Spending steadied in 2000

The steady decrease in domestic exploration spending that has plagued the industry since 1997 began to slow in 2000, according to a study compiled by the Department of Natural Resources.

Exploration spending in 2000 levelled off at about $502 million, virtually identical to the industry-wide exploration bill in 1999. That represents a drop of $419 million since a peak in 1997 of $921 million.

One of the trends noted in the study is a decline in the share of the overall exploration budget allotted to grassroots exploration, which fell to 63% from 68% in 1999. Deposit-appraisal work — for example, reserve drilling and feasibility studies — increased both in dollar terms and in its share of the total exploration budget. The authors of the study see the trend as an indication that true “exploration” expenditures are still on a downtrend, even though some projects are at more intensive stages of development.

Spending in 2000 concentrated more on off-site exploration than on increasing resource bases on producing mine properties, something the authors of the study ascribe to cost-cutting by operating units during a period of lower metal prices.

Junior companies accounted for a third of planned exploration spending in 2000, up from 27% of total exploration spending in 1999. But there were far fewer junior companies working in exploration: 93 companies disappeared from the exploration scene in 1999 and a further 95 vanished in 2000. Most of these juniors were small spenders anyway, and their withdrawal did not dent the junior budget.

Increased spending on exploration for platinum group metals offset a decline in spending on gold projects. Budgets for base metal exploration were off slightly, and for the first time, diamond exploration took the largest share of exploration dollars spent on a single commodity.

All provinces and territories saw exploration spending decline in 1999, but estimates for 2000 indicated Ontario, the Northwest Territories, Nunavut, Saskatchewan and Nova Scotia saw increases in exploration spending, offset by declines in expenditures in Quebec and Newfoundland.

Mine development expenditures (which were not included in exploration spending) decreased slightly, to $736 million, in 2000. Mine development soaked up $763 million in 1999.