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After three years of falling commodity prices, big mining companies are taking the lead on exploration in Canada as cash-strapped junior miners struggle to stay afloat.
Centerra Gold Inc. will spend upward of $100-million to develop a gold deposit in Ontario. Goldcorp Inc. is spending about 10 per cent more on exploration in 2015 than it did last year. Agnico Eagle Mines Ltd. is expanding its exploration team in Nunavut after it found gold on boulders near its mine in the territory.
“We have a lot of evidence that there is gold in the area,” said Sean Boyd, Agnico’s chief executive. The company is moving eight drill rigs and about 80 miners to its arctic camp, in order to locate the source of the golden boulders.
Traditionally, small mining companies have done the bulk of the prospecting in Canada. But with commodity prices at multiyear lows and a dearth of high-profile discoveries, investors are unwilling to bankroll junior miners with little or no track record.
Last year, junior companies spent a total of $742.5-million exploring in Canada, while the senior companies spent a total of $1.2-billion, according to government data. At the height of the commodity boom in 2011, the groups of small and big companies each spent around $2-billion.
“In the last 10 years, lots of money has been raised but there have been very few success stories,” said Don Hoy, who helped discover the Ring of Fire mineral belt in Ontario and runs an exploration company. “That is what we are sorely missing in North America are new discoveries like that. A world-class discovery,” he said.
During the boom years, virtually any idea would attract investor funding. There was a bidding war for the largest chromite deposits in the Ring of Fire in 2009. Money poured into the Labrador Trough, the 1,600-kilometre-long iron-ore-rich mineral belt that straddles the Quebec and Labrador border.
Both areas are at a standstill. Iron ore prices are down 70 per cent since 2011, and the Ring of Fire in particular is facing numerous hurdles, including lack of infrastructure.
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