Winnipeg Free Press - PRINT EDITION

Mineral exploration sinking

Manitoba No. 1 in field no more

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Andrew Ganton, a drill geologist for Bison Gold, looks for gold in drill cores at the Ogama-Rockland Project two years ago. Lack of capital has now forced Bison to do less-costly surface exploration.

JOHN WOODS / WINNIPEG FREE PRESS FILES Enlarge Image

Andrew Ganton, a drill geologist for Bison Gold, looks for gold in drill cores at the Ogama-Rockland Project two years ago. Lack of capital has now forced Bison to do less-costly surface exploration. Photo Store

A couple of years ago, Bison Gold Resources was able to spend a couple of million dollars a month doing mineral-exploration drilling on its Ogama-Rockland property in the historic gold zone near Rice Lake, Man.

Now, Bison must content itself with much less costly surface exploration work after raising a paltry $61,000 earlier this year.

"It's just too capital-intensive to run a small drill program," said Amir Mousavi, Bison's CEO. "It's very hard to justify the mobilization costs with a camp, cooks, housing."

With lower commodity prices, mineral exploration is down across the country, but it's especially low in Manitoba.

In 2014, exploration companies -- "juniors," in industry parlance -- are expected to spend a very modest $10 million in this province.

In 2000-01, mineral exploration in Manitoba represented about 5.6 per cent of the total exploration in the country. This year, it will be down to 2.4 per cent.

Not only that, but Manitoba's ranking in the highly regarded Fraser Institute's Survey of Mining Companies has dropped from No. 1 internationally in the 2006-07 survey to 26th in the 2013 edition that came out earlier this year.

But Ed Huebert, of the Mining Association of Manitoba, said there's reason for optimism results can improve.

The industry association's mission is to see Manitoba back in the top 10 by 2017.

"The most important issue to address is transparency," Huebert said. "Permitting is an issue not just from the industry perspective; it has to have traction with the First Nations communities as well. That's why we say we are looking for transparent, consistent implication of policy."

Manitoba has struggled to come up with an adequate process when it comes to the duty to consult First Nations that are potentially affected by resource development on their traditional lands.

Not to say there is a more confrontational environment in this province than elsewhere in the country, but Manitoba has been hit with some high-profile disputes, including an ongoing one between Red Sucker Lake First Nation and Mega Precious Metals Inc., which have both resorted to taking court action against each other.

While Mega is years away from having any chance of producing the gold and tungsten it has identified at its property, it is one of the most exciting new mine prospects in the province.

Huebert and others are hopeful the Mining Advisory Council established last fall, co-chaired by Chief Donovan Fontaine of Sagkeeng First Nation and Chief Ron Evans of Norway House Cree Nation, will start to bridge some of the gaps of understanding that exist.

In the meantime, those disputes help create an atmosphere of uncertainty in the province.

Ken Green, one of the authors of the Fraser Institute report, said those are the kinds of issues that give mining companies pause when considering capital expenditure.

"When you talk to people who are involved in mining, the word uncertainty has more meaning to them than almost anything else in developed countries," Green said, noting security is the biggest issue in developing countries.

"It is really quite obvious. People put up huge amounts of money. Millions of dollars go into the ground before anything comes out. They need transparency, consistency and predictability."

He said it's not uncommon for jurisdictions to move up or down in the rankings very quickly, but policies need to be addressed.

Manitoba's mines branch is acutely aware of the challenges and has been extremely engaged in creating more transparency.

But nothing is likely to change much in the field until mineral prices start to improve.

And that might be happening.

Nickel prices have risen to about $9 per pound from about $6 per pound three months ago.

"With $6 nickel, it's hard to get excited," said Huebert. "But at $9, it's easier to look at it with some optimism when it's moving in that direction. How that will translate for Manitoba, we'll have to wait and see."

martin.cash@freepress.mb.ca

 

Republished from the Winnipeg Free Press print edition May 17, 2014 A1

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