Saskatchewan may be viewed as the most attractive place in the world for mineral exploration companies to spend their money, but you wouldn’t know it by just looking at the latest estimates on spending in the province.
Spending on mineral exploration and deposit appraisal declined for the second year in a row, according to new statistics from Natural Resources Canada.
That’s despite Saskatchewan ranking first place in a 2016 industry poll, released earlier this year, that asked companies which jurisdiction across the world has the most enticing environment for investment.
Down 21 per cent in 2017
In 2017, companies spent $181 million looking for Saskatchewan’s next uranium mine or other commodity churner.
That’s down 21 per cent from last year and represents the second-biggest year-over-year drop — behind only Nunavut — among provinces or territories where the dollar value of activity took a dive last year.
Saskatchewan mineral exploration spending (2013-2017)
2013: $222 million
2014: $245 million
2015: $257 million
2016: $229 million
2017: $181 million
It’s also down from 2015, when $257 million was spent in Saskatchewan.
Losing out to other countries
The decline is partly the result of Saskatchewan, and the rest of Canada, losing business to other continents such as South America, Africa, Australia and even some Scandinavian countries, says Pam Schwann, the president of the Regina-based Saskatchewan Mining Association.
“You cannot get a mine developed in Canada in under 10 years with the current regulatory system,” said Schwann.
“For [the] high-risk activity that exploration is, and for sinking hundreds of millions dollars before you really get any production and any return out of it, companies are really looking hard at other jurisdictions that are more competitive and will offer a better return and a quicker return on the dollar.
More than just uranium
Natural Resources Canada’s figures aren’t final: they’re based on an early 2017 survey of what companies planned to spend this year and a checkup later in 2017 on actual spending. They’ll be revised again in early 2018.
But they offer some idea of how much money is being spent to find sources of new jobs and future royalties for the provincial government.
Pam Schwann, president of the Saskatchewan Mining Association. (Saskatchewan Mining Association)
Schwann says one thing that would help the province’s numbers trend upward again — besides a lift in uranium and potash prices — is if companies diversified their spending beyond those staple commodities. Uranium, for example, accounts for more than two-thirds of the mineral spending, commodity-wise, in Saskatchewan.
Gold and rare earth deposits in the western part of the province bear digging up, too, said Schwann.
“Particularly because gold prices has sustained over $1,2,00 an ounce and it hasn’t seen the decline that we’ve seen in uranium and potash and [their] sustained low prices for a number of years now,” she said.
PST worries
One worrying change is the fact that mineral exploration companies were not exempt from the Saskatchewan government’s PST expansion last spring.
They did not have to pay PST on drilling costs before, said Schwann.
“That will make up anywhere between 30 and 50 per cent of your typical exploration program,” she said.
“That’s a lot of money that’s not going in the ground anymore and not into northern Saskatchewan but into the provincial government.”
Some good news: despite the decline, Saskatchewan is still one of Canada’s top five provinces for spending, and 16 of the 100 highest-spending exploration projects across the country were in Saskatchewan last year.
Many of the 100 highest-spending exploration projects in Canada in 2016 – 16 in fact – were in Saskatchewan. (Natural Resources Canada)
In 2017, company spending was nearly equally split between smaller-sized junior exploration companies ($85 million) and larger — and usually more easily financed — senior exploration companies ($97 million).
Activity-wise, the majority of money went to actual drilling of mineral targets as opposed to head-office (non-field activities) such as registering mineral claims.
Source: CBC News