Exploration projects in British Columbia continue to take off, as juniors and investors acknowledge the strengths and competitive advantages that operating in this province entails.

BY Eduardo Arcos

Expanding Infrastructure, Expanding Horizons

March 01, 2017

Over the past three years, attention has largely centered on the struggles of British Columbia’s mineral exploration sector, as the number of juniors established in the province has decreased by roughly 30%, thereby reflecting the state of the global mining industry during this time period. Despite this protracted bearish market, exploration projects in British Columbia (BC) have silently moved forward and are starting to garner attention from investors both local and overseas, drawn by the advantageous conditions that this jurisdiction offers. Huge exploration potential lies in B.C.: the northwestern region, just north of the town of Stewart, is widely considered one of the richest mineral areas in the North American continent, while the more developed Highland Valley area in south-central B.C. still holds vast copper porphyry deposits. Moreover, only 0.05% of land in British Columbia, a province of roughly the same size as Nigeria, is used for mining purposes, evidencing the immense potential for the industry.

Market developments over the past 12 months and forecasts for the upcoming year have helped buoy investors’ sentiment. Copper, which accounts for roughly 8% of British Columbia’s exports, has experienced a surge of over 35% in its price since hitting an all-time low of US$1.94/lb in January 2016. Analysts expect this spike in copper prices to continue throughout 2017. Furthermore, gold prices are currently hovering above the US$1,200/oz. threshold, boosting exploration projects in the province.

Completions of long awaited infrastructure projects during the downturn years have also contributed to an uptick in exploration activity, as more projects become economically feasible amid declining operational and logistical costs. Government incentives, namely the mining flow-through share tax credit, which allows individual investors to claim an income tax credit of up to 20% when buying shares in mining exploration companies in B.C., has also been largely beneficial for juniors and has helped sustain exploration activities during the downturn.

After a rough patch for the sector, exploration activity in B.C. is looking more promising than it has done in years.

Attention Shifts Northwest

Since the late 1800s, the area north of the town of Stewart, just across the Alaska border in northwestern British Columbia, has lured prospectors and gold-hunters with its vast mineral wealth. This has left a deep-rooted mining tradition and a century-long appetite for new projects. The first major discovery in this region led to the development of the Premier Gold mine, which started operations in 1918 and was, at its peak of operations, one of the major silver and gold mines in the world. Since then, major mines such as Snip and Eskay Creek have showcased the region’s mineral abundance. In fact, Eskay Creek would go on to become Canada’s highest-grade gold mine and the world’s fifth largest silver producer, with production in excess of 3 million oz. gold and 160 million oz. silver. Unfortunately, low gold prices during the late 1990s and high operational costs led to the closure of Snip and subsequently, Eskay Creek. During the first decade of the millennium, exploration projects in the area stalled, as juniors and prospectors opted to acquire projects overseas during the commodity boom years.

The remarkable success stories of Pretivm and Seabridge have been accompanied by a simultaneous wave of new developments that could collectively transform the region, now dubbed ‘The Golden Triangle’. Prospect generators and juniors took advantage of the depressed market of the past three years to acquire properties in the area, rightly sensing that when the turnaround finally arrived, their prospects would be much more promising.

Moreover, conditions to operate in the region have improved dramatically, as Walter Coles, president and CEO at Skeena Resources noted: “We paid for a project that had not produced gold since the 1990’s, when nearby infrastructure was poor, operations were costly, and gold prices were declining significantly. Today, gold prices are much higher, and infrastructure in the Golden Triangle has vastly improved. Additionally, we already know the gold is there and that it is high-grade, so our biggest risk is simply trusting the data that we have collected.”

Skeena acquired the historic Snip mine through a deal with Barrick Gold in 2016 and is targeting high-grade gold at the property. The company also owns the Spectrum-GJ project, which was bought from Teck, and the Porter Idaho project, which could hold up to 150 million oz. silver. East of the Snip mine lies Metallis Resources’ Kirkham property, where the company intends to begin drilling this summer following favorable airborne geo-survey results. “Metallis is excited about the possibility of two completely different discoveries in the same property, both vein and porphyry. The Kirkham property has the potential to replicate the Snip gold mine, as both properties have very similar geologies. We are lucky to be located right in the middle of the Golden Triangle”, declared Fiore Aliperti, CEO at Metallis.

British Columbia’s location along the Pacific Rim has helped it secure investments from Asian powerhouses that regard projects in the region as highly attractive given the appetite for commodities of their economies. Last year, Serengeti Resources reached an agreement with the Korean trading company Posco-Daewoo Corporation for its Kwanika project. “Daewoo invested $1.2 million for a 5% direct interest in the project…the investments went principally toward drilling, which yielded some very encouraging results”, stated David Moore, president and CEO at Serengeti.

The completion of the Northwest Transmission Line and the Iskut extension has resulted in a boost to the region’s competitiveness, drastically bringing down operational costs. Other infrastructure developments, such as new roads in the area, have contributed to increased connectivity. Moreover, 2016 marked the completion of Stewart World Port, a multi-purpose break-bulk port facility that aims to service the region’s main industries, particularly the mining sector. “When the idea of Stewart World Port was conceived, the idea was that it would cater solely to the mining industry due to its proximity to the Golden Triangle. As it turns out, we have been able to serve a number of other industries… Stewart World Port is mostly exporting to China, South Korea and Japan. Shipping out of Stewart instead of Vancouver saves about a day and a half of ocean freight, and it is cheaper”, declared Breanne Boettcher, business development manager at Stewart World Port.

Other Golden Triangles

Despite the intense activity taking place to the northwest of the province, exploration is far from confined to the Golden Triangle. In the Highland Valley area, home of the great copper porphyry deposits that British Columbia is traditionally known for, several noteworthy projects are gaining traction.

Such is the case of Nicola Mining, a junior company that has successfully turned around its fortunes since 2013 and is now advancing work at its Thule copper property. The company aims to add 10 to 15 drill holes in the property’s Embayment zone this year and explore the Titan Queen zone further. Moreover, Nicola’s fully permitted mill facility has the potential to consolidate small gold and silver mine projects in British Columbia, as the company is allowed to receive material from throughout the province. The consolidation of assets, coupled with an aggressive vision, has been key for the company’s improved fortunes. “I believe junior companies should make more ambitious attempts to take their initial projects all the way into production… . Our end goal is to take the project into production ourselves. We have the financial expertise and the geological expertise”, stated Peter Espig, CEO at Nicola.

Amarc Resources, a junior company developing the IKE property in the Highland Valley area, has announced a 300-hole drilling program for this year, in addition to plans for 50 drill holes at its Duke and Joy projects, located elsewhere in the province. Robert Dickinson, executive chairman at Amarc, noted the immense potential that lies in the area: “In a way, we have found what I call a ‘Golden Triangle’ but it is down in an area with developed infrastructure, in the porphyry center of Highland Valley in central British Columbia. This is what we have found in IKE.”

Promising projects elsewhere in British Columbia add up optimism for the exploration scene in the province, which can boast a myriad of competitive advantages. Citing the strengths of operating in B.C., Robert Cameron, CEO at Commander Resources noted: “Our business model is particularly effective [in B.C.] because the government has datasets available that we leverage to find new projects, which is lacking in most jurisdictions. We also have low landholding costs, which make it easier to maintain a large portfolio. This helped abate the effects of the downturn, whereas in other countries, land that is not in use is still subject to high taxes and other landholding costs.”

Commander Resources owns four properties in different stages of development throughout British Columbia and has seven projects in its royalties portfolio – a strategy that proved beneficial to ensure revenues during the downturn.

In regards to B.C.’s competitive advantages relative to other prominent mining jurisdictions, Robert Dickinson added: “The reason why B.C. can compete with 0.4% copper versus Peru’s or Chile’s 1% deposits is because we have infrastructure and we have great labor skills. These ultimately make operations more efficient and that is how the province is able to remain competitive”.

Exploration projects in British Columbia continue to take off, as juniors and investors acknowledge the strengths and competitive advantages that operating in this province entails.

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