Gold slump hurts Yukon, base metals activity up

A swing back to base metals and a renewed interest in copper highlighted the past year’s mineral exploration season despite a significant downturn, a federal geologist told the annual Geoscience Forum here recently.

Geologist Trevor Bremner said the Yukon had many grassroots programs and advanced projects this year, with numerous feasibility and prefeasibility studies based on 1988 work.

With high copper prices, Yukon copper exploration has resumed for the first time in 18 years, Bremner told more than 150 mining industry representatives in a standing-room only session at the forum.

The $18 million spent on Yukon mineral exploration this year was a major drop from 1988, when investors injected a record $50 million into the territory. Mining is the Yukon’s largest private-sector employer.

In the federal Northern Affairs department’s 1989 Yukon summary, released at the Whitehorse forum, geologists note that only 15 diamond drill exploration programs were carried out this season, compared with more than 30 in 1988.

To the end of September, claim staking was down 60% to 4,000 claims from about 10,000 over the same period in 1988.

“The slowdown in activity is attributed to low prices for gold and silver, changes to the structure of the flow-through share system, high interest rates which encouraged other forms of investment, and the poor performance of the Vancouver Stock Exchange,” the report states.

On the positive side, the report notes that Curragh Resources’ Faro lead-zinc mine and Canamax Resources’ (TSE) Ketza River gold mine operated at capacity all year, with several smaller operations producing coal, jade and rhodonite.

Strong base metal prices spurred exploration for zinc, nickel, copper and lead. Work was done on at least 64 separate properties, although more than 75% of exploration dollars were spent by six major companies on a few large projects.

Of the remaining exploration dollars, gold accounted for about 27% and nickel for about 3%.

Federal geologists pointed to Curragh’s development on its Vangorda, Grumm and Dy lead- zinc-silver deposits, the Curragh- Hillsborough Resources’ (TSE) lead-zinc-silver project at Mount Hundere, and Total Energold’s (TSE) O’Brien gold property at Antimony Mountain as some of the most significant projects.

The most impressive new mineral showing this year is a zinc- silver deposit first uncovered by First Yukon Silver Resources near Swift River, the report says.

As well, Placer Dome’s (TSE) agreement to acquire an interest in Skukum Gold (TSE) is expected to generate a higher level of activity in the Wheaton River district next year.

Yukon Mines Minister Piers McDonald said that despite the exploration slump, eight deposits are at the feasibility or prefeasibility stage, an unprecedented number in the territory’s history.

They’re also diversified between 12 metals, he told the forum, and spread across the Yukon. Perhaps one or two could become producing mines in the next few years, he said.

Although United Keno Hill Mines’ (TSE) silver mines in his Mayo riding closed down earlier this year, McDonald said, “the industry is developing and is becoming more stable and less susceptible than the boom-and-bust cycles we’ve experienced in the past.”

He cited a recent study by the Centre for Resource Studies showing that return on mineral investment is 32-60% in the North, compared with 16% in the South.

Al Doherty, president of the Yukon Chamber of Mines, said that although exploration was down, most work was done on properties of merit.

The industry faces new legislation next year linked to the native land claims settlement, he noted, such as a Surface Rights Act and a new development assessment process. This worries the industry a bit, he said, although investment hasn’t been affected.

Doherty said this legislation is important to the entire Canadian mining industry because some planned changes may be cited as examples in southern Canada.

“The industry nationwide should be watching carefully what’s developing here in the North,” he said.

Access to land continues to be a major concern for Yukon mining, he said, with 17.9% of land withdrawn from staking — one of the highest percentages in Canada. (With the settlement of native land claims, some of this land will be freed up for staking again.)

And Doherty said there are more territorial restrictions in sight in the land-use planning and heritage areas.

Environmental issues remain at the forefront for the mining industry, he said. At a national conference Doherty attended last spring, he said, an editor of The Economist told him the 1990s will be tough on the industry.

“Change has occurred in the mining industry,” he said, “but we just haven’t communicated it well to the public. The onus is on the industry.”

The Yukon government doesn’t seem to have the transfer of mineral programs from federal to territorial responsibility at the top of its agenda, Doherty said, and the federal government is being cautious in the meantime.

Registration at the Nov forum, the largest annual event for the Yukon mining industry, was up dramatically over last year. More than 250 people from within and outside the Yukon registered compared with about 175 in 1988.