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TORONTO (miningweekly.com) – Investment in the grassroots level of prospecting and early-stage exploration are critically needed in British Columbia to uncover new deposits that, in turn, would encourage more investment in advanced exploration and resource development, the Association for Mineral Exploration British Columbia (AME BC) president and CEO Gavin Dirom said.
He told Mining Weekly Online that despite the province attracting significant investment in advanced-stage exploration and resource development, there is a critical need for more investment in grassroots level prospecting to ensure that the province’s mining output remains on an upward growth trajectory.
MONEY MAKES THE DRILLS GO ROUND
Dirom said that British Columbia had succeeded in recent years in attracting more exploration investment. He said the province had managed to lift investor confidence in the past five years or so, attracting more investment than what it typically did in the past, which was a significant development.
In exploration alone, British Columbia last year attracted investment totalling about $476-million. Although it paled in comparison to the decade record set in 2012, when exploration investment topped $680-million, Dirom pointed out that it still represented about 22% - possibly growing to 24% - of all exploration expenditure across Canada.
During the 1990s and at the turn of the century, the province attracted a meagre 5% to 6% of the country’s total exploration spending.
According to Dirom, the most critical challenge the junior prospecting and exploration industry has to deal with at present, is the persistent lack of venture capital over the last two to three years.
“It is fundamental to everything really; the whole industry comes to a grinding halt without it,” he pointed out.
Despite the gloomy market environment of the recent past, Dirom pointed to signs that things have been improving over the last three to six months; whether it is in the collective venture market, hopes buoyed by specific projects, or because of certain takeover deals, signs are emerging.
“From an industry investment perspective, these are good indicators that the worst is behind us and that confidence is returning. We saw that at the Mineral Exploration Roundup 2014, at the Prospectors and Developers Association of Canada’s (PDAC’s) 2014 convention, and also at a recent smaller conference of the Kamloops Exploration Group Society, comprising about 500 British Columbia-based geological experts, where there was collective optimism,” he said.
He noted that there had not only been a recent uptick in the public market, but also in interest from the private investment world, which was funding a growing group of companies.
Over the past 60 years, major miners were mainly funding their own exploration projects. This changed over the last 20 years to become the responsibility of junior firms; but, according to Dirom, exploration might once again become the responsibility of the majors, as many juniors are now either failing, or being snapped up by intermediate and major miners.
“We saw that with Teck Resources at the PDAC. They were definitely putting out a welcome mat for folks that have prospective projects, to further that potential business relationship,” Dirom said.
WELL-HEELED BRITISH COLUMBIA
Dirom pointed out that the fundamentals for resource investment in British Columbia are positive. This includes the geographic location of the province, which provides shipping access and a gateway to developing markets in Asia.
Further, the province itself is vast, being the size of France and Germany combined. Add to this the numerous fjords and mountains, which increase the explorable surface area, and one could find exceptionally rich deposits across almost every commodity group.
“Despite the province being explored for more than 150 years, we believe that it is still underexplored. Whether it is gold, copper, coal etcetera, it is here in extremely large endowments. Mines such as the Thompson Creek-owned Mt Milligan copper/gold mine, and Imperial Metals’ Red Chris operation illustrate the fact that there still are world-class deposits out here that need to be found,” Dirom said.
In monetary value terms, the estimated total gross revenue from mineral resources mined over the last 150 years in British Columbia, has been estimated at between $700-billion and $800-billion. Over the last five to ten years, the province has been averaging gross revenue of about $8-billion to $10-billion a year from the industry.
“That’s significant, and knowing that there are currently about 300 exploration projects being undertaken, this can only grow,” he enthused.
“Besides the natural advantages of the province, combining that with the province’s human expertise, whether in the technical, financial, business, academic or legal fields, we have nurtured ourselves out of the ‘dry spell’ of the 1990s, when we weren’t attracting as much investment. We certainly now stand a chance of attracting 30% of Canada’s [total exploration] expenditure,” Dirom said.
Also, despite certain areas being isolated from infrastructure, the province has excellent infrastructure, including excellent road, electricity and communications networks.
Dirom further pointed out that the province had an attractive, progressive tax regime, favouring the resources industry.
Tax incentives such as the mining flow-through share programme or the mining exploration tax credit, and even incentives for combating the destruction resulting from the mountain pine beetle on the forestry and tourism industries, were attracting a lot of attention and investment.
REVENUE SHARING
Another progressive ingredient to the resources industry in British Columbia, which is often not considered from the outset, is sharing the wealth generated by a given project, Dirom said.
He noted that whether it is in forestry, oil and gas or mining, Aboriginals and the provincial government have worked out an industry-leading strategy to share a part of the revenue through the mineral tax, and through Economic and Community Development Agreements.
“These agreements are quite uncommon in the rest of the world, and certainly precedent-setting in Canada and North America. Now, First Nations have the ability to negotiate a portion of the mineral tax to go to them,” Dirom said.
Several such deals have now been struck, including examples such as Mt Milligan, New Gold’s New Afton mine, and Copper Mountain.
“This is a very positive development, and sometimes they are joint between several communities, which helps to create more predictability and security for projects. It also helps to create better investor confidence in the province. It is sound public policy.”
Despite several pending land claims, which are slowly progressing between the First Nations, the province and federal governments, Dirom said that he had found the business community – including Aboriginals – was getting on with business in the mean time by executing such agreements.
Importantly, he noted that unlike several other jurisdictions around the world, there is a rule of law and a procedural approach to negotiate and settle disputes.
SKILLS DEVELOPMENT
Dirom estimated that about 4 000 new jobs would become available over the next five to ten years in British Columbia, as older individuals retire.
“Skills development and mentoring is of critical importance now, to facilitate the knowledge transfer before the skills exit,” he said.
He noted that the province had set up a human resources task team taking a multistakeholder approach to ensure the skills across all trades were being developed.
Retaining skills is also a significant challenge in the province and in Canada as a whole. Dirom noted that British Columbia had indeed managed to repatriate many skills that sought experience elsewhere in the 1990s.
“We are working to create awareness among new Canadians and foreigners to attract them to British Columbia. We have a growing industry, with plenty of opportunity for a lot of different skill sets,” he said.