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SOMBA K'E/YELLOWKNIFE - David Webb, president and CEO of Tyhee Development Corp., can describe his company's exploration prospects for 2009 in the territory with one word: dismal.

He's likely not the only one.

Exploration spending by junior and senior companies in the NWT is expected to plummet by a combined 79 per cent, according to a report recently released by Natural Resources Canada.

Val Pratico, chief geologist with Tyhee Development Corp., stands in front of the Ormsby Portal at the company's Yellowknife Gold Project during better economic times. This year, the company's spending budget is reduced to $1 million from $9 million last year. - photo courtesy of Tyhee Development Corp.

The report, which surveys mining companies to gauge their 2009 spending intentions, predicts exploration spending will drop to $28 million in 2009 from $133 million last year.

Besides the Yukon, which shows a similar drop, "the only province that's anywhere near those numbers is B.C., where the stated intentions were (down by) 63 percent," said Mike Vaydik, general manager of the NWT and Nunavut Chamber of Mines.

While all jurisdictions in Canada are feeling the pain, the NWT appears to be hurting most, with Nunavut experiencing an estimated 39 per cent drop, Ontario a 37 per cent drop and Quebec a 41 per cent drop.

Vaydik spoke to News/North on his way back home from the Prospectors and Developers Association of Canada conference in Toronto, which hosted close to 20,000 registrants from all over the world.

"We don't think we've seen the bottom of the market yet, and so it won't surprise me to see some more layoffs," said Vaydik. "And, unfortunately, there are many businesses that depend on the exploration and mining industry for their well-being: aviation and expediters and logistics people, truckers and other folk, right down to the grocery stores that sell to the exploration camps."

Vaydik said one of the things he's most concerned about is ensuring the territory gets to work on its regulatory system, so when markets turn around, the territory is able to attract investment back into the North.

"We saw the reduction in exploration in the Northwest Territories even before the markets got hit and it was people who couldn't get permits to drill or do major exploration work," said Vaydik.

"The problem in the NWT is that it takes so long on the permitting side to get anything done," agreed Webb.

Vancouver-based Tyhee, which is focused on the historic Yellowknife Gold Camp 90 km north of Yellowknife, has reduced spending to $1 million this year from $9 million last year and expects to only employ six people in operations this summer, as opposed to last year's 50.

Webb said the company started working on its permitting process in 2006 with the Mackenzie Valley Environmental Impact Review Board.

The company hopes to get some documents back from the board in the next four months so it can begin its next step in the permitting process, which could take "the next six, eight, 12 (months)," he said.

As traditionally occurs in an economic downturn, gold companies in other jurisdictions are doing quite well, Web added.

"Ours, we're tagged as a Northwest Territories development, which comes with a discount. If we were in Quebec (a comparable jurisdiction for resources) we could do this, but it's because we're in the NWT," he said. But Webb is "not wholly negative" on the territory.

"I came up there very early in my life ... basically I've been there a lifetime ... and it's unfortunate it takes a lifetime to accomplish something up there - but I'm going to give it a shot."