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SOMBA K'E/YELLOWKNIFE - Mineral exploration projections showing a decline in spending in the Northwest Territories this year seem to be panning out so far, Yellowknife-based expediters say.

Yk-based exploration companies are getting most of their work in Nunavut and the Yukon, where exploration has risen "very significantly," according to Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines. - NNSL file photo

Natural Resources Canada (NRCan) data on exploration activity forecast $83 million in spending in the NWT this year, lagging far behind expected exploration spending in Nunavut, and down from about $85 million in 2010.

As increased uncertainty with the regulatory process in the NWT deters companies from starting exploration projects in the territory, Yk-based exploration companies are getting most of their work in Nunavut and the Yukon, where exploration has risen "very significantly," according to Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines.

"These companies are relying on work in Nunavut and Yukon as their bread and butter," Hoefer said.

Discovery Air vice-president Chuck Parker described the exploration activity in Nunavut so far this year as "robust," especially in the Kitikmeot region.

Exploration in Nunavut is expected to increase to $322 million this year, up from about $263 million in 2010, NRCan reported.

While it is still early in the primary part of exploration season, which typically starts in mid-June and stretches to early September, Yellowknife-based logistics company Braden Bury Expediting has no summer exploration work scheduled in the NWT, president Gary Reid said, adding "there is considerable interest in the Yukon and Nunavut." Two of the camps BBE has dealt with in the NWT over the last several years did not return for drilling programs this summer.

"As far as I can tell there's very little happening in the NWT," Reid said. "We had virtually no client contact on service requirements."

Parker said it is difficult to separate the amount of work they have in Nunavut and the NWT entirely, but the NRCan projections of dwindling exploration spending in the NWT speak for themselves.

"I would think there is something to be considered there given that there is strong, positive geology in the Northwest Territories," Parker said.

Discovery Mining Services vice-president Malcolm McLean said the main deterrent for companies is the permitting process.

"It's been difficult to get any new permitting," McLean said. "If people can't get permits, they can't work.

"It's basically the regulatory process that's holding them back."

Major barriers to NWT investment listed by industry executives and managers in this year's Fraser Institute Global Petroleum Survey included uncertainty with regard to environmental regulations, uncertainty concerning protected areas, governmental overlap and the cost of regulatory compliance.

The free-market advocate also conducts global mining surveys, and the NWT has typically ranked behind all the Canadian provinces because of these issues of uncertainty.

"We're just not sure what the rules are here with respect to engagement, regulatory complexity and land use permits," Hoefer said. "That has scared away a lot of investment.

"We need to do some work to identify where people's doubts lie."

Hoefer said the chamber would like to work with all parties, including the government and aboriginal groups, to make the regulatory environment more conducive to exploration startups for the future of the industry.

"If we start to dry up this grassroots exploration, it's going to hurt us a few years down the road," Hoefer said.

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