Facts ‘n’ Figures: BC mining and exploration see resurgence, study finds

The following is the executive summary of the second annual “British Columbia mineral and coal exploration survey” conducted jointly by accounting firm EY, B.C.’s Ministry of Energy, Mines & Petroleum Resources and the Association for Mineral Exploration. Data and analysis in the survey are based on information collected from 20 prospectors and 175 mineral and coal exploration companies operating in B.C. that collectively representing 219 exploration projects across the province.

Following years of decline, global exploration budgets increased by more than 14% in 2017 — the first increase in annual exploration budgets since 2012. This increase is in line with rising, or at least stable, commodity prices since 2016. Globally, gold has led the way, accounting for 73% of the year-on-year increase in worldwide exploration expenditure.

Workers handling core samples at GT Gold’s Saddle gold-silver project in northern British Columbia. Credit: GT Gold.

Many of the exploration trends observed globally were also experienced in B.C. in 2017. With an improved commodity price outlook, a stabilizing Canadian market and renewed vigor in the economy, the B.C. mineral and coal exploration industry grew for the first year since 2012. Province-wide exploration spend of $246 million in 2017 was up $41 million, or 20%, from 2016.

This expenditure is in relation to mining revenues in the province that are expected to approach $9 billion annually.

Analysis of survey data identified a number of key figures, insights, themes and observations for 2017:

• Gold accounted for 87% ($37 million) of the increase in total exploration expenditure in BC, led by the “Golden Triangle” in the province’s Northwest, which experienced an $11 million increase in expenditure over the prior year to $82 million in 2017. Recent important infrastructure upgrades — including the Stewart-Cassiar Highway, new ocean port facilities at Stewart and a new high-voltage transmission line — have been catalysts in the increase in gold and silver exploration in the region. Meanwhile, the historic Cariboo gold belt of the province’s interior saw gold exploration expenditures increase by $19 million, or 70%.
• Exploration expenditure on primary-silver projects more than doubled to $9.8 million, almost all which occurred in the Golden Triangle.
• The sector is at the end of a 10- to 15-year mine development cycle in the province. A number of projects that were approved and funded prior to the 2012 mining downturn that have supported exploration expenditure over the past five years have evolved (or been postponed). Exploration focus has now shifted to less capital-intense grassroots and early-stage exploration.
• Notwithstanding the current downturn, the industry remained an important source of jobs and was and continues to be an economic contributor to communities throughout the province.
• In particular, exploration companies continue to demonstrate their commitment to local communities and First Nations engagement through targeted activities, investment, employment and procurement.
• Zinc exploration rebounded in B.C. in 2017, up by almost 50% to $8.2 million and in line with increasing zinc prices.
• Expenditure on other base metal exploration — including copper, molybdenum and nickel — was generally in line with 2016 levels.
• Exploration expenditure was likely inhibited by the historically intense and prolonged wildfire season that was felt across the province and particularly in South Central B.C., leading to project shutdown or delay and shifting of activity to safer regions.
• From a regional perspective, the province’s Northwest and Southeast regions accounted for more than three quarters (77%, or $33 million of $41 million) of the increased exploration expenditure in the province in 2017, almost entirely due to the aforementioned increase in exploration activity in their respective gold and silver producing regions.
• In contrast, a steep decline in coal exploration expenditure in 2017 had a disproportionately adverse impact on the province’s Northeast region, where exploration spend declined by almost 75% to $2.4 million, almost entirely due to coal.

— To access the complete report for free, please visit ey.com/ca/bcminingsurvey.