Two mines are under development in British Columbia, with several more set to move forward. After decades in the doldrums, the province’s mining industry is gaining momentum. Recent discoveries are adding to numerous deposits that were found in decades gone by. Exploration programs throughout the province hold promise of further discoveries.
British Columbia is extremely well-endowed with resources. The province hosts a wealth of mineral deposits, encompassing precious and base metals, as well as coal and industrial minerals. For a couple of decades, from the 1950s through the early 1970s, all the major mining companies were actively exploring in the province, with several of them operating mines.
Support From the Province
One of the most important improvements in BC from years gone by is the supportive nature of the provincial government. BC hasn’t seen a new mine built since 1997 despite favorable geology and an abundance of known deposits. Mine development projects were stalled by soaring construction costs before the global financial crisis. While cost estimates have moderated considerably with the slowdown in global mining construction, companies faced difficulties in securing financing. Those projects that had access to funding were trapped in a permitting process filled with red tape.
The government is now encouraging new mines by simplifying the permitting process. Timelines on approvals ensure that applications don’t get stalled.
The first major metal mine in over a decade is now under construction .A half dozen other projects are in advanced stage planning to begin development in the near future.
The BC and Federal governments have also committed to investing $380 million in the construction of the Northwest Powerline along Highway 37. The northwest region of the province hosts a wealth of mineral deposits. Bringing low-cost power within reach of those projects will provide a huge boost to their economic viability.
The Federal flow-through tax benefit program is augmented with a provincial tax credit, creating a “super flow-through” benefit to investors. For those not familiar with flow-through shares: Investors in specified mining company financings can get a tax write-off equal to the amount invested. If the investor is resident in BC and the company invests the proceeds in BC, the investor gains an additional credit against BC income taxes.
BC has for years maintained an exemplary data base of geological data. Explorers in the province are required to file “assessment reports” annually to keep their claims in good standing. Once the claims lapse, the reports are available to the public. In that way, a new explorer can build on the results of previous work. The province has moved with the times, making those reports available on the internet. Even claim staking can now be done on-line.
With attractive tax policies, reasonable mining regulations, high quality and accessible geological data and attractive exploration incentives, the province is now one of the most favorable places to explore. The BC government is actively encouraging the mining industry to explore and develop in the province. That was not always the case, and it will take time for investors to overcome the legacy of the past.
Support from Communities
Most areas of the province are strongly supportive of the mining industry, recognizing the jobs that mining brings. However, some well-publicized disputes with First Nations groups in the past have stalled projects and created concerns among investors. Those disputes have generally not involved outright opposition to mining so much as getting a fair share of the economic benefits of mining on traditional lands.
Mining companies are now working hard to forge strong and progressive relationships with First Nations in British Columbia. The BC government has taken a proactive stance, becoming the first province in Canada to negotiate revenue-sharing agreements with First Nations for new mine projects.
“There are several companies that have successfully engaged with First Nations in British Columbia to develop win-win relationships. Several of the 19 proponents in various stages of the environmental assessment process in Tahltan traditional territory, often referred to as the Golden Triangle that covers almost 97,000 square kilometers of the northwest British Columbia, have negotiated communication, environmental review or impact benefits agreements,” says Robert Simpson, president of PR Associates, who helped negotiate these agreements.
The perception of difficulties with land claims is a legacy of the past. Over time the perception will converge with reality. The First Nations are now working with the mining industry. They are taking entrepreneurial approaches to providing support services and are actively involved in training programs to develop the skills needed by the mining industry.
Favorable Geology
British Columbia is composed of a wide range of geological environments. The patchwork of crustal plates that came together to form the province include everything from mid-ocean rifting to high volcanoes and extending to deep continental crust. As a result, the province hosts virtually every type of mineral deposit including gold, silver, platinum, iron, base metals, coal and even oil and gas.
The province was explored fairly intensely from the 1950s to the early 1970s. Political changes then drove the mining industry away. The geological talent pool was dispersed to the world. While working abroad, many of those geos remained based in Vancouver. From that base, the city has evolved into an important center for worldwide mineral exploration, development and financing.
The results of that earlier work have been and continue to be re-evaluated. Geological science has come a long way since that first pass of exploration. In those decades, the mining industry and the metals markets have also evolved. For example, prior to the 1970s, gold was given little or no value in a copper deposit: The gold price was low and with the technology of the day it was hard to extract. Today, in some BC copper deposits, the gold credit equals or even exceeds the value of the copper. One company outlined more than 5 million ounces of gold that was previously ignored in a copper deposit.
In the 1970s and 1980s, other parts of the world opened up to the mining industry. Big, high-grade deposits in places like Chile and Indonesia satisfied the growing demand for metals at that time. Many of those deposits are now nearing the ends of their useful lives. The lower grade deposits in BC are now emerging as the best available prospects for new mine development. Efficient, large-scale mining operations can make big profits even from low grade deposits. For example, Teck’s Highland Valley mine is hugely profitable, even with a copper grade below 0.4% and very small by-product credits.
Furthermore, what were then considered low grade surface deposits are now recognized as being potential indicators of higher grade deposits at depth.
An enormous amount of geological talent and a lot of money are being directed to re-evaluating BC deposits and in making new discoveries in this mineral-rich province. Junior companies are the leaders in that search for new mines.
Once Remote Areas are Opening Up
Parts of BC were difficult to access in the past, due to the rugged terrain in some areas and the lack of roads. That has changed considerably. The province has expanded the network of provincial roads, opening up areas that were once remote. The logging industry has extended that network of roads deep into the mountains. An extensive fleet of helicopters can get geologists into those areas that are still off the beaten track.
As noted above, the provincial government is keen to see mining proceed and is working closely with the industry regarding further infrastructure projects that will assist in mine development.
The area most impacted by the infrastructure build-out is the area north of Stewart. For more than a century, the area was recognized as being rich in gold, silver and base metals. Small, high grade deposits have been worked since the early 1900s. A couple of bigger mines, notably Eskay Creek, have also been developed. Several other big deposits in the area are benefitting from the on-going improvements to the highways in that region and the plans to extend the provincial power grid.
The Re-emergence of BC Mining
A wealth of mineral resources, decades of work that have identified deposits, supportive government and local communities, improving infrastructure and favorable metals markets are coming together to drive a rebirth of the mining industry in BC.
So far, investors have largely ignored the changes that are adding value to BC projects. The news flow from another season of exploration and further developments of advanced-stage projects will bring the investor attention that the province deserves.
