Nova Scotia withers in wake of Nfld exploration boom

Exploration expenditures in Nova Scotia were $10 million in 1985; $22 million in 1986; $45 million in 1987; an estimated $35 million in 1988; and for 1989, will probably be considerably lower, McMullin said. Diamond drilling in the province shows a similar trend, with 45,000 m drilled in 1985, 75,000 m in 1986, and 215,000 m in 1987. Of the 105,000 m drilled in 1988, 95,000 m were done in the first six months of the year, causing McMullin to surmise that exploration stagnated rapidly in the last half of 1988. Three drills are operating in the province at present.

Exploration requires money, and financing levels in Nova Scotia have been declining, too. In 1987, 17 Nova Scotia junior companies raised $54 million, which included $14.5 million mustered by Seabright Resources and Seabright Explorations (TSE), $8.25 million by Coxheath Gold Holdings (TSE), $5.8 million by Acadia Mineral Ventures (TSE), and $1.3 million by NovaGold Resources (TSE). In 1988, 13 juniors raised $30 million, which included $13 million by NovaGold. NovaGold has since announced that it’s divesting itself of its two major Nova Scotia properties and concentrating on projects in New Brunswick and Nevada.

In contrast to Nova Scotia, exploration in Newfoundland is doing very well, according to Paul Dean of the Newfoundland Department of Mines. Exploration expenditures were flat until 1986, when exploration funded by flow-through shares resulted in some significant discoveries. Exploration expenditures in Newfoundland were $13 million in 1986, $32 million in 1987, $40 million in 1988, and estimates for this year are $40-50 million.

There has been phenomenal growth in the number of claims staked in Newfoundland. In 1988, 25,000 claims were staked, and 12,000 have been staked thus far in 1989. Drilling statistics for Newfoundland were about 50,000 m each year for 1985, 1986 and 1987, jumping to 275,000 m in 1988.

Dean attributes the recent rise in exploration in Newfoundland to a series of significant gold and base metal discoveries made in 1986 and 1987 by a mix of major and junior companies. During that time, large tracts of land that had been held under tenure for decades came open for staking. Also, geological and geochemical surveys done over the same regions as part of the federal-provincial Mineral Development Agreements outlined numerous targets with gold discovery potential.

“The MDAs are essential,” Dean said, adding that they’re the driving force behind exploration in the province.

Of particular note have been the “pond” bottom geochemistry surveys that precipitated staking and several subsequent discoveries. A recent information release highlighted gold anomalies in the Deer Lake basin of Carboniferous age, an environment not generally regarded as having gold potential.

“There’s a great diversity of geology that’s being explored for the first time,” Dean said. Only since the start of this decade has there been any systematic gold exploration in the province, he said. Newfoundland now has a good mix of major and junior companies, but there aren’t many local prospectors or entrepreneurs forming Newfoundland exploration companies. Most juniors working in Newfoundland have been Vancouver — or Calgary-based. More recently, Nova Scotia-based junior companies have begun taking up ground for gold, base metals and industrial minerals. Annual staking of 25,000 claims and exploration expenditures of about $50 million should translate into a number of new mines for the province, Dean said. He hopes that the next producers will be Noranda’s (TSE) Tally Pond-Duck Pond base metal property in central Newfoundland, Aurion Minerals’ marble property on the Great Northern Peninsula, and Dolphin Explorations’ (TSE) Cape Ray gold deposit along the southwest coast.

In contrast with Newfoundland, the exploration boom is over in Nova Scotia. The downturn in activity happened sooner in Nova Scotia and has been more dramatic than elsewhere across Canada. The stock market crash and softening gold prices are often cited as the reason for Nova Scotia’s malaise, but exploration continues to rise in Newfoundland and New Brunswick despite these events.

What Nova Scotia lacks is what Newfoundland has in abundance — significant discoveries in new geologic environments which fuel optimism. A large proportion of Nova Scotia’s exploration since 1987 has been in one geologic environment, the Meguma Group. After the failure of several projects to confirm drill-indicated geologic reserves in underground programs, investor confidence has waned. There have been no new non- Meguma discoveries to sustain exploration interest.

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