Activity to stay hiogh despite uncertainty

Everyone in the industry has had it pretty good for the past five years. Even 1988, when much of the political tinkering took place that has given rise to the feeling of uncertainty, was a good year thanks to an active first six months.

“It’s very confusing, to say the least,” says Gordon Cyr, general manager of Midwest Drilling in Winnipeg. He says the federal government’s move to replace the Mineral Exploration Depletion Allowance (MEDA) with a grant system known as the Canadian Exploration Incentive Program (CEIP) has caused a lot of the confusion.

Both MEDA and CEIP were meant to promote investment from individuals into mineral exploration. MEDA was extremely successful, but no one seems to be too sure just how CEIP will work, so investors are waiting on the sidelines.

“Consequently, junior companies just don’t have any money,” says Cyr.

He sees the potential for activity to pick up in the second half of 1989 and the winter of 1990 if the new program proves at all successful. He also sees the potential for higher base metal prices to prompt more exploration in that area.

Because of the investment community’s unfamiliarity with CEIP, Cyr compares 1989 to 1981 when MEDA was virtually unknown.

Others in related businesses voice similar concerns regarding the uncertainty of 1989.

“Most people are still enthusiastic, but I’m not sure there’s the same enthusiasm as there was a year ago,” says George LeFebvre, vice-president and general manager of Langridge-Marshall. Langridge- Marshall, a division of Northern Miner Press Limited, is a leading outfitter for the exploration industry. LeFebvre speaks to many in the exploration business as they make their plans for the coming year.

“January was good to us this year,” says Lefebvre, “but the difference between January 1988 and January 1987 is fairly significant.”

When 1988 began, exploration was coming off a year that set records for exploration activity likely to stand for a long time. It wasn’t until later in the year that things changed. Then uncertainty over tax reform, a federal election and proposed changes to the flow- through financing mechanism caused activity to come “to a grinding halt” late in 1988.

LeFebvre, who has been with Langridge-Marshall for 15 years, says he’s notice a sharper delineation between the peaks and valleys in the exploration business in the past few years. The activity in early 1988 followed by “real doldrums” in late July, August and September was a dramatic shift in one year. Then December, 1988, was a record month, one of the reasons he’s reasonably confident that 1989 will shape up as a good year.

]]>