The focus of exploration in British Columbia (BC) is shifting to grassroots and early-stage exploration, according to a new survey – a joint initiative between EY, the Government of British Columbia’s Ministry of Energy and Mines (MEM) and the Association for Mineral Exploration British Columbia (AME).
“We’re seeing a number of projects that supported exploration expenditure over the past five years now evolving into the mine development phase, resulting in a drop in expenditure in the capital intense later stages of the exploration lifecycle” says Iain Thompson, Associate Partner with EY’s Canadian Mining & Metals practice. “But importantly, the survey indicates a swing in focus with a rise in expenditure in the early stages of exploration. The resilience of the exploration industry in BC over time reflects the province’s favorable geology, good infrastructure, and stable policy environment.”
While the overall downward trend in exploration in BC continued in 2016, led by low commodity prices, market uncertainty, and another sharp drop in advanced-stage exploration, the British Columbia Mineral and Coal Exploration Survey found that grassroots and early stage projects actually experienced significant growth in exploration expenditure in 2016:
- Grassroots expenditure increased by 24% to just under C$15 million
- Early stage expenditure increased by 48% to just under C$42 million
“BC’s share of national exploration expenditure has demonstrated a long-term upward trend,” says Gordon Clarke Director, BC Mineral Development Office. “Notwithstanding the current downturn, the industry remained an important source of jobs and was – and continues to be – an economic contributor to communities throughout the province.”
“Exploration companies continue to demonstrate their commitment to local communities and First Nations engagement through targeted activities, investment, employment and procurement,” says Jonathan Buchanan, Director, Information & Public Affairs at AME. “In fact, a significant percentage of exploration budgets remain in the local community.”
According to the survey, 66% of those who responded indicated that 50% or more of their budget was spent locally, with nearly 30% indicating 90% or more was spent in the local community.
The survey suggests that exploration in BC may be nearing or experiencing a mining exploration lifecycle “reset.”
EY, MEM and AME agree: “Looking forward, the outlook for the exploration sector in BC will largely be influenced by the success of grassroots and early-stage exploration. It will also be influenced by commodity prices and the ability of exploration companies to raise capital.”