March/April 2015

“Intelligent exploration” at Roundup 2015

The key to finding the next generation of mines

By Vivian Danielson

Mining industry leaders have historically used the podium at the Mineral Exploration Roundup Conference to encourage companies to find smarter ways to explore. This year, in that spirit, Goldcorp CEO Chuck Jeannes and Franco-Nevada CEO David Harquail urged enterprises to focus more on the quality rather than quantity of resources in the ground, and to cut discovery costs through innovation and better allocation of scarce capital.

“If you make a big productivity breakthrough and discover a mining camp, there will be unlimited capital for that innovation,” Harquail said. “But if we just keep doing the same old thing, the market won’t finance it anymore because they’ve seen the financial outcome.”

His message is particularly relevant in British Columbia, which, according to conference organizer AME BC, is home to 58 per cent of Canada’s 1,500 publicly traded mineral exploration and mining companies. It is timely too, as spending on exploration in B.C. totalled $338 million in 2014, down from a 20-year peak of $680 million in 2012. These grim numbers mirror the almost 50 per cent drop in global exploration spending over the same period.

Still, it was not all doom and gloom at the conference. Jeannes lifted delegates’ spirits when he predicted that the gold sector is “on its way back to relevance” for investors based on ­supply-demand fundamentals and the average 20-year mine-permitting window. He said he believes this will allow companies to move forward and see market multiples bounce back from a 30-year low.

B.C. Premier Christy Clark offered encouragement to the beleaguered industry by noting that the province is more than halfway to its 2012 goal of opening 15 new and expanded mines by 2015. She cited construction of Imperial Metals’ Red Chris copper-gold mine as a major event of 2014, along with the completion of the Northwest Transmission Line, which will provide low-cost power to Red Chris and other mine projects in northwestern B.C.

Clark also announced a $10-million investment to improve the coordination of major mine permits and help restore confidence in the wake of the recent Mount Polley mine tailings spill near Williams Lake. “We’re increasing resources to have more boots on the ground and perform more inspections,” she said.

Along with Red Chris, which is now in the final commissioning stage, the list of potential new B.C. mines includes Seabridge Gold’s KSM gold-copper project, Pretivm Resources’ Brucejack gold project and New Gold’s Blackwater gold project. Several B.C. past-producers are also poised for a revival, notably Chieftain Metals with its polymetallic Tulsequah Chief mine and Sona Resources’ Blackdome gold mine.

Roundup 2015 also gave companies the opportunity to highlight “intelligent exploration” – the theme of this year’s conference in Vancouver – at early-stage projects with potential to become new mines. One example of the strategy to focus on high-margin resources is Lac Minerals’ Red Mountain gold project, which has seen $40 million of exploration since its discovery in 1989.

IDM Mining, headed by Robert McLeod, optioned the northwestern B.C. project in April 2014. The junior miner has since outlined a Measured and Indicated Resource of 1.45 million tonnes averaging 8.15 grams per tonne (g/t) of gold and 29.57 g/t silver, plus additional Inferred Resources. McLeod said retreating glaciers have exposed new showings to be further explored this year. Mine permitting is under way.

“We’re excited about the prospect of developing a high-grade, low-capex and low-cost underground mine near my hometown of Stewart,” McLeod said.

In neighbouring Yukon, Kaminak Gold is advancing its wholly owned Coffee gold project as a proposed open-pit heap-leach mine. “This is a new deposit style for Yukon,” said Kaminak president Eira Thomas. “We see it as a brand new gold district.”

Thomas stressed the project’s robust economics, based on a preliminary economic assessment that projected all-in sustaining costs of US$688 per ounce, capital costs of $305 million, and production of 167,000 ounces of gold per year over an 11-year mine life.

Exploration spending at $80 million in 2014 is still at robust levels in Yukon, although down 13 per cent from 2013. Alaska saw a big slump last year to $92 million from $180 million a year earlier.

The big surprise was the Northwest Territories, which saw a 32 per cent increase in spending on exploration and deposit appraisal last year to $103 million. The uptick was largely attributed to a resurgence of diamond exploration near three producing diamond mines and proposed expansions at Ekati and Diavik.


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