While BC mining sector resurrects, small miners are being left behind.

 

Gold prospector Dan Hurd prepares for a day of exploration in central B.C.

David Makepeace is fighting to advance the re-opening of a 100 ton per day silver-lead-zinc mine. But the “never-ending permitting and environmental reports” have exhausted the sixty-five-year-old senior project geologist with KlondikeSilver Corp.in Sandon B.C.

“When you transition from exploration to an active mine permit, there is a quantum leap in the amount of paperwork,” said Makepeace, who has a graduate degree in environmental engineering.

“Our tiny operation is considered the same as a major operating mine like Highland Valley Copper, which produces over 100,000 tons a day,” he explained.

The B.C. Government requires Makepeace to produce the same paperwork and environmental studies. Right now, he’s writing a 200-page annual reclamation report, which “diverts my attention from exploration and helping raise money for the company.”

“Klondike Silver could’ve begun production three years ago,” Makepeace said. “Instead, we spent $4 million of shareholders’ money to do nothing.”

Despite Makepeace’s struggle, the B.C. Ministry of Energy, Mines and Petroleum reported in their Mineral and Coal Exploration Survey that 2018 was the second consecutive year of grass-roots mineral exploration growth, with project spending up 62 per cent from 2016 – totalling $330.2 million. They said total drilled metres were up 17 per cent from 626,897m to 730,500m – a robust increase that saw early-stage exploration spending rise nine per cent.

Iain Thompson, Canadian Mining and Metals Leader with Ernst & Young (EY) said that it’s getting much more challenging – globally – to get mining exploration projects through the approvals phase.

“It’s not just a B.C. issue,” he said.

“Obtaining social license is now part of the process – it’s jumped from number seven to number one in global risk.”

However, Thompson said a recent EY study put B.C. in a positive light.

“From a total investment dollars perspective, we certainly are seeing an increase in expenditure in B C,” he explained.

“Three years ago, there was an expectation for a reset, which was a return to early-stage exploration in B.C. We’ve seen that hold somewhat true as Canada captures a larger portion of global mining investment.”

From the 60s to the 90s, the B.C. mining business was like a live theatre that showcased thousands of penny-stock mining companies — many of which were successful in transforming Vancouver into a global mining centre.

The stars of the show were bombastic geologists, Cadillac driving mining promoters, and trophy investment bankers. Men with money blasting their way to riches or bankruptcy.

Decades later things have changed.

Seeking sustainability, successive NDP and Liberal governments have added environmental red tape, making it difficult to advance mining projects from discovery to production. Although B.C. maintains a healthy baseline of producing mines, such as New Afton in Kamloops and Highland Valley Copper near Logan Lake, many mineral explorers are leaving Canada.

According to a Mining Association of Canada report, innovation dollars are steadily leaving for countries like Australia, Germany and South Africa.

Statistics Canada reported that B.C. mineral exploration and deposit appraisal expenditures dropped by $113.4 billion between 2014 and 2018. The Mining Association of Canada reported the number of active projects in Canada is down by almost one-half since 2011. Only two new mining projects were submitted for federal environmental assessment in 2016 according to the MAC.

Daniel Lui, a 17-year veteran of the B.C. mining sector, is one of the exploration geologists who’ve stayed in Canada. He’s grateful that exploration permitting has been streamlined with the use of multi-year area-based permitting, “a system that authorizes flexible exploration work for up to five years on mineral or coal tenures – where (drilling) rigs are sometimes allowed to change planned locations without having to re-permit.”

“But there aren’t many exploration programs left in B.C.,” Lui said.

The situation might be improving. The B.C. Mineral and Coal Exploration Survey said that early stage mineral exploration influences the outlook for the mining and metals sector. Five years ago, the prospects for discoveries leading to new mines appeared bleak, with few investments being made in grass-roots exploration. According to the survey, the mining sector has been going through a reset over the last two years – 2018 denotes 5 years of increases in early stage exploration as a share of total exploration.

Rob Stevens, vice president, regulatory and technical policy, for the Association for Mineral Exploration B.C., said the provincial government has accepted approximately 25 new recommendations via the final report of the association’s Mining Jobs Taskforce.

“They are going to implement all of the various recommendations,” Stevens said.

“The aim of the taskforce was to position B.C. as essentially the most interactive jurisdiction in the country for exploration and mining. They (provincial government) have made tax incentives for flow-through investment permanent.”

Stevens said there are two types of incentives — one for investors, and one for companies – which are able to write-off a portion of their exploration activities. The provincial government has also provided funding for an initiative called the B.C. Regional Mining Allowance, a pilot program that is a collaboration between First Nations, the province, several exploration companies, and the AME.

“The idea was to attend investment forums – to bring forward a consolidated front where everybody is working towards advancing exploration and mining in B.C,” Stevens said.

BCIT graduate, and independent prospector Dan Hurd, 45, has over 20 gold tenures throughout the interior of B.C.

“There’s lots of small-scale exploration to be done out there. That’s easy to do. Moving beyond that is where it starts getting tricky,” said Hurd.

“That’s where the bureaucracy comes into it. We have some fairly strict (environmental) rules here in B.C. Well-natured rules. For a good reason.”

Hurd said that moving beyond hand-digging involves the same approval processes as open pit mining.

“That’s where it gets tough for the little guys,” he explained.

“It really hampers that mid-stage of prospecting. And First Nations consultations can cost thousands. Pretty much everyone now is having to do an archeological study.”

The Government of B.C. website stipulates, “proponents are generally encouraged to engage with First Nations as early as possible in the planning stages to build relationships, and for information sharing purposes that may support consultation processes.”

Hurd said that following the amorphous rules is a near impossibility for some prospectors.

“People are losing their shirts in the process,” he lamented.