Resourcex Reports: Another Impressive Year for Canadian Exploration Companies

Juniors Spend More Than $1B in 2006
By Melissa Pistilli

In 2006, resource companies spent more on mineral exploration in British Columbia than any other year since such records have been kept. Natural Resource Canada (NRCan) reported this last week in its Overview of Trends in Canadian Mineral Exploration, an annual overview of mineral exploration published by the government of Canada.

In case after case, the analysis in this lengthy tome shows that the remarkable rebound of the exploration sector since the historical lows of 2000 was more prevalent than ever in 2006. Projections remain encouraging for 2007.
In British Columbia, mineral exploration activity continued to skyrocket with 2006 expenditures forecast to exceed 2005 spending by over 22%. Although statistics for the end of the year are still pending, the authors of the report estimated 2006 spending on exploration activity in BC to top $265 million. This achievement is less than 25% below Ontario, the leader in exploration spending in Canada. Quebec and British Columbia saw about the same expenditures for the year.
Saskatchewan’s uranium-rich Athabasca Basin and adjacent areas have benefited immensely from the ever-rising spot price of U308. An estimated $100 million was spent in exploration in this region in 2006 (up from $74.6 million in 2005). The western part of the basin has become the target of new staking and grassroots exploration programs and recent activities in the area have shifted from geophysical surveys to diamond drilling.
Overall, the statistics and trends presented in the report undeniably reflect the prominent position of junior exploration and mining companies in the Canadian mineral exploration sector. This prominence, coupled with the positive metals market outlook, offers lucrative opportunities for investors.

Over the last few years the junior mining sector has experienced an impressive comeback following the harsh downward trend of the late 1990s. For the third year in a row, junior company expenditures on exploration and deposit appraisal has surpassed that of senior companies. According to NRCan, “junior mining companies are major spenders in most commodity groups, undertake a large share of drilling activity, and continue to increase their average spending year after year.”

Over the last six years, NRCan has noted an upward trend in junior project expenditures, beginning slowly in 2000 and growing exponentially since 2003 which saw gains of 44% followed by 105% in 2004 and 30% in 2005. Combined overall spending by senior and junior sectors is expected to increase 32% from over $1.3 billion in 2005 to over $1.7 billion for 2006.

The 632 junior project operators (up from 387 in 2000) are expected to increase spending by 40% to over $1.1 billion in 2006. This is the highest total ever recorded for junior company spending. In comparison, the 104 senior project operators will only increase their total spending by 19% this year.

In the past, spending intentions of more than $10 million were predominantly the forte of senior companies. In 2006, this spending category is near evenly divided between senior and junior companies. NRCan reports that “of the 30 project operators with intended spending exceeding $10 million”, 14 are junior companies expected to average $23.3 million in expenditures and 16 are senior companies expected to average $27.2 million.

Most mining provinces or territories will experience the intensity of these increases in junior spending. NRCan reports that the largest increases should occur in:

o British Columbia – up $88 million
o The Northwest Territories – up $51 million
o Québec – up $40 million
o Saskatchewan – up $36 million

In 2006, British Columbia, Ontario ($150 million), Nunavut ($149 million), and Québec are expected to account for 62% of all junior company expenditures in Canada. The Yukon ($79 million) and Newfoundland and Labrador ($67 million) will also benefit from a substantial increase in activity by the junior mining sector.

The authors of the report attribute the massive influx of spending in Canadian mineral exploration to the phoenix-like rise in commodities’ prices and the evolving dominance of the junior exploration and mining sector. The authors also place emphasis on government incentive programs which they say were initiated to combat the stagnating resource industry of the 1990s. These programs are typically provided either in the form of tax benefits or cash assistance to grassroots projects.Melissa Pistilli is a contributing writer with the Resourcex Investor, an internationally distributed newsletter specializing in identifying as-yet undiscovered resource companies representing the best in their class. For more information, visit the website www.resourcexinvestor.com.

Article Source: http://www.articlepros.com