EDITORIAL PAGE Major firms filling financing void

Major mining companies are quietly taking on a stronger presence in the Canadian mineral industry these days. While this might seem a novel state of affairs for junior companies that began life in the flow-through boom years, it represents nothing new. As one seasoned major company executive recently said, things are just getting back to where they were before. Before flow through, that is. During the 1986-1989 exploration boom, the popular tax incentive opened a rare window of opportunity allowing juniors to greatly broaden the scope of their activities. An unprecedented number aspired to become mine operators, and the more successful of these were able to finance their own exploration projects through to production.

Some projects proved to be successful, but a good many failed outright, or failed to live up to expectations. As has often been said, the equity markets were so buoyant in those days that at its peak even a few turkeys got off the ground.

Today, the ability to raise flow-through financing has been severely curtailed by the latest writeoff rules introduced by the federal government. And in view of our massive debt and annual budgetary deficit, industry organizations such as the British Columbia and Yukon Chamber of Mines think that the flow-through issue “is dead for the foreseeable future.”

As a result, the past year has been one of transition for juniors learning to adjust to life after flow through. It hasn’t been easy, particularly as equity markets have been in a generally bearish mode since the October, 1987, market crash.

I ther i silve linin i al thi gloo an doom i i that the financing void is being partly filled by senior mining companies from both Canada and the U.S. Majors have already acquired several important deposits found by Canadian juniors while others are providing funds for juniors to carry out exploration through joint ventures or equity investments.

In turn, juniors are redirecting their focus to explore and develop projects of specific interest to majors, particularly those looking to beef up their dwindling reserve base. As a result, we are seeing a shift away from the single-minded pursuit of gold to a healthier mix of mineral projects.

Faced with thetask of developing a strategy to survive in the leaner, greener `90s, juniors today are seeking to establish relationships with majors they once eschewed as predatory or meddlesome influences. By doing so, they are demonstrating the ability to adapt to changing times. The major-junior relationship has worked well in the past and has much to offer both sides. It can work well again.