JUNIOR MINING SPECIAL — Nova Scotia juniors an `endangered

Publicly traded junior mining companies in Nova Scotia — once thriving employers and significant contributors to the provincial economy during the late 1980s — are near extinction.

The result has been five successive years of decline in exploration activity in the province. Provincial exploration expenditures in 1993 are estimated at less than $2 million, the lowest level of activity in two decades. The value of assessment work filed last year was just under $1 million.

Although total exploration expenditures for Canada as a whole in 1993 were the lowest since 1967, Nova Scotia’s usual piece of this shrinking pie has decreased. Prior to 1986, Nova Scotia, with about 0.5% of Canada’s land area, received on average about 1.5% of total Canadian exploration expenditures, except during the flow-through share heyday from 1986-89, when its proportion doubled, reaching about 3%.

The province’s drop to only 0.5% of Canadian exploration expenditure in 1993 is alarming, and cannot be explained solely by Nova Scotia’s inability to participate in diamond fever because of a lack of kimberlitic terrains. Claim-staking trends in the province tell a similar story. During 1993, the number of claims held was the lowest in 20 years, a mere 8,969 claims (358,760 acres). Currently, land acreage closed to staking in Nova Scotia for park land assessment is more than double the number of acres staked. The present situation is a far cry from the situation just five years ago, when more than two dozen public junior companies were actively looking for gold. The demise of flow-through share financing, the stock market correction of 1987, weakening gold prices, a recession and a series of disappointing results from the most advanced exploration programs in the province, compounded by indifference from the local brokerage community, have all conspired to alienate investor interest in the Nova Scotia juniors. Seabright Resources, Seabright Explorations and Aquagold Resources have all been taken over, but remain in the mineral resource industry; Scotia Prime Minerals and Cobequid Resources were taken over by non-mining interests; and Coxheath Gold Holdings became insolvent.

Only NovaGold Resources (TSE) of Halifax has remained intact, but has done so by focusing its attention on New Brunswick and Newfoundland, and to a lesser extent the U.S. and South America.

A private Nova Scotia company associated with NovaGold, Dufferin Resources, has optioned the Dufferin gold property of Corner Bay Minerals (TSE) and is planning a development program this year.

All other locally derived activity, albeit with limited funds, comes from private companies such as Tri-Explorations and Colpton Resources, prospecting syndicates headed by Avard Hudgins of Truro, and individual prospectors. Nova Scotia’s economy has been slow to awaken from the recession, and many risk-takers no longer have the financial discretion to fund high-risk exploration. Those with funds to invest find few enticing opportunities with any measure of liquidity in the form of publicly traded juniors. Junior exploration companies, individual prospectors and prospecting syndicates are finding it difficult or impossible to raise significant amounts of money for exploration, and the results have been painfully obvious. Practically all exploration planned or undertaken in the province this year will be funded by majors, extra-provincial juniors, or the Nova Scotia government through grants under its Prospectors’ Assistance Program. Out-of-province juniors active in Nova Scotia include Abacus Minerals (VSE) of Vancouver at North Brookfield; Dundee-Palliser Resources (TSE) of Toronto, which is trying to finance a deal announced in 1991 to purchase the Gays River lead-zinc mine and mill from Westminer Canada; and Tangier Mining, with British Columbia connections, which is looking at reactivating a dormant gold mine at Tangier, Halifax Cty., formerly operated by the insolvent Coxheath Gold.

Major companies with ground positions in the province include Metall Mining (TSE), Noranda (TSE), Falconbridge and Cominco (TSE), all of which hold claims in various carboniferous basins having potential for carbonate-hosted lead-zinc. Phelps Dodge and Falconbridge have properties covering Precambrian rocks with volcanogenic massive sulphide potential.

At least 40 qualified prospectors will receive grants of up to a maximum of $5,000 each this spring through the Prospectors Assistance Program. The province also has offered travel assistance for prospectors to attend conferences and promote their properties. Both programs have been well received and should serve as a catalyst to rejuvenate the exploration industry.

However, all is not gloom and doom. Nova Scotia’s geology and infrastructure are bright lights in an otherwise dismal investment climate. The province’s complex history of geological development has included volcanism and plutonism associated with more than two major orogenies.

The province consists of a series of isolated highland areas, each with a distinct geologic make-up, that were brought into juxtaposition along deep-seated faults during the Acadian orogeny. Most of these major faults are now obscured by carboniferous cover containing a wide variety of base and precious metal mineralization. There are many showings of intriguing mineralization throughout the entire stratigraphic column that either never have been drilled or have been investigated only superficially. A case in point is a peculiar new style of gold mineralization in the Meguma goldfields at North Brookfield, Queens Cty., initially discovered in the early 1970s but only recently documented by government geologists. Several local private companies have taken ground positions in the region, as has Don Mckinnon of Hemlo fame. The property containing the mineralized zone was optioned by Tri-Explorations to Abacus in 1993, which has advanced the property with an exploration program.

At North Brookfield, spheroidal and irregular-shaped nugget-like grains of complex metal alloys dominated by gold, silver, lead and copper occur within an intensely sericitized metawacke that is devoid of veining and has been pervasively carbonatized. Abacus has obtained up to 0.03 oz. gold per ton over 125 ft. within the stratabound zone. Evidence has led to speculation that the mineralization could be strataform, marking a metallogenic event around 500-550 Ma in the Meguma goldfields. The more traditional gold-bearing quartz veins in the Meguma Group were formed around 370 Ma.

— Craig Miller is a consulting geologist in Halifax.