As the spring issue of AME’s Mineral Exploration magazine goes to press, a successful 2017 AME Roundup conference has just completed, at which we welcomed 5,834 registrants from 43 countries around the world. Importantly, the conference displayed a sense of optimism about the year ahead, reflecting improving capital markets and growing investor interest in British Columbia’s mineral exploration and development industry. As markets continue to turn, it will be important for all of us to reinvigorate the sense of passion, pride and confidence that has long been a hallmark of our sector, and for government to clearly and publicly reaffirm that the province is open for mineral investment.

While recovery within the exploration and development sector has thus far been uneven and commodity-dependent (led by higher prices for gold, zinc, metallurgical coal and, more recently, copper), there has been a growing trend toward new investment coming into the industry. B.C.-based exploration and mining companies with international projects, such as Reservoir Minerals, JDL Gold and Anfield Gold, represented some of the top financings on the TSX-V last year.

But the real measure of any sustained upturn for our sector is on-the-ground exploration expenditures, particularly those directed toward grassroots and early-stage exploration. Although 2016 delivered a fourth consecutive year of declining mineral exploration expenditures overall, down 26% to $205 million,1 a deeper look at the data shows some promising trends.2 Of particular note is the number of advanced-stage projects with high expenditures in recent years that have now advanced beyond the exploration phase. For example, B.C. experienced significant private sector capital investment in construction-phase projects in 2016 – such as Pretium Resources’ Brucejack gold project in the Golden Triangle, and JDS Energy & Mining’s Silvertip silver-lead-zinc mine in northern B.C.

In fact, some $150 million of the $205 million invested in mineral exploration in B.C. last year was incurred at cost- intensive later-stage exploration projects. This was reflected in significant public financings for the likes of Seabridge Gold and IDM Mining in the Golden Triangle, and Barkerville Gold Mines in central B.C.

Of the 177 exploration companies active in B.C. last year, 87% were junior companies, mainly publicly trading with market capitalizations below $10 million. Of these, 73% were focused on grassroots and early-stage exploration for 38 different commodities – primarily gold, silver, copper, zinc, lead, molybdenum and coal.

Financings in support of earlier-stage exploration projects and commodities other than gold were harder to achieve in 2016. That said, Westhaven Ventures, Dolly Varden Silver and Colorado Resources all achieved market financings that prove opportunities are beginning to expand beyond the later-stage projects. As financial and commodity markets continue to recover in 2017, I suspect we will increasingly see a shift in exploration focus to less capital-intensive grassroots and early-stage exploration.

Reviewing 2016 investment data also provides evidence of an increased focus on the Americas by some majors, and – in particular – a renewed interest in B.C. For example, the Canadian subsidiary of Daewoo International Corp. invested in Serengeti Resources’ Kwanika project last year. More recently, Antofagasta plc signed an exclusivity agreement with Evrim Resources on its Ball Creek project.

Total expenditures on grassroots and early-stage exploration projects in B.C. increased to $57 million in 2016, up from $40 million in 2015. Of this total, $15 million was invested in grassroots work (or 7% of all expenditures), while $42 million was focused on early stage activities. By way of contrast, when exploration spending peaked in B.C. at $681 million back in 2012, grassroots activities represented only 2% (or $13.6 million) of the total.

It has been suggested that at least 20% of exploration expenditures must be directed toward grassroots exploration in order to sustain B.C.’s mining industry by making quality discoveries with the frequency and number to replace mining operations where orebodies are exhausted. So although these early signs of increased investment into grassroots and early-stage exploration are encouraging, policies aimed at nurturing and growing this trend must continue in order to sustain and grow our industry.

B.C. has a diverse mineral endowment and an experienced exploration sector that enjoys many competitive advantages. These include access to good geoscience, a legacy of exploration and development excellence, political stability, good regulatory processes, safety standards established through the Mines Act, and a range of other advantages – such as excellent location, growing infrastructure, legal structures and tax incentives.

Despite these attributes, B.C.’s share of exploration spending in Canada dropped to 14% in 2016 from a peak of 22% in 2014. This is of concern: there is a very real requirement not just to maintain our sector, but to grow our presence in B.C. in order to identify new orebodies upon which the mines of tomorrow can be developed. Existing mining operations in B.C. collectively generated $7.7 billion in gross mining revenues in 2015, including $476 million in annual payments to government (down from a high of $9.9 billion in revenues and $674 million in payments to governments in 2011).3 Modern mines are powerful economic engines that the province can’t afford not to replace.

Mineral exploration, of course, is a risky and speculative business that does not generate operating revenues in the near term. As a result, investment in earlystage exploration tends to lag behind other mining investment when markets are risk averse, as they have been in recent years. In addition, as the regulatory, environmental and stakeholder hurdles facing mineral explorers and developers increase, it takes more funds than ever to make and advance a mineral discovery.

Tax incentives, such as the flowthrough share tax credit and the B.C. mining exploration tax credit, which have been renewed by the province through 2017 and December 2019,4 respectively, and the recent $10 million in new funding for Geoscience BC over two years that boosts mineral, coal, and oil and gas exploration investment in the province, will assist the exploration business.

Government must clearly and publicly reaffirm that the province is open for mineral investment.

But to attract, grow and retain investment, we must demonstrate that exploration and development projects in B.C. can be advanced efficiently, without undue roadblocks. There remain certain inconsistencies and unpredictability in British Columbia’s regulatory and permitting regime for exploration and development – in particular, with respect to the rights of mineral claim holders and government efforts to negotiate agreements with First Nations. If unresolved, these issues could well diminish the proportion of total mineral exploration expenditure that B.C. attracts.

AME will be working hard this year with government on behalf of our members to ensure that regulations are clarified and adhered to in order to provide the long term stability that our industry requires. We will also continue to work with the province’s First Nations people to support the types of partnerships that have made Canada’s minerals industry the No. 1 employer of First Nations people in the country.

With a provincial election upcoming in May, B.C. and its policies will be under the spotlight in 2017. AME will be working with the Mining Association of BC and others to keep positive, investor-friendly policies front and centre with candidates over the next few months. Our industry remains a vital and committed part of rural economic development in the province, bringing well-paid jobs and opportunities to local communities and First Nations alike, and delivering benefits to all British Columbians. We invite you to join our efforts to ensure that the political landscape is positive and welcoming for the minerals sector and our investors now and in the future.

It is still too early in the year to determine how many of B.C.’s 259 exploration projects will be funded in 2017. However, with capital markets and outlooks for commodities improving, we have every hope that 2017 will be a year of renewed growth and success for our business.

I thank you, our members, for your enthusiasm and support as we enter a pivotal year for mineral explorers in B.C., and wish you the best for a productive and successful 2017 field season.

  1. Geoscience/PublicationsCatalogue/ InformationCirculars/Pages/IC2017-1.aspx
  2. As compiled by the Ministry of Energy and Mines along with AME and Ernst & Young LLP (EY), which is a new collaboration in 2016 and involves some differences: The new survey does not capture exploration expenditures for aggregates (previously done for the Southwest region only), and allows respondents to partition expenditures (e.g., grassroots 60%, advanced 40%). For details, see EY’s British Columbia Mineral and Coal Exploration Survey 2016 Report viewable at
  3. mining-industry- british-columbia.html