SOMBA K'E/YELLOWKNIFE - Spending by mineral exploration companies is slated to increase in the NWT this year, after a year in which companies drastically cut back on spending, according to preliminary estimates released last week by Natural Resources Canada.

Michael Lafferty, a labourer and driller's helper at Avalon Rare Metals' Nechalacho rare earth minerals project 100 km southeast of Yellowknife, rides an ATV to the project's drill site. Mineral exploration spending in the territory is expected to double this year. - Guy Quenneville/NNSL photo

That's good news for Yellowknife businesses, many of whom cater to exploration projects both in the immediate area, and throughout the NWT and Nunavut.

Spending in this territory is projected to total $66.3 million in 2010, a 125-per cent increase from $29.5 million last year.

One business is already realizing the rise in spending. Based on the orders made so far, "This year appears to be busier than last year already," said Bud Weaver, co-owner of Weaver and Devore.

The Northern gear outfitter supplies food and hardware to numerous companies, including Sabina Gold and Silver Corp., which owns the Back River and Hackett River precious metals projects near Bathurst Inlet.

Sabina is spending $20 million on drilling at both projects this year, substantially more than last year.

At Discovery Air - which owns Great Slave Helicopters, Discovery Mining Services and Air Tindi - the mood is optimistic, but cautious.

"I try not to predict how markets are going to do," said Dave Jennings, president of the company. "All I can tell you is the evidence we have. As we sit here in March, we don't have firm evidence that things have picked up, because the bulk of the work doesn't really start yet."

But as for "some circumstantial, anecdotal evidence that things are picking up over the last year, it might be simple things like going to the annual mining shows – the mood is a lot more positive," said Jennings. "People are talking about spending as opposed to cutting back."

Mike Vaydik, general manager of the NWT and Nunavut Chamber of Mines, is currently attending the Prospectors and Developers Association of Canada's International Trade Show in Vancouver, where the mood has picked up noticeably since last year, he said.

"I spent some of yesterday at some of these commodities talks and I'd say that they were all mildly optimistic," said Vaydik. "There's probably a $1,100 price for gold sustained over the year. That sort of (prediction) is a basis for exploration. It sets a trend for some of the other commodities."

Among gold companies in the territory, Tyhee is currently spending approximately $2.5 million on winter drilling at its Yellowknife Gold Project, located 75 km northeast of the city. The project has created work for 12 people, most of them from Yellowknife.

Vaydik said the exploration statistics are promising, but still considerably lower than in previous years.

In 2007 and 2008, $193.8 million and $147.8 million were spent in the NWT, respectively.

"We still have to work at sustaining that growth," Vaydik said of this year's expected rise.

Last week's federal budget included some promising signs for the mineral industry, including an $11 million pledge toward accelerating the review processes for resource projects in the North.

In addition, Ottawa extended a 15-per cent mineral exploration tax credit for investors.

"These are flow-through shares that you get an additional tax credit on if you invest in grassroots exploration in Canada," said Vaydik. "It's a further incentive to invest in the grassroots sector."