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By Gary Park
Mining News Calgary Correspondent 

Gold poised to leap ahead in Canada

Improved prices spur exploration in British Columbia, northern territories; Canadian government holds out hope of exploration tax credit extension

 

Last updated 4/18/2004 at Noon



Gold exploration is being fired up in British Columbia and Canada's three northern territories, rekindled by improved metal prices.

"The industry is finally coming back," declared Dan Jepsen, executive director of the British Columbia and Yukon Chamber of Mines.

The British Columbia Ministry of Energy and Mines is counting on exploration doubling last year's spending of C$55 million, helped by the provincial government's efforts to reduce bureaucratic delays and introduce tax incentives for mining investments.

Optimism has also been raised by Canada's Natural Resources Minister John Efford, who said a 15 percent mineral exploration tax credit may be extended three years to the end of 2007.

He told the 72nd annual convention of the Prospectors and Developers Association of Canada in Toronto that mining firms, as well as energy and forestry companies, need a break as they struggle to adjust to a stronger Canadian dollar, which gained 20 percent in value over the last year against its U.S. counterpart.

"One of the things they have to face is the rise in the Canadian dollar in an exporting industry," Efford said.

"We've got to make some improvements in our tax regime to try and help the industry."

Streamlining permit process the priority

Efford also promised to slash the time mining and energy companies need to obtain environmental permits.

He said those approvals can often take up to two years, compared to 120 days in the United States

Streamlining the process, is his "number one priority," Efford said.

But he hailed Canada's "rapid advancement in the diamond industry," noting that last year 11.2 million carats worth C$1.7 billion were mined, compared with 4.9 million carats valued at C$790 million in 2002.

"To be ranked third in the world in the value of diamond production after only five years is nothing short of remarkable," he said.

With their confidence growing, investors are pulling British Columbia out of a decade-long slump.

Last year, British Columbia-based companies raised C$800 million in financing, double the previous year, according to Jim Mustard, senior mining analyst at Haywood Securities, noting that last year was the fourth in succession when exploration spending rose.

The renewed interest shows every sign of spilling over to Canada's most remote regions - the Northwest Territories, Yukon and Nunavut.

In the Northwest Territories, the surge in gold prices over the last five years has set the stage for a revival of old projects outside the immediate orbit of Yellowknife.

Anaconda options Damoti Lake property

Topping that list, Anaconda Gold has optioned the Damoti Lake property, 105 miles north of Yellowknife, from Doublestar Resources after extensive drilling during the 1990s; Seabridge Gold has acquired operating interests from Newmont Mining and Total Resources (a unit of the French energy giant) to revive the Courageous Lake project; and junior mining company Tyhee Development, based on revised resource estimates, believes it can inject fresh life into the Discovery mine that produced 1 million ounces of gold over 20 years to 1969.

In the Yukon, a joint venture has been formed by StrataGold and Northgate Exploration to spend C$700,000 this year drilling the Hyland property, 45 miles northeast of Watson Lake.

Success would give the Yukon its first producing gold mine since the closure of the Brewer Creek mine, which yielded 266,000 ounces from 1997 to 2001.

For Nunavut, the biggest hope rests with Edmonton-based Committee Bay Resources, which has collected samples along a 180-mile rock formation southwest of Melville Peninsula.

Chief Executive Officer John Williamson said his company hopes to complete sufficient drilling to calculate an "inferred" resource, offering an insight into the gold potential of one location, known as Three Hills.

He said Committee Bay's prospecting during the 1990s has allowed it to select "high quality land."

 

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