Diamond talk in Toronto
Nunavut expects growth, Prospectors and Developers Conference told
Stewart Burnett and Karen Ho
Northern News Services
Monday, March 16, 2015
NUNAVUT
A diamond play on the Melville Peninsula, nine km north of Naujaat (Repulse Bay), was a bright spot at the Prospectors and Developers Conference in Toronto this month.
Ken Armstrong, president and CEO of North Arrow Minerals, is happy with his company's latest yellow diamond report on the partial results from the Qilalugaq bulk sample showing a significant portion of large and fancy stones. However, he noticed the industry's tough state at the conference.
"It's not super positive out there," Armstrong said. "There are definitely a lot fewer people at the conference than in years past."
Most Canadian mining companies and related businesses attend the annual conference. Registrations were down significantly this year and media reports said the prizes and specials being offered at booths to lure investors in were less extravagant than in previous years.
Armstrong said the conversations are not positive on the exploration side.
"Companies continue to struggle to raise money to do the exploration work that's required to make new discoveries," said Armstrong. "Companies that have deposits they're trying to evaluate and take through a permitting process to put through production are having trouble raising money to do that work."
According to a recent report from Natural Resources Canada, exploration spending is expected to be down sharply – 54 per cent – in the Northwest Territories this year. That's a drop to $43.6 million, down from $52.2 million last year.
Conversely, both the Yukon and Nunavut are forecasting increased exploration spending. Nunavut is forecast to increase 21 per cent to $174.3 million from $144.6 million.
"The NWT is not doing well in that projection," said Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines.
"It's down considerably. But if you look at Nunavut and Yukon, they're both projecting spending to go up. It says that the exploration world and the finance world isn't dead. It's not flat, but there's certainly more competition for the dollars out there, so the kind of growth we saw in recent years is not there right now."
And investors are sitting on the sideline, waiting to see how companies manage the downturn.
"When you can't raise money, it's tough to do the real evaluation work that's required to determine if a prospect is worthwhile or not," said Armstrong.
Hoefer had a booth at the show to inform people about Northern opportunities.
"The marketplace is in a lot of pain," said Hoefer. "There isn't a lot of money out there and there's more competition for it."
Some companies have dropped out of that competition entirely right now and didn't even attend the show.
"(The conference) saw quite a reduction in numbers," said Hoefer.
He said fewer people came by his booth and asked questions than in previous years.
"The mood is down," said Hoefer, who added that similar results were seen in the Vancouver mining conference in January this year and a Yellowknife forum last year. China's slowdown has a lot to do with the pain mining is in, he said.
"China heated up the whole world and drove excitement into almost every corner of the world," said Hoefer. "When a country that big with that speed of growth gets moving, they were pulling resources from almost every country in the world."
High-risk exploration, the type of exploration commonly associated with Northern projects due to high power costs and lack of infrastructure, is less attractive in this environment.
