Editorial: Yukon – The downturn up here

WHITEHORSE, YUKON — After several scorching hot years of exploration, the Yukon has cooled off.

After Underworld Resources discovered 1 million oz. gold at its White Gold project and prompted a quick $138-million takeover by Kinross Gold, the Yukon experienced a few years of full-tilt exploration. Hundreds of thousands of claims were staked, and hundreds of millions of dollars were poured into the ground.

The result was a whack of interesting prospects. Unfortunately most were precisely the kind of remote, early stage projects that the current market cares little for. That meant many a Yukon explorer started 2013 with great ground but limited capital.

Knowing that, I headed off for a week-long tour of the territory in early August expecting to find shuttered offices and gloomy explorers.

But I was wrong: that’s not how Yukoners operate, and it’s not how seasoned vets survive the never-ending cycles of the mining sector.

Sure, there were quiet camps. Exploration spending is way down this year, likely to come in around $60 million — compared to $146 million last year and a whopping $300 million in 2011. Many companies that spent millions on Yukon projects last year are conspicuously absent this season. Of those that are exploring, many have stepped away from drilling in favour of less expensive geophysical surveying, mapping and trenching.

But there was also tangible excitement around new prospecting technologies, animated discussions of new regional geological concepts flowing from a joint government-corporate research project, and a collective sentiment that perhaps the region needed a bit of a reset anyway.

From project managers to Yukon government geos, there is wide acknowledgement that the flood of capital in 2010–11 had pushed Yukon prospects ahead too quickly. Explorers brimming with cash and hope had punched drill holes into newly identified soil anomalies, skipping the geophysics, trenching and expanded soil grids that usually happen in between.

The result was a lot of drilling disappointment, which soured an investor base that was already shrinking away from mining stocks. In 2012, explorers found it more challenging to raise money. This year it was almost impossible.

But those who believe in the Yukon’s golden potential are not so easily dissuaded. And those who have endured mining market cycles before know it can take several restarts for a new area play to stick. These hardy folk are using this reset to rethink the “what” and “how” of Yukon gold exploration.

Shawn Ryan is central to this rethink. Ryan and his wife Cathy Wood are the prospectors whose dedicated soil sampling efforts led to the discovery of the White Gold deposit. They also discovered the gold-in-soil anomaly at Coffee, Kaminak Gold’s nearby — and increasingly impressive — gold project, and have optioned similar golden soil prospects to perhaps two dozen companies. [See our 2010 Mining Person of the Year feature article, “Ryan, Wood renew Yukon gold rush” (T.N.M., Dec. 20–26/10)].

You might think Ryan would have slowed down after cashing in on his prospecting success, but you can’t take the prospector out of a Yukoner so easily. Instead, he’s spent the last 18 months figuring out how to make gold exploration in the territory more reliable and less expensive.

“I could see the crash coming and I could see there was so much money being wasted up here,” Ryan said in an interview in Dawson City. “So we took a step back and thought, ‘If we’re going to keep this momentum alive we need to add something new — we need to figure out some simple new tools that will increase drilling confidence without costing millions.’”

That is what he did. Ryan and Wood’s company, GroundTruth Exploration Inc., now offers a package deal of novel exploration technologies that can turn a soil anomaly into high-confidence drill targets (if the anomaly offers up the goods) in just three weeks, and at relatively modest cost.

Next week: An exclusive, in-depth look at Shawn Ryan’s rethink of Yukon gold exploration, and some of the new prospecting methods he’s developing in hopes of triggering the next wave of discoveries.