Global worries put squeeze on mine prospects

BURNS LAKE -- Junior mining companies are experiencing hard times and established mining firms are also suffering but the pessimism at the Minerals North Conference comes with a strong hope for a major turnaround in the next couple of years.

"I would say the junior companies [those exploring the landscape to find a new mine] are down by 50 per cent, the major-juniors are down a third, and that is making this a really hard year. It sucks," said Ralph Keefe of RKG exploration. "Mining is high risk. The world's economic conditions are so unstable that investment into the junior level of mining is just frozen."

Although some at the conference cautioned that junior mining companies were perpetually in difficult financial positions, there is validity to the glum spirits this year, according to Don Vigue of IRL Supplies, a longtime retailer of equipment and gear to the mining industry.

"The juniors are having a hard time raising money to go out there and explore," he said. "For us, the established companies are the bulk of our business and even they are moving slowly. The best year for us on the mining side was 2007, that was a fantastic year, but then things dropped fast when the economic downturn hit. It is coming back, though. 2011 was a very strong year again but 2012 is slower, no doubt about it."

Should almost any of the global financial forces shift for the better, Vigue said, and it would almost certainly have a positive impact on this year's mining conditions. It's still possible, depending on how Europe's debt issues are handled and China's manufacturing sector fares, to have a rush of northern B.C. mining business this fall.

Major companies in northern B.C. are still gearing up for better days ahead. Endako Mine at Francois Lake is undergoing a major expansion. So too is Huckleberry Mine near Houston. A mine at Mt. Milligan is under construction. All are in the purview of MLA John Rustad, who was in Burns Lake for the Minerals North event. He said the softness in junior investment was real, but the province was still doing big exploration business and this area in particular was benefiting.

"We did about $400 million in exploration work in B.C. last year. This year, NewGold alone is investing $107 million at that is just for its Blackwater property south of Vanderhoof," he said. "They have about 250 people working out there now. They are on an incredible pace, on track to begin construction in 2015 if all the environmental assessments come through on schedule, and they would be open by 2017."

A new company in the mining sector, Bid-Ironclad is less than a year old, forged as a partnership between two preexisting companies. Bid-Ironclad is now building major components at the Mt. Milligan site and at Huckleberry.

"We see extensive opportunities in the north," said general manager Kane Kelly. "We see the softness in investment, but we are laying the groundwork now for when the economy turns."

Rustad said the biggest indication about the long-term health of the mining industry was public attitude. The population has a higher understanding and acceptance of the mining industry now, he said, compared to 15 or so years ago and that was helping motivate the industry.