IQALUIT
This year's Nunavut Mining Symposium took place against the backdrop of a territory-wide slump in mineral exploration and deposit appraisal.

Exploration equipment on-site at Peregrine Diamonds Chidliak project on Baffin Island. Barriers to investment in Nunavut must be addressed to bring spending in the territory in line with its mineral potential. - photo courtesy Peregrine Diamonds Ltd.

The most recent data from Natural Resources Canada (NRCan) indicates projected 2014 spending in Nunavut ($166.5 million) to be down 38 per cent over what it was in 2013 ($270.2 million).

If these projections for 2014 hold true, this decline means expenditures on exploration and resource development will be less than 40 per cent of what it was in 2012, when $422.5 million was spent in the territory.

Spending across the North is down. Projections for the Yukon put it at a 42 per cent of spending in 2012, while the NWT is projected to sit at 66 per cent of 2012 spending.

This dark cloud isn't just hanging over Nunavut and the North. According to NRCan, 2013 expenditures were down across Canada by 41 per cent over 2012, and they are expected to decline a further seven per cent in 2014 to $2.1 billion.

To give this 2014 number context, 2009 expenditures on exploration hit $1.9 billion following the 2008 financial crisis.

As if that dark cloud of depressed spending were not enough, actual spending in 2013 was lower than initially projected by $1 billion.

Here's where the cautious optimism comes in. Gold shed value in 2013, taking with it -- according to NRCan -- the stimulus for exploration as companies waited to see what would happen. Gold closed 2013 at just more than $1,200 USD per oz. Since then, it has hit $1,382 and currently sits at around $1,320 per ounce.

"We still consider these to be quite challenging times for the industry," said Elizabeth Kingston, Nunavut manager for the NWT and Nunavut Chamber of Mines.

"But we're optimistic and hopeful that the market is going to turn around and that we may see better spending later in the year."

The 2013 contraction may have provided impetus for mining companies to tighten their belts. In the case of Nunavut's Agnico-Eagle Meadowbank mine, 2013 was a record year for gold production.

"Despite low gold prices, they had record production of over 430,000 oz of gold," Kingston said. "That's an increase of about 16 per cent over last year."

"It's a good marker of what we can potentially achieve."

Exploration and mineral appraisal spending is important to Nunavut's economy, especially its small-business base.

In a tight global market, Kingston said governments and societies like the NWT and Nunavut Chamber of Commerce cannot simply wait for dark clouds to disperse.

Strong regulatory and taxation support for mineral exploration can keep money flowing into the territory even when markets are down.

"We're totally at the mercy of the markets," Kingston said. "The markets are like the weather. We can't control either of those environments, but there are other things we can control."

Bucking the national trend, exploratory spending in B.C. is expected to remain stable over what it was last year. Kingston points to that province for comparison with Nunavut.

"We have similar mineral potential (to B.C.)," Kingston said. "But we in Nunavut are missing out on attracting hundreds of millions of dollars in exploration investment that would help our local businesses."

She acknowledges that B.C. has advantages over Nunavut, including a temperate climate and much better road and power infrastructure, but there are strategies Nunavut could take to attract exploration dollars.

"(There is) a broad-based national tax benefit available for exploration companies, but it's really the only thing we have here in Nunavut," Kingston said.

"Other jurisdictions have a variety of other incentives. We really don't have anything else in the North. It's ... so difficult and expensive to work in the North, there should be tax incentives for people to come and work here."

There is a note of optimism here for Kingston as well.

"We're very pleased with the new government and Premier Taptuna," Kingston said. "He's always been a supporter and an advocate for our industry."