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AME BC reports progress made on key policy issues amid rising commodity tide

AME BC chairperson and CEO Gavin Dirom

AME BC chairperson and CEO Gavin Dirom

Photo by Henry Lazenby

28th January 2017

By: Henry Lazenby

Creamer Media Deputy Editor: North America

     

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VANCOUVER (miningweekly.com) – Optimism has returned to the junior exploration industry, based on changed market fundamentals and more buoyant commodity prices, the Association for Mineral Exploration British Columbia (AME BC) president and CEO Gavin Dirom tells Mining Weekly Online in an interview.

“It’s amazing what difference a year makes, because it was really tough last year. Perhaps metrics will prove that last January was when the TSX turned, signalling investments starting to come back to the industry, but this year the atmosphere is alive with investors actively interested in grassroots projects," Dirom said on the sidelines of the association’s yearly Roundup convention, held in Vancouver, and which about 6 000 delegates attended this week.

Dirom noted reports by exhibiting juniors that there was a lot of interest in projects, with information materials flying off exhibitor stalls at a rate simply not seen in recent years. “The optimism is real and is based on fundamentals that have changed the whole dynamic."

The optimism, however, came with caveats, as outlined by several of the conference’s keynote speakers.

Goldcorp CEO David Garofalo mentioned in his talk that while exploration was critically important to the major, it would continue to do so by proxy. It aims to establish relationships with between 15 to 20 juniors that take on the exploration risks, and further down the line add value to Goldcorp’s project pipeline. Mining veteran and TMAC Resources chairperson Terry MacGibbon emphasised the importance of everyone in the industry doing exploration, saying it was incumbent on all industry players to replenish the industry’s project pipeline. Teck Resources’ president and CEO Don Lindsay outlined how volatility was the new normal, especially as had been seen with steelmaking coal in recent quarters.

“These are factors that still challenge the industry despite the certain sense of optimism. Because the bear market was so deep at about 1 200-plus days, depending on which metric you use, it will take some time for the optimism to flow over into action, with increased exploration budgets and new drilling taking place on sites,” Dirom stated.

“We are seeing increased demand for the commodities, particularly in base metals such as copper and zinc and also precious metals such as gold, and it’s all commodities that are being mined here in British Columbia. So, things are looking better,” he added.

POLICY PROMOTION
Dirom outlined three critical policy issues the AME BC had been lobbying all levels of government on over the past 12 months – access to capital, access to land and permitting and the federal environmental assessment review process currently under way, noting that these were the ingredients to make mining jurisdictions work.

While many AME BC members are chiefly concerned with ensuring survival over the past year, either by preserving or acquiring capital, the association's management had been actively lobbying governments on maintaining and expanding the regulatory incentives the provincial and federal governments have given the industry.

“There was concern among members with the changeover of the federal government in 2015; that it would result in certain tax incentives not being repeated or implemented. Through most of the summer and the fall, there was a lot of advocacy, on the flow-through share programme particularly, and the Mineral Exploration Tax Credit at the federal level, to make sure Ottawa understood the benefits and maintained those incentives and maybe created more long-term certainty around it,” Dirom said.

AME BC has made a strong case for maintaining and expanding the incentives, which Dirom believes have been well understood and received by policy makers. Despite receiving some assurances that the incentives would be maintained, no decision has been reached yet. He pointed out Canada’s rich mineral wealth provided plenty of examples by which to clearly demonstrate to government the benefits of these tax incentives.

In British Columbia, the AME BC worked closely with the provincial and federal governments to implement the Canadian Exploration Expense (CEE). The former federal government made the announcement that environmental studies and engagement costs would be considered as part of exploration expenditures and qualify for tax credits. Implementation never followed on federal level, but British Columbia Premier Christy Clark this week announced that the Income Tax Act will be modified to that the CEE incentive would be implemented on provincial level forthwith.

The AME also continued to work on securing support for Geoscience BC, for which the provincial government also this week set aside a further C$10-million over two years. The organisation provides fundamental information to AME BC’s members, from which they derive new mineral targets to explore.

“Government is seeing the benefit of Geoscience BC at a time when the industry is still in ‘recovery mode’,” Dirom pointed out.

LAND ACCESS
The AME BC has also been articulating the issue of access to land to all levels of government. It remains a concern in British Columbia in particular, especially when innovative tools are available to easily make new discoveries without disturbing lands. “Since seeing the metrics as presented in our report on the matter last year, Victoria has responded positively and is working with communities to establish improved access to land for mineral exploration,” Dirom advised.

The report highlighted how restrictive land access and use regulations and policies are putting the future mineral exploration and development industry at risk. Today, more than 18% is closed to exploration activities, while access to another 33% of the provincial land base is severely limited. “Discovering hidden mineral deposits requires access to large tracts of land to explore, but the actual land used for mining purposes is only 0.05% of British Columbia, of which more than 40% is under reclamation,” Dirom noted.

“There’s understanding now that we need to tackle this problem – it will take time, but we’re making progress,” he said.

On a national scale, the mineral reserves are declining. This is not a healthy proposition to sustain the industry, underscoring the importance of good access to land, and the need to avail that land for exploration to enable discoveries to be made to replenish the reserves, Dirom argued.

Meanwhile, environmental assessments and the permitting process is critically important to help companies succeed. He noted that if these processes were not effective and efficient, the industry would be at a severe disadvantage on the international stage.

“I think Victoria is making appropriate resources available to improve the permitting process. The challenge, though, is the environmental process review being undertaken on the federal level from the latter part of 2016 onwards, for which we submitted a paper – we are not sure what the outcome will be, but it is likely that there will be some changes to the environmental process in Canada as we know it, which would impact every territory and province,” Dirom stated.

“It is important for us to work with Ottawa and the province to make sure the changes are as harmonised and streamlined as possible, and that their goals – which is essentially to build stronger and more meaningful relationships with First Nation communities – are reached,” he said.

Edited by Creamer Media Reporter

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