EXPLORATION ’87 (March 02, 1987)

Here, some of Canada’s major mining companies explain where their 1987 exploration funds are going.

Gold fever has swept Canada. Never in history has so much money been spent looking for the precious metal. Reliable estimates have put flow-through financing at $750 million this year, and another $100 million in non-flow through funds can probably be added to that. Compare that to the approximately $600 million spent last year (similar to the 1981 figure) and you get some idea about what is going on out there.

As you can see from the following pages, most of those funds are going to gold. Virtually every showing in the country has been staked, although the vastness of Canada is such that even with record numbers being spent, a good number of these will not be looked at. No matter. They can wait. Lots of mines are being discovered. Our predictions are that the current rate of 10-12 new gold mines per year will be coming on stream in Canada. As we pointed out last month, the latest crop of mines is adding some $300 million to the gross national product and most of those producers are relatively small.

It is only a matter of time before we come across another “Big One” — maybe not a Hemlo, but one with size enough to make a difference to the country’s gold output. That is if flow- through is kept intact. If our government decides to pull the plug on the popular tax incentive this year, it could spell disaster for the exploration industry — far worse than what the oil industry encountered with the National Energy Program in 1981. It would recover over time if there were a sustained rise in metal prices, but the initial impact would mean an almost immediate halt to future exploration plans. Investors used to the tax advantages associated with flow- through would likely be reluctant to suddenly begin investing hard dollars in all but the most promising prospects.

There is no shortage of these promising prospects. Our map on tomorrow’s gold mines, published last year listed 60 advanced projects. It didn’t mention the approximately 200 smaller gold deposits that are also seeing extensive work this year, nor the thousands of tie-on properties and other gold showings around the country.

The exploration reports on the following pages represent most of Canada’s major companies and some of the larger groups of juniors. The Northern Miner has been doing this for a number of years now because the lion’s share of the exploration has been carried out under the direction of the majors. However, the texture of the junior industry has changed drastically since Hemlo; and now the juniors are playing a larger and certainly more dramatic role than the more established companies. Most of the major companies are represented in our roundup (all were invited to respond, but some didn’t) and yet their exploration plans total only $250 million or about a third of the total exploration in Canada, not including their programs that are being financed by junior companies. That leaves almost two thirds of the exploration in this country under the financial control of the junior companies. No wonder things are different in the north.