Gold prices are reaching historic highs, but raising money for grassroots exploration work remains as tough as ever, according to those in Northern Ontario’s junior mining and prospecting community.
On the second day of the Northern Prospectors Association’s (NPA) recent Northeastern Ontario Mines and Mines Symposium in Kirkland Lake, the price of gold shot above US$4,000 an ounce. By dawn the next day, it climbed to a historic high of $4,053, up 54 per cent in the past year.
“I’m excited,” said geologist Mike Kilbourne. “I’ve been through these bumps before and this one’s a good one.”
As senior project geologist for Kirkland Lake Discoveries, Kilbourne’s watched the junior mining company’s stock rise from a nickel a share to 35 cents in three months.
The company holds 100,000 acres of mining claims in the Kirkland Lake area and has made encouraging discoveries in an area known for copper, zinc, silver and gold. It recently announced plans to raise $14 million for more exploration and expenses.
“We started a month ago, trying to raise $7 million. It’s gone to $10 million. Now it’s at $14 million,” Kilbourne said, “Good companies with good management and good projects can raise money.”
Retail investors seem to be paying attention to junior mining companies and what their stocks can do, he finds.
However, gold’s lustre has not shone equally across the breadth of the industry, said NPA president Gino Chitaroni.
While companies with drill-ready properties and a mineral resource are seeing most of the investment generated by climbing metal prices, very little is flowing into prospectors' grassroots exploration properties, he said.
“It’s challenging for the prospector as rules and regulations are squeezing out the little guy. It’s very hard to get investors to look at grassroots, which has been like this for many years.”
Historically, competition for investment capital came from the marijuana industry, then from crypto currencies and now artificial intelligence, Chitaroni said.
“Government incentives for smaller grassroots projects are very weak,” he said.
The worldwide surge of interest and investment in critical minerals over the past five years has been cooled by a change in politics south of the border and by automotive companies backing off electric vehicles, said Chitaroni.
“It’s been a tough go for the last few years,” added consulting geologist Martin Ethier of Hinterland Geoscience and Geomatics. “It seems there hasn’t been much money for exploration since COVID,” he said. “A lot of people are having a hard time.”
Some have nice properties, but can’t do more exploration because of a lack of investment in junior mining, he explained.
Changes to Ontario’s Mining Act in 2018 created more bureaucratic procedures for exploration.
“If you’ve got something on the go, it may take a while to get a permit,” Ethier said. “There’s a lot of issues, definitely more red tape.”
Before the advent of digital mining claim map-staking in 2018, on-the-ground claim-staking created business for stakers and an opportunity to actually see the ground.
“Now, you can be anywhere and stake a claim,” Ethier said.
From the perspective of Pam Coles, chief geophysicist at Thunder Bay’s Abitibi Geophysics, “things have been going great.”
“We’ve been very, very busy the last year, busier than we have been since before COVID.”
Though not exactly sure why, she’s heard people have been doing more geophysics because it’s less costly than exploration drilling.
“I don’t know if that’s actually the case, but people are having a harder time raising as much money and geophysics is a cheaper option.”
While the company doesn’t deal a lot with mining regulations, its clients do. And there still remain complaints about red tape and the lengthy approvals process, he said.
On one project Abitibi worked a few months ago, a client wanted to extend exploration by a few kilometres.
“It was months and months of process and pushback to get something as simple as that approved.”
Gilbert Huard, surface and underground operations manager at Val-d’Or, Que.-based Orbit Garant Drilling, an industry leader, sees the beginning of a small mining boom prompted by the rising value of precious metals.
“Things are going really well on the drilling side and the mining side,” he said. “In the short term, especially with the market increasing, we’re going to see significant improvement in the next four to six years in the drilling world.”
This poses challenges, Huard said, with a diminishing workforce that’s always on the hunt for help.
“It’s very hard to crew up,” he said. “We have over 200 drills in our fleet. We have over 1,000 employees and we’re always looking for good talent.”
George Pollock, vice-president of exploration at Northstar Gold, finds the junior mining market is still in a downturn.
Major mining companies are benefitting from high metal prices because they have the capital to promote and develop some of their older projects.
“That’s something which a lot of majors are actively doing right now, in many different projects, and the market is reflecting that,” he said. “Share prices are beginning to move and I think this is the sign of a turnaround in mining in general.”
For cash-conscious junior companies, it will take a little bit longer to start moving their projects forward, Pollock said.
Northstar is preparing to surgically mine its 1,100-acre Miller Copper Gold Property, 20 kilometres southeast of Kirkland Lake.
“It’s going to take a little while for the juniors to catch up because if the juniors want to reevaluate their assets it usually takes some drilling, usually requires some resource calculations and maybe some permitting in order to get revaluation. That takes time and it takes bit of money.”
The introduction of map-staking has hurt prospectors, Pollock said, because many were also claimstakers who knew how to get through the bush, cut a claim line and make a claim post.
“Casual people or even geologists sitting behind a desk wouldn’t know how to do those things. Those are specialized skills that a lot of prospectors had. They’re no longer being utilized.”
Mapstaking, he said, levels the playing field and prospectors no longer have an advantage.
“All you need is a computer with a mouse to be able to click a button and you can stake a mining claim.”
Timiskaming – Cochrane MPP John Vanthof told the symposium Ontario’s Bill 5 includes a provision to help shepherd mining projects through decision-making processes for permits.
While he expects it will speed things up, he dislikes the bill’s intent to create special economic zones, where municipal laws can be overridden.
Special economic zones are not a recipe for success, Vanthof said.
“We have great public trust in the mining sector.” Special economic zones will erode that trust, he said.
“It’s going to create more protests against the mining sector and it’s going to create uneven playing fields,” Vanthof said. “You should make the rules better, stronger and more efficient for everyone, not pick and choose.”
The government, he warned, could designate an area a special economic zone, not because it’s the best place to extract minerals, but for political purposes.
“I think the Ring of Fire is one of them. I’m not knocking what’s in the Ring of Fire. I’m not a geologist, but it’s going to be really, really, expensive to get to the Ring of Fire. There are other deposits that could be accessed more economically.”