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Policy or geology?

February 28th, 2020

What’s behind Canada’s plunging reputation among miners?

by Greg Klein

If you think that’s bad news, be glad the poll ended when it did. The Fraser Institute Survey of Mining Companies 2019 imposed a November 8 deadline on respondents. Shut Down Canada didn’t really gain momentum until a bit later.

Even so, for the first time in a decade no Canadian jurisdiction made the top 10 for the survey’s main list, the Investment Attractiveness Index (IAI). Media coverage played up the role of provincial and territorial governments in jeopardizing what was—until recently and at least by Canadians—generally considered the world’s pre-eminent mining country. In doing so, reporters followed the institute’s commentary which, in keeping with its advocacy purpose, emphasized politicians’ ability to help or hinder the industry. But a closer look suggests miners and explorers gave other concerns higher priority.

What’s behind Canada’s plunging reputation among miners?

(Image: Fraser Institute)

The survey bases the IAI on two other indices, Policy Perception and Mineral Potential. The first is determined by company responses to government actions or in-actions affecting the industry. The second (assuming an un-interfering nirvana of “best practices” by those governments) considers companies’ appraisals of geology. The survey provides separate ratings for policy and geology, but also weighs them 40% and 60% respectively to compile the IAI. The 40/60 split reflects institute intel about how companies make investment decisions.

Despite Canada’s disappearance from the IAI top 10, three provinces rated highly for Policy Perception. Alberta, Newfoundland and Saskatchewan rated sixth, eighth and ninth in the world respectively. Five Canadian jurisdictions showed Policy Perception improvements over the previous year. Moreover, the most dramatic declines from 2018 appeared in the Mineral Potential index.

“We know there’s not a lot that policy-makers can do about the geology in particular areas,” says Fraser Institute senior policy analyst Ashley Stedman. “But when we see declines on the policy index, that’s something policy-makers should be paying attention to.

“In particular we saw significant declines in Saskatchewan, which dropped from third the previous year to 11th, and that was largely the result of concerns about policy factors including taxation, regulatory duplication and inconsistencies, and trade barriers. And in Quebec we saw a decline from fourth to 18th, with uncertainties about environmental regulations and about the administration or enforcement of existing regulations. We can see from both these jurisdictions and a number of other Canadian jurisdictions that regulatory issues are escalating and this should be a serious concern for policy-makers.”

What’s behind Canada’s plunging reputation among miners?

But while Saskatchewan’s Policy Perception rating fell from first place to ninth, the province’s Mineral Potential rank fell farther, from seventh to 21st. Quebec dropped from 10th to 21st in Policy Perception but plummeted from sixth to 25th in Mineral Potential.

Other dramatic Mineral Potential declines included Manitoba (from 11th to 26th), New Brunswick (49th to 72nd), Newfoundland (18th to 50th), the NWT (fourth to 29th), Nunavut (fifth to 16th) and Yukon (10th to 22nd).

Four provinces—Alberta, B.C., Nova Scotia and Ontario—did show improvements. Still, the question remains: What the hell happened to Canadian geology?

Some causes might be resource depletion, recalcitrant commodity prices or (talk to enough CEOs and this seems very possible indeed) confusion about how to answer survey questions.

Stedman suggests another likelihood. Discoveries in some jurisdictions might dampen enthusiasm for others. “We do have to keep in mind that this is a relative ranking, so if other places are seen as more attractive, that can have an impact on other jurisdictions as well.”

Although policy factors affect just 40% of a jurisdiction’s IAI ranking, “our write-up focuses on the policy rankings as an area that policy-makers can pay attention to,” Stedman explains. In some cases governments do respond to the survey’s findings. “Reporters will often ask policy-makers to comment on the rankings.”

As for other countries, “we do get quite a bit of interest globally for this survey and we’ve seen a lot of countries and jurisdictions ask us questions about the rankings. There’s quite a lot of interest in this publication in particular.”

Confidentiality, however, prevents her from divulging how many respondents are based in Canada.

The survey provides “a policy report card for governments on areas that require improvement and areas where certain jurisdictions are performing well,” she adds.

In general we see that investment dollars will flow to jurisdictions with attractive polices, and governments need to focus on adopting competitive policies to attract valuable investment dollars that will ultimately create jobs.—Ashley Stedman,
senior policy analyst
for the Fraser Institute

With geology beyond the reach of government power, policy improvement would be Canada’s only means of re-entering the IAI’s global top 10. “In general we see that investment dollars will flow to jurisdictions with attractive polices, and governments need to focus on adopting competitive policies to attract valuable investment dollars that will ultimately create jobs.”

Whether the pre-PDAC week timing will cast a pall on the Canadian industry’s biggest annual bash remains to be seen. COVID-19 has cast a bigger pall on travel while, at time of writing, there seems nothing to stop Shut Down Canada from turning its attention to airports, hotels and convention centres.

The following charts show the global IAI top 10, Canada’s IAI top 10, Canada’s top 10 for Policy Perception and Mineral Potential, and—consoling for its lack of Canadian content—the global bottom 10.

With fewer responses this time, the 2019 survey covers 76 jurisdictions compared with 83 the previous year. Here are the global IAI rankings for 2019, with 2018 spots in parentheses.

  • 1 Western Australia (5)

  • 2 Finland (17)

  • 3 Nevada (1)

  • 4 Alaska (5)

  • 5 Portugal (46)

  • 6 South Australia (8)

  • 7 Irish Republic (19)

  • 8 Idaho (16)

  • 9 Arizona (8)

  • 10 Sweden (21)

All Canadian jurisdictions except Ontario, Alberta and Nova Scotia fell in the IAI. Here’s the list for Canada, with global numbers provided for 2019 and 2018:

  • 11 Saskatchewan (3)

  • 16 Ontario (20)

  • 18 Quebec (4)

  • 19 British Columbia (18)

  • 23 Yukon (9)

  • 26 Nunavut (15)

  • 28 Newfoundland and Labrador (11)

  • 30 Alberta (51)

  • 34 Manitoba (12)

  • 35 Northwest Territories (10)

  • 52 Nova Scotia (57)

  • 60 New Brunswick (30)

Here’s Canada’s Policy Perception ratings. Alberta, Newfoundland, Ontario, B.C. and Nunavut improved their standings.

  • 6 Alberta (14)

  • 8 Newfoundland and Labrador (18)

  • 9 Saskatchewan (11)

  • 13 New Brunswick (9)

  • 18 Nova Scotia (11)

  • 21 Quebec (10)

  • 24 Ontario (30)

  • 32 Yukon (24)

  • 36 British Columbia (44)

  • 44 Nunavut (45)

  • 50 Northwest Territories (42)

  • 53 Manitoba (33)

Mineral Potential showed Canada’s most dramatic downfalls, although Alberta, B.C., Nova Scotia and Ontario managed to move upwards.

  • 10 British Columbia (13)

  • 16 Nunavut (5)

  • 18 Ontario (20)

  • 21 Saskatchewan (7)

  • 22 Yukon (10)

  • 25 Quebec (6)

  • 26 Manitoba (11)

  • 29 Northwest Territories (4)

  • 50 Newfoundland and Labrador (18)

  • 54 Alberta (74)

  • 61 Nova Scotia (79)

  • 72 New Brunswick (49)

And finally the global IAI bottom 10:

  • 67 Nicaragua (81)

  • 68 Mali (50)

  • 69 Democratic Republic of Congo (67)

  • 70 Venezuela (83)

  • 71 Zambia (45)

  • 72 Dominican Republic (76)

  • 73 Guatemala (80)

  • 74 La Rioja province, Argentina (75)

  • 75 Chubut province, Argentina (69)

  • 76 Tanzania (66)

Download the Fraser Institute Survey of Mining Companies 2019.

Read about last year’s survey.

Canada to boost support for mining, but faces challenges

September 18th, 2013

by Cecilia Jamasmie | September 18, 2013 | Reprinted by permission of Mining.com

Canada’s Prime Minister Stephen Harper is ready to launch an aggressive campaign to promote the country’s mining sector abroad, in an effort to redirect trade spending and foreign affairs to core economic interests.

Canada to boost support for mining, but faces challenges

Prime Minister Stephen Harper announces support
for Northern Innovation in Mining, August 2013.
(Photo: PMO)

Ed Fast, the international trade minister, began Wednesday a cross-country campaign to get feedback from experts and actors on what kind of support they think the government should offer mining companies.

According to the Globe and Mail, the move comes as the Harper administration starts warming up its campaign machine for the 2015 elections.

But Harper faces a challenging scenario. As a result of the global mining slowdown, Canada’s mining sector has been hit hard by weak commodity prices and lack of interest from foreign and local investors.

For the first time in a decade, Canada’s normally bustling resource industry failed to book a single initial public offering (IPO) on either the Toronto Stock Exchange or the TSX Venture Exchange in the first quarter of the year, a PwC survey revealed.

Tarnished name

While Canada remains the world’s top destination for mining investments, the sector has built a less-than-popular reputation abroad. Local miners have faced domestic opposition to their projects in all parts of the globe, including Greece, Colombia, Nicaragua, Peru, Bolivia, the Dominican Republic, Slovakia, Romania and Israel.

In January, for example, hundreds of Greeks protested in Thessaloniki against several gold mining projects owned by Vancouver-based Eldorado Gold TSX:ELD.

The following month, Catholic priests and small-scale miners marched with 5,000 locals in Matagalpa, Nicaragua, against a project owned by Vancouver-based B2Gold TSX:BTO.

In April tens of thousands of Colombians took to the streets of Bucaramanga, the country’s sixth-largest city, to defend their water supply from Vancouver-based Eco Oro Minerals’ TSX:EOM gold project.

Recently, Toronto-based Barrick Gold TSX:ABX admitted before a Chilean judge it had committed several violations in regards to its touted $8.5-billion Pascua Lama gold and silver project, straddling the border of Chile and Argentina.

And the most fresh example is the renewed opposition Gabriel Resources TSX:GBU faces in Romania because of its Rosia Montana gold project. Only yesterday the country’s president, Traian Basescu, asked Parliament to withdraw a bill that would allow the London-based Canadian miner to move forward.

However the future looks auspicious. Canada is among the top five producers of potash, uranium, nickel, platinum, aluminum, diamonds and steel-making coal. And global demand for commodities is expected to grow by up to 75% over the next 15 years, according to the world’s No. 1 miner, BHP Billiton NYE:BHP.

Reprinted by permission of Mining.com

Stocks rise with ounces

November 20th, 2012

Investors embrace resource estimates from Pretium and Golden Reign

by Greg Klein

Next Page 1 | 2

Investors embrace resource estimates from Pretium and Golden Reign

Visible gold shines through core samples from
Pretium Resources’ Valley of the Kings zone.

Two resource estimates announced November 20 received warm market welcomes. Pretium Resources TSX:PVG increased the indicated category of its Brucejack Project in northwestern British Columbia by 66%. Golden Reign Resources TSXV:GRR, meanwhile, debuted the San Albino-Murra Property in western Nicaragua with its first-ever estimate.

Pretium last released updates on September 7 for both the Valley of the Kings zone and the West zone 500 metres north. The November 20 update concerns Valley of the Kings only.

Using a cutoff of 5 g/t gold-equivalent, the resource shows:

  • an indicated category of 16.1 million tonnes averaging 16.4 g/t gold and 14.2 g/t silver for 8.5 million gold ounces and 7.3 million silver ounces
  • an inferred category of 5.4 million tonnes averaging 17 g/t gold and 15.7 g/t silver for 2.9 million gold ounces and 2.7 million silver ounces

The Valley of the Kings resource now includes drilling from Galena Hill, previously thought to be a separate zone. The company stated that the Valley remains open to the east and west along strike and at depth.

By boosting the indicated category 66%, the resource pushes Brucejack further along its feasibility study, Pretium president/CEO Bob Quartermain tells ResourceClips. “This gives us a really good base to do the feasibility study and develop a mine plan around the high-grade resource at the Valley of the Kings,” he says. He hopes to have feasibility complete by the first half of next year.

“We continue to de-risk the project and I think the next major catalyst for the company will be the feasibility study,” he adds. “There’s also the underground bulk sample, which we’re hoping to take again in the second half of next year. Those continue to create value for our shareholders. Obviously the market likes the way we’re de-risking the project and certainly reacted positively today.”

Indeed Pretium opened November 20 at $13.07 and reached $13.25 before settling back at a $12.95 close—still comfortably above the previous day’s $12.77 close. The stock has a 52-week high of $18.15 and low of $8.27. With 94.83 million shares outstanding, the press-time market cap came to $1.23 billion.

Next Page 1 | 2

Cash-Cow Potential

March 13th, 2012

Golden Reign Advances Low-Cost, High-Grade Nicaragua Gold and Silver

By Ted Niles

Nicaragua has had a stable democracy for 20 years, but the Communist mayhem that saw its gold mines nationalized in 1979 was long remembered by the industry. Free elections in 1990 removed the Sandinistas from power, but a weak gold price kept the industry in eclipse. Now that the gold price has surged, Nicaragua promises an almost singular potential. It is “virtually untapped because of its history of conflict,” says Kim Evans, President and CEO of Golden Reign Resources TSXV:GRR.

Evans reports, “Nicaragua’s just starting to emerge as a major area for mining exploration and development.” Indeed, 2011 gold exports from Nicaragua were up 60% from 2010. Gold is now its third-leading export, and the country’s largest producer, B2Gold Corp TSX:BTO, has committed $100 million for further development of its La Libertad and Limon mines.

Golden Reign Advances Low-Cost, High-Grade Nicaragua Gold and Silver

“It is considered a developing Third World nation, and so there is a wide pool of available talent,” Evans says. “We’ve had nothing but great experiences and work very closely with the mining ministry and all the different mining groups. It is a very pro-mining country and a very good place to be doing business.” She adds, “It is the safest country by far in Central America. It is actually ranked as being much safer than a number of the big US cities, such as New York and Boston.”

Golden Reign‘s 8,700-hectare San Albino-Murra gold property is located in the Nueva Segovia Department. Its ongoing 25,000-metre drill program has focused on a two-square-kilometre area of the property, including the San Albino and Arras zones. February 22 results from the Las Conchitas area, located just south of the historic San Albino Mine, include

  • 62.96 grams per tonne gold and 61.7 g/t silver over 3 metres
  • 12.01 g/t gold and 13.1 g/t silver over 3 metres
  • 14.96 g/t gold and 25.4 g/t silver over 2.5 metres
  • 9.44 g/t gold and 17.3 g/t silver over 1.5 metres
  • 8.63 g/t gold over 5 metres

February 15 results from the San Albino Mine area include

  • 85.86 g/t gold and 35.1 g/t silver over 2 metres
  • 4.48 g/t gold and 12.3 g/t silver over 4 metres
  • 4.22 g/t gold and 9.1 g/t silver over 1 metre

“The [assays] are quite spectacular, as you can tell,” Evans comments. “It is rare nowadays for projects to see multi-ounce material as prevalent as this. It’s open in all directions and at depth at this point, and our program will finish likely with it open in all directions and at depth.”

The [assays] are quite spectacular, as you can tell. It is rare nowadays for projects to see multi-ounce material as prevalent as this —Kim Evans

The company expects San Albino-Murra’s maiden resource estimate in July 2012. “What I would like to do [after that],” Evans says, “is start spacing the drill holes tighter so we can take it from what will likely be an inferred category—with the possibility of some indicated—to more of a reserve level. Then we’ll start stepping out as well to try to define the outer boundaries of the San Albino area.”

Evans doesn’t think Golden Reign likely to take the project to production but notes that the probable capital expenditure (which she estimates at $50 million to $100 million) wouldn’t require the financial resources of a major. “This isn’t elephant country, where you’re going to see one big deposit of five million ounces. What we think we have the potential for is a number of small, one million (give or take) ounce deposits. It has very nice little cash-cow potential.”

The project is accessible by all-weather roads and has power and water, so the company’s biggest expense is drilling. “Everything else is very inexpensive to run,” Evans says. “Working in a country that is a developing nation, your costs are considerably lower.” Golden Reign has $3 million cash on hand.

“We’re a very aggressive company, so in the last year we’ve progressed significantly,” Evans concludes. “I think we’re going to see another big step up this year with the initial resource and then with opening up other areas. We believe we can replicate what we’re seeing in each of the [three] blocks we have within the property boundary and also with the new property [the El Jicaro Concession] that I’ve just added south of us. We think there is huge potential.”

At press time, Golden Reign had 59.1 million shares trading at $0.99 for a market cap of $58.5 million.

A Healthy Hybrid

October 17th, 2011

B2Gold Grows With Auryx Buy

By Ted Niles

It is a rare company that hasn’t seen its share price take a beating this year. Rarer still, one that has seen the steady growth that B2Gold Corp TSX:BTO has. President and CEO Clive Johnson puts it down to strength of management, “beating your projections” and growth through exploration and acquisition. He adds, “Most explorers don’t produce; and most producers don’t find a lot. In our case, we’re a bit of a hybrid company. We’re producers, but we’re also very good at exploration. We always have been.”

True enough, as anyone familiar with B2Gold and its predecessor, Bema Gold, will attest. When Bema—a company which began as a grassroots explorer—was acquired by Kinross Gold Corporation TSX:K in 2006 for $3.1 billion, it had nine mines in five countries with reserves and resources of 50 million ounces gold, 80 million ounces silver and 2.9 billion ounces copper. Founded in 2007 (and retaining Bema’s executive and management team), B2Gold now has two producing mines in Nicaragua—La Libertad and Limon, with combined production in 2010 of 108,700 ounces gold—as well as other properties in Latin American and now, after its October 11 acquisition of Auryx Gold Corp TSX:AYX, Namibia.

B2Gold Grows With Auryx Buy

“Some people ask if we can handle all these projects in all these different locations, but I think you have to look at our history,” Johnson remarks. “All of us together in B2Gold built Bema Gold—so we’ve done it before in Russia, in South Africa, in Chile and now in Nicaragua. We have an unusually strong team from exploration all the way through construction and production. We didn’t go to Namibia saying we have to have something in Namibia—we’ve been looking at lots of projects. The [Otjikoto] project itself was the first thing that attracted us. We’re definitely ready to build another mine, and we have the team to do it. We’ve shown we can do it anywhere in the world.”

B2Gold acquired Auryx and its flagship Otjikoto gold project last week in a friendly-merger deal for $160 million. Otjikoto is located on the Damara Belt Formation—which also hosts AngloGold Ashanti’s Navachab Mine—and has a December 2010 NI 43-101 resource estimate of 1.16 million ounces gold indicated and 660,000 ounces inferred. In September 2011 Auryx released a positive preliminary economic assessment showing a pre-tax net present value of $301 million, and an internal rate of return of 42% (with gold at $1,300 per ounce).

“[Otjikoto] is a robust project economically,” Johnson continues. “We think there’s a lot of upside, and we think there’s a lot of optimization that can be done in a number of areas to make an already good project even better. It’s got a minimum 10-year mine life with, by 2015, [production of] 100,000 ounces per year. We think there’s upside on that, but that’s a long mine life. And Namibia is a very good jurisdiction. The logistics are fantastic; the tax regime is fair; and the mining law works. We think it’s a good acquisition for us, and it can have a significant impact on our production. By 2015, we’re looking at getting up over 300,000 ounces.”

B2Gold will visit the project this week. Auryx anticipated the completion of a definitive feasibility study by 2Q 2013, and while B2Gold will be conducting a detailed review, Johnson expects to follow the same timeline.

Meanwhile, B2Gold’s La Libertad and Limon mines in Nicaragua proceed apace. The company had gold revenues totalling $127.5 million in 2010—an increase of 517% from 2009—and expects to increase 2011 production to approximately 135,000 ounces. Also, exploration drilling at La Libertad in 2010 yielded the discovery of the high-grade Jabali target, which already has an inferred mineral resource of 522,000 ounces gold, increasing La Libertad’s total inferred resources by 180%.

We’re definitely ready to build another mine, and we have the team to do it. We’ve shown we can do it anywhere in the world —Clive Johnson

Johnson notes that the company’s Gramalote property in Colombia is becoming an important asset. It is a joint venture with AngloGold Ashanti (B2Gold holds 49%, AngloGold Ashanti 51%), with AngloGold as the project operator. “The 2.4 million ounces we started with there is definitely getting a lot bigger, and everything is looking very positive,” Johnson says. “Anglo is talking 250,000 to 300,000 ounces a year, and we think it might be larger than that.” Johnson expects an updated resource at Gramalote by the end of year.

The combination of good management, year-over-year production increases and aggressive exploration and acquisition have granted B2Gold a degree of financial independence unusual in the junior mining sector. Johnson reports, “We’re generating from the Nicaragua mines right now about $118 million of cash from operations. So we can do all of our capital spends at the mine and all of our exploration—our budget this year totalled $53 million—and we can take on [Otjikoto] as well and still maintain a really strong cash balance going well into the future. With [Auryx's] cash and our cash we’ll have about $100 million in cash and no debt or hedging.”

He concludes, “We’re looking at production growing from about 145,000 ounces this year to, within two years, over 200,000 ounces. Then up to 320,000 ounces or thereabouts by bringing the [Otjikoto] project on. Then there’s the Colombian project. So we see a path to approaching a half-million ounces a year from existing ounces. This puts us in a very unusual place in the sector right now. And there are more acquisitions to be done.”

At press time, B2Gold had 344 million shares trading at $3.36, for a market cap of $1.16 billion. Its other exploration projects in Nicaragua are the Trebol, Pavon and San Pedro properties, which it holds in joint venture with Radius Gold Inc TSXV:RDU; and the Borosi prospect, also a joint venture with Calibre Mining Corp TSXV:CXB. It also has the Bellavista property in Costa Rica, the Mocoa property in Colombia and the Cebollati property in Uruguay.

Calibre President Robert Brown on Nicaragua assays of 10.25 g/t gold and 288.25 g/t silver over 5.4m

April 19th, 2011

“Riscos de Oro—which means ‘golden ridge’ in Spanish—was an open pit and underground operation that was in production from 1977 to 1981. It was originally put into production by the Rosario Mining Company but then was nationalized by the Nicaraguan government. So, it was shut down in 1981 for political reasons, not because of the resource. We had a good understanding of where the open pit was. It’s about 250 metres long; [the previous operators] took the topographic high, mined that and went down about 25 metres. They then sunk a shaft to about 525 feet. The development that we have records for was only from the 150-foot and 300-foot levels. So last year we came into the program and drilled under the mine. We made sure that we were deep enough not to hit any of the old workings. Last year’s program identified mineralization going down 300 metres below surface. Then we stepped out on strike, and we hit an additional ore shoot. So we’ve identified two ore shoots. The program we’re doing right now is about a 2,500-metre program. And we’re coming back and infilling from 300 metres up towards surface on both of these shoots.

“These are our best results to date. One of the things that we’ve been able to identify with this program right now is that we think we’re looking at multiple horizons. It’s just a matter of coming back in and infilling. The one thing that remains unanswered is: does this lower unit that we’ve identified in holes 10 and 12 continue up underneath the old mine? Because, historically, all the information stops at the one zone, and there’s no drilling past that.

“This year we’ll finish this 2,500-metre program. We’re also going to be stepping out on strike with some geophysics down to the southwest. The Riscos de Oro concession is an exploitation concession, as it is a past mine, and there’s about two kilometres of strike on that zone. To the southwest it continues for another five kilometres, which is also on our wholly-owned concession. The southernmost end of the structure has a target running around 12.5 g/t over 2.5 metres at surface. So we’re looking at a very long structure, and we’re also finding parallel zones.

“It’s very similar to the Bonanza Camp, which is roughly 30 kilometres to the northwest and has been in production since the early 1900s. It’s a similar system; a low-sulphidation epithermal system, that’s roughly a 19-kilometre by four-kilometre structural zone. It’s in the hands of a private company that’s been producing 40,000 ounces a year.

“The interesting thing with Riscos is that we’re seeing multiple episodes of mineralization and brecciation. On a typical low-sulphidation system you usually see a zonation going from a gold-rich zone to a silver-rich zone then to base metals. But we’re seeing four or five different episodes of mineralization and brecciation, and we’re seeing a different zonation to the metals; so at the 150-metre level we’re getting this high grade silver and gold and then below that we’re getting a gold-rich system. So either we’re seeing a telescoping of the system or multiple pulses coming through. I think it’s multiple mineralizing events.

“We don’t have a resource estimate for Riscos. Most of this drilling is going towards that end. Last week, we also put out a 43-101 compliant report for our Cerro Aeropuerto and La Luna deposits at just under a million ounces gold equivalent. If, at the end of this drill program, it makes sense to put a resource estimate together for Riscos, then we’ll do it this year.”

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