Canadian miners face `Hard Choices’ down south

The convention known as the “Cordilleran Roundup,” held here every January, typically features the latest developments in British Columbia’s mining industry. In recent years, however, the scope has grown to include the entire length of the Cordillera, from Alaska to the southern tip of Chile.

This year, delegates heard tales of exploration forays into Chile, Mexico, Venezuela, Bolivia and — the latest hot spot — Peru. Discussion of these and competing jurisdictions was the focus of a special session titled “Hard Choices,” during which company spokesmen revealed how they are being courted abroad after having been shunned at home.

A review panel was asked to compare southern jurisdictions with Canadian camps, with respect to exploration and mining risk. For some companies, offshore destinations were clearly preferable.

“We are moving south,” declared Wayne Lenton of Canada Tungsten (TSE). “These days we’ve got everyone involved (in resource decision-making) at home, including the Sierra Club and a host of other special interest groups. The cents end result] is more uncertainty, especially for the small miner. Delays (such as those caused by environmental groups) can bankrupt small companies and kill financings. We can no longer expose our shareholders to those kinds of risks.”

His views were reiterated by Clive Johnson of Bema Gold (TSE), a junior which has been active in Chile for more than five years. “You have to go where you can advance your projects without roadblocks. I run a business, so I have to go where I can do business.”

For some majors, however, Canada’s mineral potential continues to prove alluring. Consider Homestake Mining (NYSE), which is developing the Eskay Creek gold project near Stewart, B.C.

“We are not prepared to follow the lemmings,” said Anthony Ransom, spokesman for said company. “We look first for quality mineral endowment and we believe there is still plenty of elephant country here, as well as offshore.” Nevertheless, a noteworthy finding of the review panel was that British Columbia has lost ground to other Canadian mining jurisdictions. Exploration spending in the province fell to $35 million in 1993 from a peak of $156 million in 1988.

“Quebec is the province most supportive of mining,” said David Watkins, head of exploration for U.S.-based Cyprus-Amax (NYSE). He added that the Northwest Territories is emerging as a favorable place to do business, with other supportive areas being Manitoba and the Maritimes.

While most speakers agreed that exploration in British Columbia has reached a crisis point and that reserves and revenues are in serious decline, a modicum of encouragement was offered by Robert Dickinson, president of Vancouver-listed El Condor Resources and Taseko Mines.

Dickinson explained that various negative factors — rising costs and taxes, land use uncertainties, depressed metal prices, etc. — have recently come to a head and that the combined effect has been to underscore the current precariousness of the province’s mining industry. “To top it all off, the B.C. government put the sledgehammer to the industry on June 22, 1993, when it made the Tatshenshini region a park, even though the area contains an enormous, world-class copper deposit.”

Part of the blame for that blunder must go to the mining industry, according to Dickinson, because it lacked the unity and focus required to force the government to reverse its decision.

“Things are now changing, and the industry has been brought together into a more cohesive group that is becoming more vocal and focused about its concerns. Grassroots support for mining is building, and government attitudes are changing. As an industry, we have seen the bottom. We are ready to rebound.”

Dickinson’s bullish outlook was borne out days later when Pegasus Gold (TSE) announced plans to merge with El Condor, 60% owner of the Kemess South gold-copper deposit in north-central British Columbia. The deposit hosts 220.9 million minable tons grading 0.018 oz. gold per ton and 0.22% copper. About the same time, provincial Mines Minister Anne Edwards approved an increase in production levels for the proposed Quesnel River gold project near Quesnel. Kinross Gold (TSE) hopes to begin constructing the 800-tonne-per-day mine this spring (see page 3).

Earlier this year, Teck (TSE), Cominco (VSE) and two partners announced plans to buy the Cirque massive sulphide deposit in central B.C., near the former’s Driftpile base metal discovery.

The region near Stewart is also active, with the largest program being carried out by Lac Minerals (TSE) at its Red Mountain gold project. Another major, Hudson Bay Mining & Smelting (TSE), recently optioned properties in southeastern B.C., where the exploration target is stratabound, copper-silver mineralization in red-bed sequences (see page 6 for details). Juniors are also showing signs of renewed interest. As an example, CanQuest Resource (CDN) is planning to go public this spring with its portfolio of properties, all of which are situated in the province. These include: the Microgold epithermal gold project near Kamloops; the Cottonbelt stratabound, polymetallic, massive sulphide-precious metals project near Revelstoke; and the Magnolia copper-gold project on Texada Island.

“We think the bottom of the base metal cycle is the best time to pick up properties,” said CanQuest President John Bissett. “We want to have drills on three properties this year. We believe in B.C.”

Perhaps the best signal that the tide may indeed be turning in the province is the fact that an ambitious group of Australian mining engineers took control of City Resources (TSE) earlier this year. The new management team is planning to review the moribund Cinola gold project on the Queen Charlotte Islands.

Things are being done differently this time, though. The company says its progress depends not only on a feasible development plan but also on the support of the local community and the Haida native people.

“Yes, it is a different way of doing business, but I think so-called `strategic alliances’ with natives might become beneficial to the mining industry,” Dickinson told delegates. “Perhaps such an alliance will add another chapter to the ongoing Windy Craggy saga.”