Early estimates from the Yukon government suggest that mineral exploration spending in the territory will decline dramatically this year.
So far, the 18 largest advanced projects in the Yukon have estimated they’ll spend about $38 million on exploration in 2016. That’s down from a total of $65 million in exploration spending last year.
But Sue Thomas, spokesperson for the Department of Energy, Mines and Resources, cautioned that the $38-million estimate doesn’t include any new projects or exploration spending from smaller companies.
“There’s going to be exploration we don’t even know about,” she said.
Exploration spending has been dropping since 2014, when it totalled $80 million. And it seems that one company is responsible for much of the decline. Selwyn Chihong spent $32 million in 2014, and expected to spend about $40 million last year. But that number was revised down to $8 million by the end of the year.
Thomas said the company has put forward “almost a minimal estimate for this year.”
“We’re anticipating they might only do a million dollars worth of work this year,” she said.
Selwyn Chihong recently decided to delay development of its lead-zinc mine on the border of Yukon and the Northwest Territories by at least a year, citing low metal prices and poor economic conditions.
This year’s biggest spenders appear to be BMC Minerals, which has committed US $14 million to continue exploration and complete a pre-feasibility study at its Kudz Ze Kayah mining project, and Victoria Gold, which has announced a $3.6-million exploration program for a satellite zone near its shovel-ready Eagle Gold project.
The Yukon government’s numbers come in the wake of figures released by Natural Resources Canada, which estimates that the Yukon will see $56.4 million in exploration spending this year, down from $73.3 million in 2015.
Federal numbers are typically higher than territorial figures, as they include some additional expenditures that the Yukon government doesn’t count.
But the picture isn’t entirely bleak.
Wellgreen Platinum announced on Thursday that it has received a $10-million equity investment from billionaire investor Thomas Kaplan’s Electrum Strategic Opportunities Fund L.P.
The mining company owns a property near Burwash Landing that it hopes will produce platinum, palladium, gold, nickel and copper.
Electrum will own a 26.9 per cent equity interest in the company, or a 40.6 per cent equity interest if all warrants are exercised.
Electrum is the same hedge fund that contributed to a $22.5-million investment in Kaminak Gold Corporation last October.
“It allows us to consider additional studies we can do to advance the project,” said Wellgreen’s interim president, John Sagman.
He said the company wasn’t planning to do much exploration in 2016, but with this new financing, it may now consider a $1- to $2-million program this summer.
Sagman also said he sees Electrum as a long-term investor.
“They have the capacity to be able to finance our project as it moves through the next stages.”
Both Sagman and Thomas said this week’s Prospectors and Developers Association of Canada mining conference in Toronto was very successful. Thomas said there’s reason to believe “that this will be a better year than was originally anticipated.”
Earlier this week, Premier Darrell Pasloski sent a letter to Prime Minister Justin Trudeau, urging him to renew Canada’s mineral exploration tax credit as a way of supporting junior mining companies.
“Without juniors willing to take significant risk, there would be no mining industry in Canada,” he wrote. “And juniors can only take those risks when we create incentives, like the mineral credit.”
Before the election last year, Trudeau offered praise for the tax credit in an exchange with the Northern Miner.
He said the credit “was first introduced in 2000 by the previous Liberal government and we continue to support this important tax measure to encourage increased investment in the mining industry.”
Liberal MP Larry Bagnell also said he supported the credit during his election campaign.
Contact Maura Forrest at