Market downturn taking toll on Yukon exploration Special to The

Now, many of those camps are empty and fewer people are working. The Yukon mineral exploration industry is in a slump.

After investors pumped a record $50 million in exploration dollars into the territory in 1988, the president of the Yukon Chamber of Mines, Al Doherty, predicts exploration money won’t top $15 million this year.

“It’s a major, major turnaround,” said Doherty. “The junior companies are totally inactive.”

Some juniors that planned exploration programs this summer haven’t even shown up at their camps, unable to raise the cash. Some are courting major mining companies in the hopes of a joint venture. Juniors raised about half the Yukon exploration dollars last year.

Industry representatives point to several factors for the mineral search malaise: changes to the federal flow-through share tax break program; reluctant investors wary of high interest rates and another stock market crash; low metal prices — especially for gold — and the tarnished image of the Vancouver Stock Exchange.

Many in the industry have been nervously watching how the new Canadian Exploration Incentive Program (CEIP) — the federal government’s replac ement for the popular flow-through shares that raised $750 million for Canadian mineral exploration in 1988 — would be received.

The new program offers a smaller return on investment than its predecessor. Mining companies now must raise the flow-through share money first, do grassroots exploration, then apply for a 30% government rebate.

“Nobody wants to put their money into anything that looks vaguely daring,” said Charles Russell, president of All-North Resources (VSE).

“Right now, most people with the money in their back pocket would rather put it in a bank,” he said.

Last year, All-North pumped $4.2 million into the Wellgreen and White River deposits in southwestern Yukon and employed about 200 people. This year? Maybe $50,000 and a handful of workers, Russell said.

All-North is seeking a partner to pay for a $5-million feasibility study for the polymetallic Wellgreen deposit and has a 50-50 joint venture with Chevron Minerals (TSE) on its White River nickel property, 80 km away. But little work is being done at either site, says Russell.

For All-North, Russell said the new tax incentive plan is a no-go. He said that like many other junior mining stocks, All-North’s shares are depressed, hovering around the 80-85 cents mark the past two months. Drumming up flow-through funds at this price would dilute the stock too much, he said.

Because so many juniors can’t raise money, they may not be able to take advantage of almost $1 million in the Yukon government’s Exploration Incentive Program, said government spokesman Rod Hill.

The 1989 budget has already been allocated to about 45 applicants, mostly juniors, Hill said. But many applications were contingent on the company raising money, something he said most applicants are still trying to do.

Hill, the chief mines development officer, said that as companies inform him they can’t raise capital, others are on a waiting list to join the program. The scheme gives 25% grants to a maximum of $50,000 on completed exploration work, such as drilling, and 6% grants on indirect work such as camp and road construction.

Marshall Bertram, director of Yukon Minerals Corp. (ASE), said only two geologists with a $100,000 budget are working on the company’s silver-lead-zinc claims in the Ketza-Seagull district this summer. That compares with a $2- million exploration budget and 25 direct and 12 indirect jobs last summer.

“Primarily it’s difficult raising funds for the Yukon,” he said.

Yukon Mineral’s newly assembled polymetallic Power project in Okanagan Falls, B.C., has about a third of the exploration costs of the claims at Groundhog Creek in the Ketza River area.

The company is now seeking a joint venture with a major mining company to expand on the costly diamond drilling exploration program.

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