Mineral exploration and development - Prospectors & Developers ...
P R O S P E C TO R S
A N D
D E V E LO P E R S
A S S O C I AT I O N
O F
C A N A D A
Mineral exploration and development T H E P DAC Our 7,000 individual and corporate members are involved in the exploration for, and discovery and development of, new mines and new wealth. We are a national association that has been representing the interests of the mineral exploration industry since 1932. We hold the world’s largest annual mineral industry convention in Toronto each March. In 2009 we welcomed 18,000 delegates from more than 100 countries.
M I N E RA L E XPLO RAT ION A N D D E VE LOP M E NT Mineral exploration is the first stage of mine development. Most major mining producers have active exploration departments, but many significant discoveries have been made by entrepreneurial exploration companies. Although exploration companies sometimes grow into mining operations, exploration is a distinct activity, with different policy and financing needs. Exploration companies (also known as ‘juniors’) are small, often have only a handful of full-time employees and usually rely on the capital markets for operating funds because they have no production revenue.
Selwyn Resources’ geologists with core from Yukon zinc-lead deposit
Features of exploration & development companies Experienced founder(s) with financial credibility
No production revenue
Entrepreneurial Small scale – most have no more than a handful of full-time employees Most exploration takes place in remote, northern areas
Depend on the capital markets to raise funds High-risk, speculative business – few exploration projects lead to mine development Leave light environmental footprint
Majority of world’s mineral exploration companies are owned by Canadians
Many exploration companies have shifted to projects outside Canada during the last 20 years
Most major mining producers have exploration departments but many recent discoveries have been made by juniors. EKATI diamond mines, NWT – DiaMet Minerals Orca sand and gravel quarry, BC – Polaris Minerals Fruta del Norte gold property, Ecuador – Aurelian Resources Ring of Fire chromite-copper-zinc deposit, James Bay Lowlands, ON – Noront Resources, Freewest Resources
Diavik diamond mine, NWT – Aber Resources Malartic gold deposit, QC – Osisko Mining Donlin Creek gold project, Alaska – NovaGold Resources Athabasca Basin uranium project, SK – Hathor Exploration
March 2010
Despite an upturn in exploration activity over the past ten years, Canada’s metal reserves, like the rest of the world’s, are in decline at a time when global demand has been climbing, led by rapid growth in countries such as Brazil, Russia, India and China.
Canada's base metal reserves: 1980-2007
30.00
million tonnes
25.00 20.00
Copper
15.00
Nickel
10.00
Lead
5.00
Zinc
0.00 1980
1990
2000
2005
2007
Source: Natural Resources Canada
M I N E RA L E XPLO RAT ION F I N A NCE Exploration finance continues to drop in 2009 while mining finance hits new record After the 2008 market sell-off, share prices of larger mining companies turned in a strong recovery to the end of November, 2009. But the market performance of juniors’ shares was sluggish. Junior financing also lagged behind the new record set by larger mining companies listed on Toronto Stock Exchange in 2009.
Mining finance continues to plunge for juniors in 2009 2007
2008
2009
$7.2 billion
$3.0 billion
$2.8 billion
Mining companies listed on Toronto Stock Exchange $11.8 billion
$5.2 billion
$19.0 billion
Juniors listed on TSX-Venture Exchange
Source: TMX Group
Flow-through shares Flow-through shares have been providing an essential element of financing for exploration in Canada since 1954. All flow-through capital, from both regular and super flow-through under the Mineral Exploration Tax Credit (METC) Program that was introduced in 2000, must be spent on exploration within Canada. Flowthrough financing gives Canadian companies a competitive advantage. Flow-through financing also drops in 2009
Announced flow-through financings
2007
2008
2009
$1.1 billion
$736.5 million
$592.6 million
Source: Gamah International Ltd.
Flow-through financing provides some stability to exploration during stock market shocks by providing a tax break to investors to reduce the risk of investing in exploration. Exploration tends to take place in remote, northern regions and contributes to maintaining Canadian sovereignty in the North, where other economic opportunities are scarce. Prospectors and Developers Association of Canada • 135 King Street East, Toronto, Ontario, Canada M5C 1G6 Telephone 416 362 1969 • Fax 416 362 0101 • Email [email protected]
A N D
D E V E LO P E R S
A S S O C I AT I O N
O F
C A N A D A
Mineral exploration and development T H E P DAC Our 7,000 individual and corporate members are involved in the exploration for, and discovery and development of, new mines and new wealth. We are a national association that has been representing the interests of the mineral exploration industry since 1932. We hold the world’s largest annual mineral industry convention in Toronto each March. In 2009 we welcomed 18,000 delegates from more than 100 countries.
M I N E RA L E XPLO RAT ION A N D D E VE LOP M E NT Mineral exploration is the first stage of mine development. Most major mining producers have active exploration departments, but many significant discoveries have been made by entrepreneurial exploration companies. Although exploration companies sometimes grow into mining operations, exploration is a distinct activity, with different policy and financing needs. Exploration companies (also known as ‘juniors’) are small, often have only a handful of full-time employees and usually rely on the capital markets for operating funds because they have no production revenue.
Selwyn Resources’ geologists with core from Yukon zinc-lead deposit
Features of exploration & development companies Experienced founder(s) with financial credibility
No production revenue
Entrepreneurial Small scale – most have no more than a handful of full-time employees Most exploration takes place in remote, northern areas
Depend on the capital markets to raise funds High-risk, speculative business – few exploration projects lead to mine development Leave light environmental footprint
Majority of world’s mineral exploration companies are owned by Canadians
Many exploration companies have shifted to projects outside Canada during the last 20 years
Most major mining producers have exploration departments but many recent discoveries have been made by juniors. EKATI diamond mines, NWT – DiaMet Minerals Orca sand and gravel quarry, BC – Polaris Minerals Fruta del Norte gold property, Ecuador – Aurelian Resources Ring of Fire chromite-copper-zinc deposit, James Bay Lowlands, ON – Noront Resources, Freewest Resources
Diavik diamond mine, NWT – Aber Resources Malartic gold deposit, QC – Osisko Mining Donlin Creek gold project, Alaska – NovaGold Resources Athabasca Basin uranium project, SK – Hathor Exploration
March 2010
Despite an upturn in exploration activity over the past ten years, Canada’s metal reserves, like the rest of the world’s, are in decline at a time when global demand has been climbing, led by rapid growth in countries such as Brazil, Russia, India and China.
Canada's base metal reserves: 1980-2007
30.00
million tonnes
25.00 20.00
Copper
15.00
Nickel
10.00
Lead
5.00
Zinc
0.00 1980
1990
2000
2005
2007
Source: Natural Resources Canada
M I N E RA L E XPLO RAT ION F I N A NCE Exploration finance continues to drop in 2009 while mining finance hits new record After the 2008 market sell-off, share prices of larger mining companies turned in a strong recovery to the end of November, 2009. But the market performance of juniors’ shares was sluggish. Junior financing also lagged behind the new record set by larger mining companies listed on Toronto Stock Exchange in 2009.
Mining finance continues to plunge for juniors in 2009 2007
2008
2009
$7.2 billion
$3.0 billion
$2.8 billion
Mining companies listed on Toronto Stock Exchange $11.8 billion
$5.2 billion
$19.0 billion
Juniors listed on TSX-Venture Exchange
Source: TMX Group
Flow-through shares Flow-through shares have been providing an essential element of financing for exploration in Canada since 1954. All flow-through capital, from both regular and super flow-through under the Mineral Exploration Tax Credit (METC) Program that was introduced in 2000, must be spent on exploration within Canada. Flowthrough financing gives Canadian companies a competitive advantage. Flow-through financing also drops in 2009
Announced flow-through financings
2007
2008
2009
$1.1 billion
$736.5 million
$592.6 million
Source: Gamah International Ltd.
Flow-through financing provides some stability to exploration during stock market shocks by providing a tax break to investors to reduce the risk of investing in exploration. Exploration tends to take place in remote, northern regions and contributes to maintaining Canadian sovereignty in the North, where other economic opportunities are scarce. Prospectors and Developers Association of Canada • 135 King Street East, Toronto, Ontario, Canada M5C 1G6 Telephone 416 362 1969 • Fax 416 362 0101 • Email [email protected]
