Fee changes, MDA may spark Alberta exploration

Mineral exploration has suddenly become affordable in Alberta with the provincial government’s decision to temporarily waive a $10-per-hectare deposit on exploration permits.

And a first-ever Minerals Development Agreement (MDA) with the federal government, which will result in $10 million being spent during the next five years (mostly on geoscience), will mean that important technical data will soon be at the fingertips of all mining companies with an inkling that Alberta may be sitting on a lot more than oil and gas.

With the current rush in permit applications involving such high rollers as Monopros and Cameco (TSE), the waived permit fee and new MDA have been lost as explanations for the heightened interest.

To date this year, in excess of 1.5 million hectares have been applied for, nearly double the previous annual record.

“It’s been extremely busy,” said Jim Lauder, the Department of Energy’s director of agreements administration. “Daily updates are extremely difficult to keep up with. Our mapping area as well as the applications for processing are very backlogged at the moment.”

The waiver is in anticipation of new permit regulations currently before the provincial cabinet. Should the new regulations not be accepted, mining companies enjoying the deposit holiday will be forced to hand over or forfeit their permits.

Jim Stewart, president of Takla Star Resources (ASE) of Edmonton, said waiving the deposit has had an incredible impact on his company’s exploration activity. Takla has claimed exploration rights on 950,000 hectares. While the company was required to pay a $450 per township fee (for a total cost of $45,000), that is a far cry from the nearly $10 million it would have cost had the deposit been applied.

He estimates that under the old rules, his company would have only been able to claim about 5,000 hectares. When setting out on early prospecting, one begins to question whether the potential return on such a small claim is worth the cost, Stewart said.

And the changed regulations have also brought out a new element in the exploration vein: speculators.

“It’s hard to put a qualifier on how much is speculation and how much is actual activity,” Lauder said, “but certainly I think there is a mix there.” Greater interest and activity, however, are exactly what the new regulations were intended to stimulate.

Technical information derived from geoscientists employed by MDA funding is expected to reach the public next spring. The funds are being channelled 50% through the Geological Survey of Canada and 50% through the Alberta Geological Survey.

The geoscience field work will be conducted by the private sector, much to the delight of the Alberta Chamber of Resources (ACR). Don Currie, ACR executive director, said the group is excited about the exploration permit boom and feels that the MDA has played a role in stoking the fire. “There is no question that it is working in a positive sense to what is happening, and there are other things happening besides diamonds,” he said. “Everyone is so focused on that. They’re not unlike the oil guys who run like lemmings off into the sea and forget all about the base metals — copper, zinc, gold and silver.”

He strongly encourages the private sector to seek out project work available through the MDA.

The ACR has also expended considerable energy, he said, in drawing attention to Alberta, and it seems to be paying off. For example, a minerals forum was hosted by a Calgary group last spring. It is likely to become an annual event. Currie added that the geoscientific work coming out of MDA funding is critical to growth in Alberta’s budding mining industry.

“That’s what Alberta needs,” he said. “We just haven’t had any of that stuff because of our focus on oil and gas.”

He expects that MDA funding will continue past its 5-year lifespan, as some other provinces are already on their third round.