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Mining News: Explore today for tomorrow’s resources Exploration tops US$700M in B.C., Alaska, Yukon; Teck leader says supply-side struggles bodes well for continued growth Shane Lasley Mining News
From college students seeking their first job in the minerals industry to executives of the world’s leading mining companies, a record-setting 7,003 people packed the Westin Bayshore Hotel in Vancouver, B.C., Jan. 24-27 to attend the Association for Mineral Exploration British Columbia’s 2011 Mineral Exploration Roundup.
“The theme this year is ‘Exploring Today for Tomorrow’s Resources’ – it couldn’t be more important a theme, and it couldn’t be more important an activity,” Teck Resources Ltd. President and CEO Don Lindsay told the crowd.
Perhaps B.C. Minister of State for Mining Randy Hawes summed up the Roundup theme best when he said, “The reason we do exploration is to find the minerals to develop into mines – that is where the big payoff is.”
Though the big payoff may be in the producing mine, the B.C. mining minister took a moment to recognize the prospectors that make the initial discoveries.
“The prospectors are a really important part – they are like incubators – they make little finds that are developed finally, hopefully, into mines. We value the prospectors as much as we value those out there doing the big exploration,” he said.
Explorers large and small are busy seeking tomorrow’s resources in British Columbia, Alaska and the Yukon Territory. Representatives of these three jurisdictions outlined a combined US$700 million spent on exploration in 2010.
Remarkable turnaround in B.C. Hawes told Roundup attendees that an estimated C$322 million was spent on seeking tomorrow’s mineral resources in British Columbia last year. This represents the third-highest total in the province’s history and a 109 percent jump from C$154 million spent in 2009. In comparison, B.C. mining exploration expenditures in 1999 totaled only C$25 million.
“This is a remarkable turnaround for the mining industry, which shows continued steady growth from the lows of the 1990s,” said Hawes, who also proclaimed the fourth week in January Mineral Exploration Week in British Columbia.
He attributed the quick turnaround in exploration spending in B.C. to the provincial government’s efforts to cut taxes and red tape.
“Policies put in place by this government have helped give the minerals sector the resilience to withstand the economic downturn that we’ve experienced recently, providing thousands of high-paying jobs in all corners of the province,” he explained.
In addition to the nearly one-third of C$1 billion spent on exploration, B.C.’s operating mines produced an estimated C$6 billion worth of minerals last year. Coal and copper were the top commodities mined – followed by gold, silver, zinc, industrial metals and aggregate.
“Coal was 60 percent of the C$6 billion in mine product value last year,” said Paul Wojdak, regional geologist for the Northwest Region of B.C. Ministry of Energy, Mines and Petroleum Resources.
Driven by demand in the Far East, B.C. is the second-largest coal exporter in the world.
“Demand for our mineral resources and our coal from Asia is growing exponentially, and we are a victim of our own success. The infrastructure to ship coal and minerals has been stretched to the point that we have to have major expansion, and we have to have it now,” Hawes explained.
The mining minister is calling for the federal government to approve expansion plans for the Ridley Terminal in Prince Rupert. Contracts with U.S. coal producers has tied up about 40 percent of Ridley’s capacity, causing strain on in-province producers who want to get their product to market.
More than C$1 billion was spend on construction and expansion at mines in the province last year.
Alaska exploration growth continues Though Alaska’s mineral exploration growth in 2010 was not as robust as B.C.’s, it still paced worldwide spending increases. Exploration expenditures in the Far North state climbed to at least US$228 million last year, up about 27 percent from US$180 million spent in 2009.
“If we look at exploration spending by deposit type, it is led by porphyry coppers at 40 percent, (followed by) intrusion-related deposits like Donlin Creek and Fort Knox at 33 percent and then a host of other types of deposits,” Alaska Division of Geological & Geographical Surveys Senior Minerals Geologist Dave Szumigala told the audience.
The senior geologist said the biggest exploration project in Alaska in 2010 was a nearly C$25 million program undertaken at the Pebble Project in Southwest Alaska. The Pebble partners Northern Dynasty Minerals Ltd. and Anglo American plc spent a total of US$73 million on the project last year, about a third of which went to exploration. The remaining funds were spent on environmental and engineering work.
“If plans go forward as the Pebble Partnership believes, they are going to start permitting late this year or early in 2012,” Szumigala said.
Production in Alaska is estimated to top US$3.04 billion in 2010, shy of the record US$3.37 billion produced in 2007.
“We have six major producing mines, three major development projects, three advanced exploration projects and somewhere around 60 significant exploration projects with about 24 of those spending a million dollars or more in 2010,” Szumigala said.
“Most people think of Alaska as a gold producer, but zinc leads the way with just over 40 percent in value, followed by gold, lead, coal, sand and gravel,” Szumigala explained.
The Red Dog Mine in Northwest Alaska, owned by Teck and NANA Regional Corp., accounts for about 55 percent of Alaska’s mineral production in 2010. It is estimated that Red Dog produced 538,000 metric tons of zinc, 109,900 metric tons of lead and an estimated 6 million ounces of silver last year.
While primarily a silver mine, Hecla Mining Co.’s Greens Creek Mine in Southeast Alaska also contributes to Alaska’s zinc production.
Szumigala told the Roundup attendees that in addition to producing 7 million ounces of silver in 2010 Greens Creek’s output includes “very significant zinc, lead and gold.”
The senior geologist said gold production in Alaska topped 850,000 ounces in 2010. Sumitomo Metal Mining’s Pogo Mine and Kinross Gold Corp.’s were the top gold miners at around 385,000 ounces and 354,000 ounces of gold respectively. Coeur d’Alene Mines Corp. began production at its Kensington Mine in July, contributing about 43,000 ounces of gold to the state’s 2010 production. Placer miners added an additional 60,000 ounces for the year.
Gold dominates Yukon exploration “It’s been an incredibly busy year in the Yukon,” Mike Burke told the Roundup crowd during his final presentation as the head of the Minerals Services Division of the Yukon Geological Survey.
“I am leaving the Yukon government, and I am going to work with industry so I started working on a ‘forward looking statement,’ but I don’t start until next week so I didn’t quite get finished,” Burke quipped.
Without the need for legal disclosure, Burke went on to outline some C$160 million worth of exploration carried out in the Yukon Territory in 2010. He said gold, accounting for about 60 percent of the exploration dollars spent, was the most sought-after mineral in the territory last year – followed by silver, copper, zinc-lead, molybdenum and tungsten.
“Yukon’s well endowed with minerals, and people are still out there looking for them; it’s just gold dominated the scene (last) year,” he said.
Burke said the excitement around the discoveries made in the White Gold District and the Selwyn Basin Gold District fueled much of the robust gold exploration and frenzied claim-staking in the Yukon.
“We staked more claims in the Yukon this year than were in good standing last year. We are up to 160,000 claims staked, that is only eight percent of our lands. Although it is the biggest exploration staking rush in history, there is still a lot of ground left, and we believe there is a lot of prospective ground that has been opened up by these new discoveries,” he said.
Burke told Roundup attendees that the White Gold District, anchored by Kinross’ White Gold property, likely encompasses the entire Dawson Range, leaving plenty of area for new discoveries.
The exploration by ATAC Resources Ltd. at its Rau property in the Selwyn Basin have uncovered the Tiger and Osiris zones, each with its own distinct style of mineralization. Osiris bears many of the characteristics of Carlin-style gold, providing a new model for gold seekers.
Burke pointed to the Minto, Bellekeno and Wolverine as examples of successfully turning exploration spending in the Yukon into operating mines.
“If you can’t turn those exploration dollars into mines, you are wasting your money, and that’s not the case in the Yukon,” he said. “Three mines in production in the Yukon, it is nice to see those mines coming on stream as a result of those exploration dollars.”
Burke left the Yukon Geological Survey Feb. 1 to become chief geologist of Golden Predator Corp..
“Certainly I have enjoyed working for the government, but I am really looking forward to being part of the discovery team, instead of congratulating them,” he observed.
US$1 bllion in 2011 spending Early indications are exploration expenditures in British Columbia, Alaska and the Yukon could well reach US$1 billion in 2011.
Hawes, who a year ago – to the surprise of his staff and other B.C. officials – predicted 2010 exploration in the British Columbia would top C$300 in 2010, is making another bold forecast for 2011.
“Now staff will really cringe. I would really like to see us hit C$500 million (in exploration spending) next year. And I think with the help of all of you and the interest we have gotten in ensuring that British Columbia is a real leader in mining, I think we are going to hit that number,” the B.C. mining minister said.
While most junior companies are busy raising funds, brokering joint venture deals and formulating exploration plans for 2011, early indicators point to continued exploration growth in Alaska.
Several companies – including Corvus Gold Corp., International Tower Hill Mines Ltd. and Millrock Resources Inc. – have reported exploration budgets in excess of US$10 million for programs planned on their Alaska properties. Several other companies are expected to announce budgets for their Alaska projects that top US$5 million in 2011. The Pebble Partnership, Alaska’s biggest mineral explorer in 2010, has not yet announced its exploration plans for this year.
A number of companies also are expected to invest in multimillion-dollar exploration programs on their properties in the Yukon. Kaminak Gold Corp. has already announced that it will spend C$15 million on its Coffee Project in the White Gold District and ATAC Resources Inc. Feb. 8 reported a C$25 million financing, which it plans to spend on continued exploration at its Rau property. Kinross, which spent about C$14 million on exploration at its White Gold Project in 2010, is expected to continue to aggressively explore those properties.
Miners struggle to produce capacity Lindsay told the Roundup crowd that a short supply of significant metal discoveries combined with producers having a hard time keeping pace with the world’s minerals needs bodes well for continued demand for new minerals projects.
“We (the mining industry) haven’t had that much success, rightly or wrongly, despite multi-billion-dollar exploration budgets worldwide – about $12 billion or so worldwide, yet few major discoveries in the last 10 years,” the Teck leader said. “And with all the challenges that we have day-to-day – with the equipment failures, landslides, avalanches, floods, the tragedy you see in Australia, ports and rail, strikes and other issues you run into, ore bodies that twist and turn and disappear, and all the different challenges we have day-to-day just to produce the capacity we already have; let alone trying to expand that on a brownfields basis; let alone to try to build something new or a new greenfields project – it’s tough.”
Though the demand side may be unpredictable, the supply-side struggles will keep minerals prices high, which bodes well for the companies exploring today for tomorrows resources, Lindsay said.
“So, I think one of the reasons commodities prices have been high and look like they will be stronger for longer is simply because it is tough on the supply side to keep things going,” he explained. “I don’t know what is going to happen on the demand side, it is always going to be cyclical, but I know this; we are probably going to get more challenges on the supply side, and that, in itself, puts a floor on commodity prices. That is an indication supply is going to be tight for some time, but it also is an indication that exploration budgets are likely to be high, too.”
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