B.C. exploration expenditures reaching more diversified portfolios
The prospects for new discoveries leading to new mines in British Columbia were bleak just a few short years ago. Investment in early-stage exploration was nowhere near where it should have been to replenish reserves for the future. That began to turnaround in 2017 with improved macroeconomic conditions and ﬁnancial markets further opening to the junior sector. In 2019, more projects started to progress through the latter stages of the exploration cycle bringing forward the possibility of new developments in the near future.
The 2019 British Columbia Mineral and Coal Exploration Survey shows that while positive momentum gained from spending in 2016-2018 flattened last year (down 1%), there was a 10% jump in the number of projects. Companies are making shifts across the province and into more diversiﬁed portfolios, driving a number of new and continuing trends.
BC poised for a future of diversified metals
Growing demand for electric vehicles and green energy led to a global uptick in demand for base metals. The 2019 survey identiﬁed exploration targeting approximately 32 metals, industrial minerals and coal. And base metals now comprise of 39% of total exploration activity in B.C. Gold still attracts the largest exploration spending for the region, but data shows investors are moving more investments towards copper, silver and nickel deposits.
Meanwhile, coal exploration continues to face downward pressure. Aside from a brief uptick, investment decreased last year – extending a trend that began in 2012.
Northwest region catching eyes
Copper and nickel exploration in the Northwest region – which saw the highest growth last year, owning 55% of the province’s total exploration expenditure – is, in part, responsible for the increase in diverse investment. This region continues to attract exploration activity as investors capitalize on high-grade discoveries supported by investment from major ﬁrms, partnerships with Indigenous groups and ongoing infrastructure development. This, coupled with possibility for M&A activity and new infrastructure, continues to drive development in the region. Recent examples include:
- Steady increases in investment from majors driving M&A activity, such as purchases from Newmont and Newcrest Mining, and a focus on junior mining opportunities like GT Gold, Garibaldi Resources and Ascot Resources.
- Continued investment in new infrastructure, including the paving of the Stewart-Cassiar Highway, the opening of ocean port facilities for export of concentrate and the completion of a high-voltage transmission line.
- Government funding and commitment to the continuation and expansion of the BC Regional Mining Alliance.
Although growth has been stagnant at a local level, Canada’s national exploration expenditure slid into fourth in global rankings – falling behind South America, Australia and Europe/Mainland China – for the ﬁrst time since 2001. As B.C. looks to attract greater national and global investment, there needs to be better collaboration between industry, government and communities to capitalize on similar opportunities demonstrated in the Northwest region to drive investor attention.
A healthy exploration industry is foundational to future investment, job creation and community development – plus fundamental to maintain a flow of new projects and source new mine development opportunities. A shift in investment towards copper and other base metals provides reason for optimism in B.C., but these last few months have proven that many factors can quickly influence exploration activity in the year ahead.
IAIN THOMPSON is the EY Canada Mining and Metals Advisory Leader. He is based in Vancouver. For more information, visit www.ey.com/ca/mining.