the FSU. In comparison, the ratio of exploration properties to the total number of properties held in Canada has
remained roughly constant at 0.96 over at least the past six years.
8.4
LARGER-COMPANY EXPLORATION MARKET IN CANADA
In 1997, the larger-company mineral exploration market in Canada was valued at almost
$600 million (Figure 44), or 11% of the $5.5 billion larger-company market worldwide. The
larger-company market in Canada accounts for about 70% of the total domestic mineral exploration market; the remaining 30% is held mainly by smaller companies. The activities of
smaller companies are not addressed here.
7 Most of the information on the mineral property portfolio of companies of all sizes listed on Canadian
stock exchanges is derived from the MIN-MET CANADA database, ROBERTSON INFO-DATA Inc.,
Vancouver, British Columbia.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
99
Figure 43
Canadian Mineral Property Portfolio Worldwide, by Region, 1992-97
Companies of All Sizes Listed on Canadian Stock Exchanges
(no. of properties)
6 000
Dec. 1992
Dec. 1994
Nov. 1996
Sept. 1993
Nov. 1995
Nov. 1997
5 000
4 000
3 000
2 000
1 000
0
Canada
Latin America
United States
Africa & Middle East
Asia-Pacific
Europe & FSU
Source: Natural Resources Canada, based on MIN-MET CANADA database, ROBERTSON INFO-DATA Inc., Vancouver, British Columbia, and used
under licence.
Figure 44
Exploration Budgets of the World's Larger Companies for Selected Regions of the World, 1997
Companies with Worldwide Budgets of at Least $4 Million (US$3 Million)
For Precious-Metal, Base-Metal or Diamond Exploration
($ millions)
1 800
Companies based elsewhere
1 600
Companies based in Canada
1 400
1 200
1 000
800
600
400
200
0
Latin America
Asia-Pacific
Africa & Middle East
Canada
United States
Europe & FSU
Source: Natural Resources Canada, based on Corporate Exploration Strategies: A Worldwide Analysis, Metals Economics Group, Halifax, Nova Scotia.
Notes: Worldwide exploration budgets of companies that intended to spend less than $4 million (US$3 million) annually are excluded. Worldwide
exploration budgets for other commodities such as uranium or industrial minerals are also excluded.
The budgets of the world’s larger domestic-based and foreign-based companies allocated to
exploration in Canada in 1997 were down by about $45 million, or 7%, compared with those in
1996. Although the budgets of these companies for Canada have risen almost every year since
1991, the proportion of worldwide budgets allocated to Canada has fallen gradually from 18% in
1992 to 11% in 1997 (Figure 45) because of the mammoth increase in exploration activity that
has occurred in Latin America, Asia and Africa since the early 1990s.
Canada remains, by far, the country where the larger Canadian-based companies spend the
most on exploration (Figure 46). During 1997, these companies were expected to spend
$417 million in Canada, up by more than $20 million, or 5%, from the $395 million that they
100
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Figure 45
Exploration Budgets of the World's Larger Companies, by Destination, 1992-97
Companies with Worldwide Budgets of at Least $4 Million (US$3 Million)
For Precious-Metal, Base-Metal or Diamond Exploration
(constant 1997 $ billions)
(percent)
Canada's market share
6
20
All budgets for elsewhere
Foreign budgets for Canada
5
Canadian budgets for Canada
15
4
3
10
2
5
1
0
0
1992
1993
1994
1995
1996
1997
Source: Natural Resources Canada, based on Corporate Exploration Strategies: A Worldwide Analysis, Metals Economics Group, Halifax, Nova Scotia.
Notes: Worldwide exploration budgets of companies that intended to spend less than $4 million (US$3 million) annually are excluded. Worldwide
exploration budgets for other commodities such as uranium or industrial minerals are also excluded.
Figure 46
Exploration Budgets of the Larger Canadian-Based Companies, 1997 –
Countries Accounting for 80% of Budgets
Companies with Worldwide Budgets of at Least $4 Million (US$3 Million)
For Precious-Metal, Base-Metal or Diamond Exploration
($ millions)
450
400
350
300
250
200
150
100
50
China
Greece
Mali
Nicaragua
Papua New
Guinea
Philippines
Russia
Australia
Tanzania
Ghana
Sweden
Dem. Rep.
of the Congo
Brazil
Peru
Argentina
Indonesia
Mexico
United States
Chile
Canada
0
Source: Natural Resources Canada, based on Corporate Exploration Strategies: A Worldwide Analysis, Metals Economics Group, Halifax, Nova Scotia.
Notes: Worldwide exploration budgets of companies that intended to spend less than $4 million (US$3 million) annually are excluded. Worldwide
exploration budgets for other commodities such as uranium or industrial minerals are also excluded.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
101
had budgeted in 1996. These Canadian companies control 70% of the larger-company market
in Canada. The situation is identical in the United States and Australia where Americanand Australian-based companies control the largest share of their respective domestic largercompany markets for mineral exploration.
In contrast, in 1992, Canadian-based companies controlled 80% of the larger-company exploration market in Canada. However, with increasing globalization, their share of the market
has fallen gradually as foreign-based companies increased their activities in this country. The
share of the exploration market controlled by the larger domestic firms has also declined in the
United States and in Latin America. In Australia, on the other hand, Australian-based companies still control over 80% of their domestic market.
At the end of 1997, companies of all sizes listed on Canadian stock exchanges held more than
4600 mineral properties in Canada, about 7% fewer than in 1996, but about the same number
as they held in the early 1990s (Figure 43). In early 1997, there were more than 170 mineral
projects in Canada at the deposit appraisal stage.8
Globalization of the mining industry is not only providing benefits to developing countries.
During 1997, the larger foreign-based multinationals were expected to spend $180 million on
mineral exploration in Canada. Compared with 1996, the budgets of larger foreign-based companies for Canada decreased by about 25%. This is, in part, because Australian-based BHP
Minerals Pty Ltd. has advanced its Ekati diamond project at Lac de Gras in the Northwest Territories to the mine construction stage, and such investment is not counted as exploration.
Nonetheless, the budgets of the larger foreign-based companies represent 30% of the exploration programs planned for Canada by all of the world’s larger companies, including those
based in Canada. In 1992, the budgets (adjusted for inflation) of the larger foreign-based companies for exploration in Canada totaled only $70 million.
The larger foreign-based companies active in Canada include WMC Limited, the Ashton Group,
and Savage Resources Limited, all based in Australia; Echo Bay Mines Ltd., the Homestake
Group, Royal Oak Mines Inc., Battle Mountain Gold Company, Phelps Dodge Corporation,
Cyprus Amax Minerals Company, Newmont Gold Company, AMAX Gold, and Vista Gold Corp.,
all based in the United States; the Minorco Group, and Outokumpu Metals and Resources Oy,
both based in Europe; Nord Pacific, based in Bermuda; the Gencor Group and the De Beers
Group, both based in Africa; First Dynasty Mines, based in Singapore; and Korea Zinc.
8.5
LARGER CANADIAN-BASED COMPANIES ABROAD
In 1997, the larger Canadian-based companies planned to spend $1.5 billion on mineral exploration outside of Canada. Since 1992, their foreign exploration budgets (adjusted for inflation)
have increased at an average annual compound rate of 47%, up from roughly $220 million in
1992. The proportion of their total budgets allocated to foreign exploration programs rose to
over 78% in 1997, up from 43% in 1992. Twenty countries spread around the globe account for
80% of the budgets of the larger Canadian-based companies (Figure 46).
At the end of 1997, companies of all sizes listed on Canadian stock exchanges held interests in a
portfolio of more than 3400 mineral properties located abroad (Figure 43). Foreign properties
now represent more than 40% of the total mineral property portfolio held by these companies,
up from about 25% in 1992. Between 1992 and 1997, the average annual compound rate of
growth in their holdings of foreign mineral properties was almost 18%.
8 For trends in mineral deposit appraisal activity in Canada over the interval 1982-97, and for a list of
projects at the deposit appraisal stage in early 1997, see André Lemieux, “Canada’s Global Mining Presence,” in the 1996 edition of the Canadian Minerals Yearbook, Natural Resources Canada, Ottawa,
pp. 8.9 and 8.11-8.22.
102
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
Apart from the United States, where companies of all sizes listed on Canadian stock exchanges
have a substantial mining presence, two dozen other nations, spread across the globe, account
for 80% of the balance of their mineral property portfolio held abroad.
8.5.1 United States
In 1997, the larger-company mineral exploration market in the United States was valued at
about $500 million (Figure 44), or 9% of the $5.5 billion larger-company market worldwide.
The larger Canadian-based companies planned to spend about $160 million in the United
States, up from about $145 million in 1996. They held over 30% of the larger-company market
there, up from about 20% in 1992. Adjusted for inflation, the annual exploration budgets of the
larger Canadian-based companies for the United States have grown at an average annual compound rate of about 13% since the early 1990s.
Between 1992 and 1997, companies of all sizes listed on Canadian stock exchanges held about
1000 mineral properties in the United States (Figure 43). At the end of 1997, there were some
400 such companies active in that country. These companies had projects in 34 states, but
mainly in the western part of the country in Nevada, California, Arizona, Alaska, Idaho, Montana, Washington, Utah, Colorado, New Mexico, Wyoming and South Dakota. Nevada alone
accounted for over 300 properties, or for more than one third of the Canadian portfolio in the
United States.
Although Canadian companies have expanded their activities considerably to Latin America,
Africa and Asia since the early 1990s, the United States is likely to remain, for the foreseeable
future, the foreign country where they hold their largest portfolio of mineral properties. At the
end of 1997, the United States accounted for 28% of all properties held abroad by these companies.
Of all the Canadian-based companies, Placer Dome Inc., Barrick Gold Corporation and Cominco
Ltd. planned the largest exploration programs in the United States during 1997. Together they
were expected to spend over $87 million. Placer Dome is focussing its deposit appraisal and
feasibility study programs on the South Pipeline gold project located on the Battle MountainEureka gold trend in Nevada, as well as on the Donlin Creek gold project in Alaska; the company is focussing its grassroots exploration programs on properties in Alaska, Arizona, Montana and Nevada, and its mine-site exploration programs on Cortez and Bald Mountain in
Nevada and on Golden Sunlight in Montana. Cominco is focussing on properties in Alaska, Arizona, Idaho, Minnesota, Montana, South Carolina and Washington, while Barrick is concentrating on Goldstrike and on other properties located on the Carlin gold trend in Nevada.
8.5.2 Latin America and the Caribbean
In 1997, the larger-company mineral exploration market in Latin America and the Caribbean
was valued at some $1.6 billion (Figure 44), or roughly 30% of the $5.5 billion larger-company
market worldwide. That region of the globe hosts the largest concentration of Canadian mineral exploration activity outside of Canada. During 1997, the larger Canadian-based companies
planned to spend almost $700 million in the region, an increase of more than $200 million, or
over 40%, compared with their budgets for 1996.
Adjusted for inflation, the exploration budgets of the larger Canadian-based companies for
Latin America and the Caribbean have grown at an average annual compound rate of over 50%
between 1992 and 1997. In 1997, these companies held about 45% of the larger-company market in the region, by far the largest share. In addition, they held the dominant share in Mexico,
South America, Central America, and the Caribbean.
At the end of 1997, companies of all sizes listed on Canadian stock exchanges held interests in
over 1300 mineral properties in the region. Since 1996, the total number of mineral properties
held there by Canadian companies has exceeded the number held in the United States.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
103
8.5.2.1 Mexico
In 1997, the larger-company mineral exploration market in Mexico was valued at over $250 million, or roughly 5% of the $5.5 billion larger-company market worldwide. Two dozen of the
larger Canadian-based companies planned to spend a total of more than $125 million in that
country, equivalent to half of the market.
Mexico remains, by far, the country of Latin America where Canadian companies are the most
active. During 1994, there was a significant increase in the average size of the mineral property portfolio held in that country by Canadian companies of all sizes listed on Canadian stock
exchanges.9 At the end of 1994, these companies held interests in projects in at least half of
Mexico’s 31 states. At the end of 1997, there were 125 such companies in Mexico with projects
in 19 states.
Farallon Resources Ltd. planned the largest Canadian exploration program in Mexico during
1997. That company planned to spend its entire budget of $25 million on the Campo Morado
gold-silver project located in the state of Guerrero.
8.5.2.2 South America
In 1997, the larger-company mineral exploration market in South America was valued at about
$1.2 billion, or over 20% of the $5.5 billion larger-company market worldwide. More than 100 of
the larger Canadian-based companies planned to spend $480 million in total in the region,
equivalent to more than 40% of the market. These companies held the dominant share in
Argentina, Bolivia, Chile, Colombia, Peru and Uruguay.
Seven Canadian-based companies planned the largest exploration programs in four countries of
South America: Essex Resource Corporation and Orvana Minerals Corp. in Bolivia; Bema Gold
Corporation and Barrick in Chile; Bolivar Goldfields Ltd. and Latingold Ltd. in Colombia; and
Rea Gold Corporation in Uruguay.
At the end of 1997, at least 280 companies of all sizes listed on Canadian stock exchanges held
more than 900 mineral properties throughout South America. They held more than 150 properties in Peru, and more than 100 in each of Chile, Argentina and Venezuela.
8.5.2.3 Central America
In 1997, the larger-company mineral exploration market in Central America was valued at
about $70 million, or 1% of the $5.5 billion larger-company market worldwide. Two dozen of the
larger Canadian-based companies planned to spend a total of $58 million in the region, equivalent to roughly 90% of the market. They held the dominant share in Costa Rica, El Salvador,
Guatemala, Honduras, Nicaragua and Panama.
In 1997, ten Canadian-based companies planned the largest programs in five countries of Central America: Placer Dome and Inmet Mining Corporation in Costa Rica; Kinross Gold Corporation in El Salvador; Tombstone Explorations Co. Ltd. in Guatemala; Breakwater Resources
Ltd., Geomaque Explorations Ltd., and Greenstone Resources Ltd. in Honduras; and Tiomin
Resources Inc., Teck Corporation, Madison Enterprises Corp. and Inmet in Panama.
At the end of 1997, companies of all sizes listed on Canadian stock exchanges held almost 100
mineral properties throughout Central America. They held 20 or more in each of Panama,
Honduras and Costa Rica.
9 For more detailed information on the penetration of the Mexican mineral exploration market by Cana-
dian companies, see André Lemieux, “Canadian Mining Activity in Mexico,” World Mineral Notes, Vol. 11,
No. 1, March 1995, Natural Resources Canada, Ottawa, pp. 23 and 24.
104
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
8.5.2.4 Caribbean
In 1997, the larger-company mineral exploration market in the Caribbean was valued at about
$25 million. The larger Canadian-based companies planned to spend about $15 million there,
equivalent to roughly 60% of the market. Canadian companies held the dominant share in
Cuba and Haiti. MacDonald Mines Exploration Ltd., Holmer Gold Mines Limited and KWG
Resources Inc. planned the largest exploration programs in these two countries.
At the end of 1997, companies of all sizes listed on Canadian stock exchanges held about 40 mineral properties in the Caribbean, about two thirds of them in Cuba.
8.5.3 Europe and the Former Soviet Union
In 1997, the larger-company mineral exploration market in Europe and the FSU was valued at
about $270 million (Figure 44), or roughly 5% of the $5.5 billion larger-company market worldwide. The larger Canadian-based companies planned to spend $135 million there, equivalent to
half the market. At the end of 1997, 70 companies of all sizes listed on Canadian stock exchanges
held over 200 mineral properties in the region.
8.5.3.1 Western Europe
In 1997, the larger-company mineral exploration market in western Europe was valued at over
$100 million, or about 2% of the $5.5 billion larger-company market worldwide. The larger
Canadian-based companies planned to spend over $55 million there, equivalent to more than
half the market. They held the dominant share in Finland, Greenland, Ireland and Sweden.
In 1997, four Canadian-based companies planned the largest programs for two countries of
western Europe: Dia Met Minerals Ltd. and Aber Resources in Greenland, and Boliden Limited
and William Resources Inc. in Sweden.
At the end of 1997, companies of all sizes listed on Canadian stock exchanges held almost
90 mineral properties in western Europe. They held more than 10 in each of Greenland and the
United Kingdom.
8.5.3.2 Eastern Europe
In 1997, the larger-company mineral exploration market in eastern Europe was valued at
$40 million, or roughly 1% of the $5.5 billion larger-company market worldwide. The larger
Canadian-based companies planned almost all of the programs in the region.
Five Canadian-based companies planned large programs in eastern Europe: TVX Gold Inc. in
Greece; Argosy Mining Corp. in Slovakia; and Inco Limited, Cominco and Eldorado Gold Corporation in Turkey.
At the end of 1997, companies of all sizes listed on Canadian stock exchanges held about
40 mineral properties in eastern Europe. In Slovakia alone, they held about one dozen.
8.5.3.3 Former Soviet Union
In 1997, the larger-company mineral exploration market in the FSU was valued at over
$100 million, or 2% of the $5.5 billion larger-company market worldwide. The larger Canadianbased companies planned to spend almost $40 million in these countries. They held the dominant share in Russia.
Since the early 1990s, there has been growing Canadian interest in participating in mineral
opportunities in the FSU. At the end of 1997, there were almost 40 companies of all sizes listed
on Canadian stock exchanges with interests in 65 mineral properties in seven countries of the
FSU. The current strategy of most of these companies appears to be to target a single country.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
105
Russia is by far the country of the FSU where Canadian companies are the most active. In
1997, the larger Canadian-based companies planned to spend almost $30 million on exploration
in that country. The number of properties held there by companies of all sizes listed on Canadian stock exchanges increased significantly starting in 1996 and now stands at almost 40. At
the end of 1997, there were at least a dozen Canadian companies active in Russia. Gold and, to
a lesser extent, diamonds are the main exploration targets of Canadian companies there.
Kazakstan also is becoming increasingly attractive to Canadian companies. During 1997, the
portfolio of mineral properties held in that country by companies of all sizes listed on Canadian
stock exchanges doubled to about two dozen.
8.5.4 Africa and the Middle East
In 1997, the larger-company mineral exploration market in Africa and the Middle East was valued at about $920 million (Figure 44), or 16% of the $5.5 billion larger-company market worldwide. The larger Canadian-based companies planned to spend over $265 million in Africa,
equivalent to about 30% of the market on that continent. In addition, they planned to spend
$10 million in the Middle East.
In 1997, the budgets of the larger Canadian-based companies for Africa were more than double
those of 1996, and more than five times those of 1995. These companies held the dominant
share of the market in Angola, Botswana, Burkina Faso, Chad, the Democratic Republic of the
Congo (Zaire), Côte d’Ivoire, Lesotho, Niger, Sierra Leone and Swaziland.
During 1997, 14 of the larger Canadian-based companies each planned mineral exploration
programs in Africa valued at over $15 million. Tenke Mining Corp. planned to spend almost
$29 million on the appraisal and study of the production feasibility of its Fungurume coppercobalt deposit in the Democratic Republic of the Congo. Sutton Resources Ltd. planned to
spend much of its $23 million African budget on its Bulyanhulu gold deposit in Tanzania.
SouthernEra planned to spend about $22 million, mainly on diamond projects in South Africa
and Angola. Emerging Africa Gold Inc. planned to spend more than $8 million on gold projects
in Guinea.
Between 1992 and 1997, the number of mineral properties held in Africa by companies of all
sizes listed on Canadian stock exchanges grew at an average annual compound rate of 60%. As
a result, at the end of 1997, some 180 of these companies held almost 500 properties in 29 countries there. They held about 100 in Ghana alone, about 70 in Tanzania, and 40 or more in each
of Zimbabwe, South Africa and Burkina Faso.
Although gold is the primary target of Canadian companies in Africa, there is nonetheless a
considerable variety in the mineral commodities that they seek there.10 Some of the commodities of interest to Canadians on that continent are not currently produced or are not widely
explored for in Canada.
8.5.5 Asia-Pacific
In 1997, the larger-company exploration market in Asia-Pacific was valued at about $1.6 billion
(Figure 44), or roughly 30% of the $5.5 billion larger-company market worldwide. The AsiaPacific market is now as large as the one in Latin America and the Caribbean. The larger
Canadian-based companies planned to spend about $230 million in Asia-Pacific, equivalent to
about 15% of the market. They held the dominant share in East Asia, and an equal and dominant share in Southeast Asia with Australian-based companies.
10 For an overview of Canadian mineral exploration in Africa during 1995, see André Lemieux, “Canada
and the Globalization of the Mining Industry,” Mineral Industry Review, Fall 1996, Natural Resources
Canada, Ottawa, pp. 32 and 33.
106
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
At the end of 1997, there were 150 companies of all sizes listed on Canadian stock exchanges
active in the region with interests in about 270 mineral properties.
8.5.5.1 Southeast Asia
In 1997, the larger-company mineral exploration market in Southeast Asia was valued at
about $550 million, or 10% of the $5.5 billion larger-company market worldwide. The larger
Canadian-based companies planned to spend about $160 million, equivalent to almost 30% of
the market. They held the dominant share in Papua New Guinea. In Indonesia alone, about
100 of the larger Canadian-based companies planned to spend about $90 million, equivalent to
30% of that market.
At the end of 1997, companies of all sizes listed on Canadian stock exchanges held about 280 mineral properties in the region. They held over 180 in Indonesia and about 50 in the Philippines.11
8.5.5.2 East Asia
In 1997, the larger-company mineral exploration market in east Asia, which includes China,
Japan, Mongolia, Taiwan and the Republic of Korea, was valued at about $50 million, or 1% of
the $5.5 billion larger-company market worldwide. The larger Canadian-based companies
planned to spend roughly $30 million, equivalent to more than half the market. They held the
dominant share in China and Mongolia.
Over the past four years, China has become increasingly attractive to Canadian mining companies. In late 1997, there were 30 companies of all sizes listed on Canadian stock exchanges
with interests in 50 mineral properties in that country. About half of their projects involved
gold. The other half involved copper-lead-zinc and a variety of other targets including diamonds, rare earths and zeolites.
8.5.5.3 South-Pacific
In 1997, the larger-company exploration market in the South-Pacific was valued at almost
$970 million, or roughly 18% of the $5.5 billion larger-company market worldwide. Australia
alone accounted for $920 million, or 95% of that market.
The larger Canadian-based companies planned to spend about $40 million in the region, about
three quarters of it in Australia and the balance in the Solomon Islands. In 1997, the larger
Canadian-based companies held about 3% of the Australian market.
At the end of 1997, companies of all sizes listed on Canadian stock exchanges held over 90 properties in Australia.
8.6
OUTLOOK
During 1996 and 1997, a record amount of equity financing was raised in Canada for Canadian
exploration companies. As a result, these companies had the capital to conduct, during 1997,
more mineral exploration programs worldwide than those of any other nation.
Canadian expertise at raising risk capital from investors in Canada, the United States, Europe,
Asia and elsewhere has facilitated the penetration by Canadian companies of the exploration
market around the world. As a result, Canadian companies have diversified their portfolio of
11 The Mining Journal, London (January 9, 1998, p. 24) reported that, according to the Philippines Mines
and Geoscience Bureau, total exploration expenditures in that country in 1997 were US$120 million.
Exploration expenditures in 1998 were expected to reach US$200 million.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
107
mineral projects to well over 100 countries. They conduct more than one third of the world’s
programs for precious-metal, base-metal and diamond exploration, and they carry out the dominant share of exploration activity in Canada, Mexico, South America, Central America, Europe
and the FSU. Nonetheless, Canada remains the country where they are, by far, the most
active.
Although exploration expenditures in Canada have shown some growth since the early 1990s,
Canada’s domestic share of the worldwide market for mineral exploration has fallen from 18%
in 1992 to 11% in 1997. However, Canada’s standing as a destination for exploration investment from worldwide sources remains remarkable given the mammoth growth that has
occurred since the early 1990s in mineral exploration activity in many developing countries.
Canadian companies have a vast number of grassroots, deposit appraisal, feasibility study, construction and production projects around the world. As a result, Canadian suppliers of all types
of goods and services are experiencing unprecedented opportunities to make further gains in
international markets. While the mineral projects of Canadian companies are helping
strengthen the economies of developing countries, they are also creating jobs for Canadians, in
both Canada and abroad, in industries related directly to mining as well as in other industries
that are related only indirectly. Major Drilling Group International Inc. (Figure 47) is a good
example of a company that, early on, saw the opportunities presented by the globalization of
the mining industry.
In mid-1997, new mines under construction and those expected to be built in the near future
around the world were valued at some US$34 billion (Figure 48). At the time of writing in late
December 1997, there was still plenty of momentum in mineral exploration and development
around the world. However, investor uncertainty created by the decline in the price of some
mineral commodities, by a number of corporate scandals, and by economic problems in Asia has
depressed exploration finance markets.
To what extent exploration programs will have fallen short of budgets during 1997 because of
investor uncertainty remains to be seen. However, it is clear that financing new exploration
programs was becoming increasingly difficult as 1997 progressed.
Figure 47
Major Drilling Group International Inc.,
Revenues by Geographic Market Segment, Year Ending April 30, 1991-97
(current $ millions)
90
Latin America
United States
Canada
80
70
60
50
40
30
20
10
0
1991
1992
1993
1994
1995
Source: Natural Resources Canada, based on company annual reports.
Note: The company that is based in Moncton, New Brunswick, completed an initial public offering in March 1995.
1996
1997
108
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
As working capital becomes depleted, many of the smaller companies will be forced to curtail
their exploration and development plans until financial markets recover. Those companies that
have no substantial revenues from production will be especially vulnerable. The incidence of
restructuring, issuer bids for their own stock, adoption of “poison-pill” provisions, mergers and
acquisitions, as well as joint ventures between large companies with sufficient working capital
and smaller companies with properties of superior mineral potential, will likely accelerate for
the foreseeable future.
Figure 48
Worldwide Mine Construction Projects Planned as at Mid-1997
US$34 Billion
South America
43%
Europe
1%
North America
17%
Australia
12%
Africa
14%
Asia
13%
Source: Natural Resources Canada, based on page 3 of the Mining Journal, August 1, 1997.
APPENDIX
Survey of Mineral Exploration,
Deposit Appraisal and Mine Complex
Development Expenditures
HISTORY OF CANADIAN EXPLORATION STATISTICS
In Canada, mineral exploration statistics have been collected, in one form or another, since
1946. From 1946 to 1963, Statistics Canada compiled “cost of prospecting” data for metal
mines for Canada and the provinces. Companies were surveyed from 1964 to 1966, but the
data were not compiled. However, using the filled-out survey questionnaires for those three
years, NRCan was able to estimate expenditures for that period. From 1967 to 1987, Statistics
Canada compiled and published both mine-site and general exploration expenditures, as well
as mine-site development expenditures and other capital and repair expenditures. From 1985
to 1987, NRCan collected detailed field work expenditures. Since 1988, NRCan has been fully
responsible for the survey of non-producing entities that have any type of exploration expenses.
Statistics Canada continued to survey producing firms until 1997. Since then, NRCan has been
totally responsible for the preliminary and forecast survey, and partially responsible for the
annual survey for non-producing as well as producing firms.
The survey of mining and exploration companies was redesigned in 1997 to better describe the
full mineral development cycle and to provide more comprehensive measures of investment in
the Canadian minerals and metals industry. It is now called the “Survey of Mineral Exploration, Deposit Appraisal and Mine Complex Development Expenditures.” New statistics are
now available and include detailed information on feasibility studies and other more technically related costs that were previously excluded. A clearer distinction between the primary
exploration and deposit appraisal phases, and additional information on associated environmental costs, are geared to improve the monitoring of the mineral development cycle.
SURVEY PROCESS
Two questionnaires are distributed each year. For example, for the survey period 1997/98, the
preliminary survey was conducted during the last quarter of 1997 and January 1998, while the
more detailed final survey questionnaires were distributed in early 1998. Results of this final
survey will be compiled during the course of 1998. The preliminary survey provides preliminary results on 1997 exploration activity and a forecast for 1998 that is based on company
spending intentions. The final survey provides a wealth of project-specific information, including specific commodities explored for, type of field work undertaken, related overhead expenditures, type of company involved, joint-venture partners, and other details.
A total of 2486 questionnaires (preliminary survey) were distributed in October 1997. Some
companies receive more than one questionnaire depending on the number of provinces/territories in which they have activities. To avoid duplicate reporting, joint-venture partners who are
not project operators do not report expenditures on such joint-venture exploration. Companies
are now asked to report exploration expenditures for the calendar year surveyed.
The survey is a full census of all the companies involved in mineral exploration in Canada.
Generally, only about 2% of questionnaires are not completed. When this happens, estimates to
replace missing values are provided by the province or territory concerned. However, this 2%
usually represents small or inactive operations; therefore, virtually all exploration expendi-
110
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
tures are covered by the survey. To protect the confidential data provided by respondents, only
aggregate statistics are released. However, specific project information can be added when such
information has already entered the public domain.
DISCREPANCIES BETWEEN PRELIMINARY AND FINAL RESULTS
The time lag between the 1998 preliminary survey conducted in late 1997 and January 1998
and the final survey conducted throughout 1998 may give rise to discrepancies between the two
surveys.
Spending intentions, which are compiled in the preliminary survey, may often be modified by
events that can limit the availability of funds for conducting exploration, such as changing commodity prices, stock market conditions and general economic conditions, as well as the impact
of new mineral discoveries and company-specific factors. As shown in Table 22, the results of
this survey cannot be interpreted as being an accurate reflection of the exploration that will
ultimately be performed in 1998.
Table 22 shows intentions, as well as preliminary and actual expenditures, when available, for
mine-site and general exploration for the years 1986-98. This table demonstrates that, for the
periods 1986-88 and 1993-95, total final expenditures (actual basis) exceeded intentions and preliminary results reported earlier for the same period. For the period 1989-92 and in 1996, this
pattern was reversed. A possible explanation for the 1986-88 period could be that more flowthrough share exploration funding became available than companies had originally anticipated
but, starting in 1989, there was an unexpected decline in the availability of those flow-through
share funds. Similarly, for the period 1993-95, exploration funding was probably more readily
available than originally expected as a result of the interest generated by discoveries of diamonds
in Canada’s North and of nickel-copper-cobalt at Voisey’s Bay in Labrador. Since the 1997 and
1998 data in this table were collected using revised definitions, a subset of data was extracted to
provide a continuation of the previous statistical series that were based on pre-1997 definitions.
DEFINITIONS USED IN THE NEW SURVEY
A number of new definitions were introduced in the new survey to more closely reflect the current realities of Canadian mineral exploration and development activities. These definitions
were developed and agreed upon by federal, provincial/territorial and industry representatives,
and they were tested by companies that volunteered to ensure their relevance and applicability.
Mineral Development Phases (Work Phases)
Exploration expenditures represent all activities and support, including capital expenditures,
carried out (on- or off-mine-site) to search for, discover and carry out the first delineation of a
previously unknown mineral deposit to establish its potential economic value (tonnage and
grade) and to justify further work.
Deposit appraisal expenditures represent all activities and support, as well as capital expenditures carried out (on- or off-mine-site), to bring a delineated deposit to the stage of detailed
knowledge required for a production feasibility study to support a production decision and the
investment required.
Mine complex development expenditures include all mine development, construction, and
machinery and equipment expenditures carried out on a mine property that is in production or
committed to production.
Mine development expenditures include all activities and support carried out on a property that
is in production or committed to production to outline, block out, and gain access to the ore and
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
TABLE 22. CANADA, COMPARISON OF INTENTIONS,
PRELIMINARY AND ACTUAL EXPLORATION EXPENDITURES,
1986-98
Exploration
Expenditures
Intentions
Preliminary
Actual
($ millions)
Actual/Intentions
(%)
1986
Mine-site
General
Total
87.5
431.2
518.7
110.2
483.6
593.8
108.6
589.3
697.9
+35
1987
Mine-site
General
Total
122.6
583.2
705.8
121.5
849.6
971.1
161.0
1 139.0
1 300.0
+84
1988
Mine-site
General
Total
154.7
891.0
1 045.7
138.7
1 107.9
1 246.6
143.0
1 207.0
1 350.0
+29
1989
Mine-site
General
Total
111.7
832.2
943.9
160.0
766.7
926.7
115.3
712.5
827.8
–12
1990
Mine-site
General
Total
150.0
633.0
783.0
107.7
643.5
751.2
112.4
662.3
774.7
–1
1991
Mine-site
General
Total
97.9
548.3
646.2
80.4
514.4
594.8
67.3
464.4
531.7
–18
1992
Mine-site
General
Total
71.2
426.3
497.5
75.4
344.2
419.6
59.4
325.9
385.3
–23
1993
Mine-site
General
Total
70.1
364.5
434.6
78.1
404.9
483.0
64.0
413.2
477.2
+10
1994
Mine-site
General
Total
66.0
470.9
536.9
68.3
561.8
630.1
72.3
555.8
628.1
+17
1995
Mine-site
General
Total
67.9
586.8
654.7
76.9
686.6
763.5
86.4
631.2
717.6
+10
1996
Mine-site
General
Total
79.4
865.8
945.2
98.3
774.2
872.5
99.6
795.2
894.8
–5
1997
Mine-site
General
Total
104.8
771.2
876.0
152.6
651.6
804.2
. .
. .
1998
Mine-site
General
Total
121.5
645.9
767.4
. .
. .
. .
Source: Natural Resources Canada, based on the federal-provincial survey of mining
and exploration companies.
. . Not available.
111
112
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
prepare it for production. Mine development also includes drilling, rock work and support to
extend the known mineral deposits in production or committed to production.
Location of Activity
On-mine-site expenditures represent all activities, support and capital expenditures applied to
exploration or deposit appraisal for an additional and separate mineral deposit on an existing
mine site in production or committed to production.
Off-mine-site expenditures represent all activities, support and capital expenditures applied to
exploration or deposit appraisal that are not located on a mine site that is in production or committed to production. (Off-mine-site includes the sites of closed mines.)
A mine site is an area that can be accessed and exploited from the current or committed installations; hence, the size of this area will vary depending on the commodity under consideration,
attitude (horizontal vs. vertical), type and extent of the deposit(s), and the mining method(s) in
use.
For a mine site to be committed to production, all of the following criteria must be met: (i) a
production feasibility study has been completed; (ii) a formal production decision has been
made by the organization; (iii) the necessary financing is on hand or has been arranged; (iv) all
required authorizations and permits have been obtained; and (v) major pieces of production
equipment have been purchased or ordered.
Surface and Underground Field Surveys and Work (Includes Field Overhead)
Surface and underground field surveys include expenditures associated with geoscientific surveys, drilling, rock work, other field costs, and engineering, economic and feasibility studies. It
includes wages, salaries, fringe benefits, food, accommodation and other services, equipment
rentals, all vehicle expenses, transportation costs (for people and equipment), and all related
technical activities/services. Direct field supervision and project management costs, and all
costs of field work carried out on contract, are also included. All surveys and work done for
environmental purposes are entered under the environment section. This would apply, for
example, to geochemical or geophysical surveys performed to characterize or monitor the environment.
Engineering studies include all expenditures related to the additional studies, tests and pilot
work (mining, milling, dewatering, etc.), plans, designs and appraisals required to establish the
technical feasibility of a mining project.
Economic studies include all expenditures for economic studies (markets, prices, financing, etc.)
required to establish the economic feasibility of a mining project.
Feasibility studies include all expenditures related to prefeasibility project reviews and to the
production feasibility studies required to develop and mine a deposit, and to obtain the required
leases, permits and authorizations (excluding environmental and land access expenditures).
Environment-Related Expenditures
Environmental characterization includes all costs of environmental characterization and assessment (including environmental impact studies) that form part of exploration and deposit
appraisal activities.
Environmental permits include all costs related to the process of meeting the legal and regulatory requirements of environmental assessment and of obtaining permits (including preproduction permits) required for the work program under consideration.
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
113
Environmental protection includes costs for monitoring (additional to normal practices) and complying with regulations and guidelines related to air emissions, liquid effluents, ground pollution,
and wildlife and habitat protection. Environmental fines, if any, are included in this category.
Environmental restoration includes all costs of decommissioning, reclaiming and restoring, and
monitoring, if required, after the completion of exploration and deposit appraisal field work.
Land Access-Related Expenditures
Land access agreements, permits, and damages include all costs related to establishing impact
benefit statements, socio-economic agreements, and other requirements for mine complex development and mine production, and the costs of rights of way, damages and permits for exploration and deposit appraisal work, including all associated legal fees, but excluding all
environment-related costs.
Capital, Repair and Maintenance Expenditures
Capital expenditures for non-residential construction, machinery and equipment include expenditures by the company for work performed by contractors or by the company for its own
account, such as salaries and wages, materials and supplies, and other charges such as engineering and consulting fees. Environmental-related capital expenditures for protection and site
restoration are included in this category.
Non-capitalized repair and maintenance expenditures consist of the gross non-capitalized repair
expenditures on non-residential buildings, other structures and machinery, the costs of maintaining the restored mine site, and the routine care of assets, including environmental monitoring of the restored mine site.
CLASSIFICATION OF COMPANIES
Some of the analysis within this report is carried out according to the following six company
types:
1) Producers: Companies with a producing mine or part ownership in a producing mine in
Canada, and companies that own more than 50% of the shares of a producing mining company. Also includes oil companies or foreign companies with a producing Canadian mine.
2) Affiliates of producing mining companies: Wholly owned or majority-owned incorporated subsidiaries of producers.
3) Oil companies: Oil companies, both domestic and foreign, with non-petroleum exploration
projects in Canada. Oil companies with producing mines are included with producers.
4) Foreign companies: This group excludes foreign-owned oil companies and foreign-owned
companies with a producing mine in Canada.
5) Junior companies and prospectors: This group excludes all of the other categories.
6) Other companies: Canadian-owned companies engaged in mineral exploration, including
forestry, construction and consulting firms, and government-owned mining companies that
do not own a producing mine. This category also includes Canadian-owned companies with
operating mines only in countries other than Canada.
A company is classified into the first of these groups in which it fits. For example, exploration
statistics reported by an oil or foreign company with a producing Canadian mine would be
included in Category 1 (producers), rather than in Category 3 (oil companies) or Category 4
114
OVERVIEW OF TRENDS IN CANADIAN MINERAL EXPLORATION
(foreign companies). Exploration by foreign-owned oil companies would appear in Category 3
(oil companies), and not in Category 4 (foreign companies).
Other sections of the report only distinguish between junior and senior companies. In general
terms, a senior mining company derives its income from mining or other business ventures and
can direct part of that income towards its exploration projects. Junior companies, on the other
hand, usually have no regular source of income and must finance their exploration activities
through the issuance of treasury shares.
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