Higher mineral prices and higher demand needed to boost financing, officials say
Imperial Metals Corp.’s plans to open its $500-million Red Chris copper/gold mine in British Columbia’s far northwest in early June is one of the bigger reasons for optimism in the mining sector for 2014.
That, coupled with a bounce in resource stocks since the start of the year and the continuing advance of high-profile development projects such as Pretium Resources Inc.’s now famous Brucejack gold deposit, make B.C.’s prospectors more hopeful the industry is making a turnaround.
“It’s a pretty bullish year,” said Gavin Dirom, CEO of the Association for Mineral Exploration B.C. “There’s a sense that the worst is behind us. You couldn’t get much worse than 2013, in terms of trying to attract venture capital.” The new mine is particularly important, he said.
Located 80 km south of Dease Lake, Red Chris will become the second new greenfield mine to open in as many years, following Thomson Creek Metals Inc.’s Mount Milligan mine, which started commercial production last fall.
“There’s no better signal to somebody in London, New York, Tokyo or the Middle East or wherever (investment capital) is coming from,” Dirom said, than showing them B.C. can build mines and “they’re doing what they said they would do.”
B.C.’s mining exploration sector is preparing to descend on Vancouver for AME B.C.’s annual Mineral Roundup conference, which starts Monday, and Dirom doesn’t see any reason for their ambitions to be dampened.
“I don’t think there’s any reason why (exploration) would be slowing down,” he added.
However, the last two years in mineral exploration have not been easy.
A proxy for prospecting’s troubles can be found in the statistic for new money raised in financings by TSX-Venture Exchange companies, which was just $1.3 billion in 2013, a precipitous decline from $5.9 billion in 2011, according to calculations by the consulting firm PwC.
“It still is hard for many companies,” Dirom said.
Others are less bullish about the prospects for mining firms, especially on the exploration side.
“Several things need to happen for those market conditions to improve,” said Philip Heywood, managing director of transaction services at PwC.
Investors need to see an improvement in commodity prices, better demand in emerging markets such as China and India, and a string of quarters with improved profits among the major mining companies, such as Teck Resources.
And while B.C. prospectors continued advancing exploration projects through 2013 hoping for a turn in the capital markets, Heywood expects more of them might have to put them back on the shelf in 2014.
“What’s going to happen in 2014, it’s difficult to say with any certainty,” Heywood said.
The exploration side of mining employed 2,638 people in 2012 (2013 numbers were not yet available), which is the front end of an industry that saw companies make $7.4 billion in sales of coal, copper, gold, molybdenum and other minerals in 2012.
Dirom said prospectors probably spent somewhere in the neighbourhood of $500 million in B.C. on exploration activities in 2013. Premier Christy Clark will unveil the final tally at the roundup on Monday.
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