Wake-up call for investors in BC exploration

Vancouver — A couple of years ago, an eastern commentator said B.C. stands for “basket case” and that the province’s exploration industry is in a coma. But if any industry is likely to survive tough times it is this one. The doom and gloom of the past few years have tested the mettle (and the metal) of the best in the business, and they are still here.

During these turbulent times, the province’s once-healthy exploration industry has been in deep trouble for lack of finance. The investment climate first deteriorated as a result of a few notorious scandals coupled with regulatory over-reaction and falling metal prices. This was exacerbated by our own made-in-B.C. mining recession. Then, finally, the high-flying, high-tech industry attracted many of the remaining investors away from mining, soaking up much of the high-risk money.

Well, the situation has changed: the high-techs have come back down to earth, and the scams have been blown off the front pages; the people of British Columbia have a new government; and new incentives, such as the “super” flow-through shares program and significant tax cuts, are either in place or under way. Sooner or later, despite the current low base metal prices, investment in the province’s mining sector is bound to improve.

“If you have survived the past five years, you have demonstrated ingenuity and luck, and this combination should allow you to continue to survive,” says John Brock, president of Pacific Ridge Exploration. “We’re dealing now with an industry that is smaller and where there is less competition. The chances for success are greater.

Those who have survived the industry’s roller-coaster ride know that a mining resurgence is inevitable.

Amid all the industry downsizing, mergers and consolidations, there are still signs of life in British Columbia’s exploration sector. Consider the confidence shown in the industry by Broken Hill Proprietary and Billiton following their merger. BHP Billiton chose to open one of its world development offices, with more than 50 geoscientists, in Vancouver because they consider the city an ideal centre for the identification of mining opportunities — a “gateway to discoveries,” as described by the British Columbia & Yukon Chamber of Mines. Likewise, other departed majors are quietly considering returning to the province. They are not doing so because of current conditions in the industry but, rather, because the long-term outlook is positive.

The Sept. 11 terrorist attacks initially shocked the markets and worsened a cyclical downturn, but the outbreak of war has many investors focusing on the basic needs of the economy . . . and among those needs are metals. The 100-year consumption growth trend for most metals is still 2-3% per year, which means a steady supply of new mines will be needed. With most base metals prices at historic lows, there is little downside risk.

As Robert Dickinson, co-chairman of the Hunter Dickinson group of companies, says: “We always hear investors complain that they never have a chance to get in at the bottom. Well, copper is at the bottom of the cycle, so this is a once-in-a-lifetime opportunity to buy low.”

Those players who have remained in British Columbia’s mineral exploration business are positioned to benefit when markets turn. “We have only the best horses and jockeys left,” states Donald McInnes, president of Western Keltic Mines.

Northgate Exploration Chairman Terry Lyons agrees: “B.C. is moving toward an upward cycle. It’s an excellent time for the mineral industry to stage a comeback.”

One encouraging sign is growth in the Vancouver-based diamond industry. According to Robert Boyd, president of Ashton Mining of Canada, this country’s diamond industry is poised to become the third-largest in the world. Ashton, along with several other Vancouver-based diamond explorers, continues to make the sorts of discoveries that boost investor confidence.

Furthermore, many foreign investors are looking for secure investment destinations during times of crisis. Canada, as a well-established and reliable supplier of minerals, has an opportunity to benefit from such investments. Adds Diamondex Resources President Randy Turner: “Within three years, there will be a diamond shortage, and Canada will be positioned to take the lead.”

So if you detect negativity out there or hear talk of basket cases, just remember: the mineral exploration industry of British Columbia — and by extension Canada — is still humming along.

This hum will be especially audible at the annual Cordilleran Roundup conference, scheduled for Jan. 22-25, 2002, at the Hotel Vancouver. The theme of the conference — “Back to Canada” — could not be more timely, and the event always provides a valuable opportunity to exchange ideas and learn about the latest discoveries.

For more information on the Cordilleran Roundup, contact the British Columbia & Yukon Chamber of Mines. Tel: (604) 681-5328. Fax: (604) 681-2363. E-mail: chamber@chamberofmines.bc.ca. Web site: www.chamberofmines.bc.ca