Flush with 1987 successes, future bright for drillers

Members of the Canadian diamond drilling industry has just completed their twelve busiest months on record. The ’87-’88 drilling season caps a 5-year period in which there has been an estimated 220% increase in drillhole footage put down by diamond drillers nationwide.

Members of the Canadian Diamond Drilling Association, meeting here last week, got some very positive assurance the industry will not fall into a slump. The confident mood that buoyed the 45th annual meeting is based on three developments — the Canadian Exploration Incentive Program (CEIP) announced last week, a bright outlook for base metals prices and the Canadian Continental Drilling Program scheduled to start within a year.

CEIP replaces the tax incentive known as the earned depletion allowance which is scheduled to be phased out by 1990. Instead of seriously damaging the positive economic effects that have resulted from the increase in the amount of exploration activity going on across the country, the federal government has provided another means for junior exploration companies to raise the necessary capital to keep mineral exploration rolling.

More of those exploration dollars will likely go into the search for deposits of base metals, now that prices for these commodities have posted spectacular increases.

“The current rate of price increases is not expected to last,” Dr M. Ahmadzadeh told delegates. “But prices over the next several years will be higher than they have been over the past decade.”

Dr Ahmadzadeh is a metal analyst for Rudolph Wolff & Co Inc., a New York-based affiliate of Noranda Inc.

He predicts nickel prices will remain well above $4.00(US) per lb and sees zinc prices staying over $1,000(US) per tonne.

On the demand side, Ahmadzadeh says demand for nickel growing at a compound annual rate of 3%. Demand for copper and zinc will increase too, according to Ahmadzadeh — by about 2-3% over the balance of this decade.

“The future for the diamond drilling industry looks very positive. Strong prices coupled with increasing demand augers well for the industry. Drilling for nickel, copper, zinc and gold will probably continue to dominate for the balance of this century.”

Besides drilling for new orebodies, Canadian diamond drillers will be called on in the months and years ahead to tackle some formidable technical challenges in the name of scientific research. The federal government, through the Department of Energy, Mines and Resources, the Geological Survey of Canada, the mining industry and a number of universities, are piecing together a deep drilling program which could involve drilling to depths beyond the capability of state-of-the-art technology.

That program, according to Dr Jim Hall, Chairman of the Department of Geology at Dalhousie University in Halifax, is scheduled to spend about $5-$10 million per year over the next several years.

The first three holes in the program were tentively laid out in Toronto last February by a group of about 50 earth scientists taking part in the project. These holes, which will be drilled to a depth of about 2-3 km, will test what Dr Hall calls a “strange package of reflectors” in the upper crust along the Kapuskasing structural zone in northern Ontario.

A number of other countries are investigating the depths of the continental crust, including the U.S., West Germany and the U.S.S.R.

“Germany is putting 400 marks into an ambitious deep drilling program to develop leadership in this technology,” Hall says. “I’m sure they’ll surpass Soviet technology in a couple of years.”

“While it may be more difficult for us to raise such funds in Canada, we should have a go at developing a program on our own.”