El pensamiento avanzado de los u’wa

Canada: 52%–4,674 projects

Latin America: 17%–1,571 projects United States: 13%–1,197 projects Africa: 7%–652 projects

Asia: 4%–313 projects Australia: 4%–339 projects UK and Europe: 3%–295 projects

Sources: InfoMine, TSX/TSX-V Market Intelligence Group

more than 600 companies on the TSX-V reported less than $250,000 in cash; a nominal sum barely enough to cover the costs of being a public company. More than 340 companies had cash balances of less than $50,000, with 11 of these companies reporting negative cash positions. Risk-averse sentiment among investors is likely to endure until the ongoing economic fluctuations stabilize, restoring investor confidence.

ALLOCATION OF INVESTMENT BY MINERALS AND METALS Precious metals attracted the lion’s share of Canadian exploration spending in 2012, accounting for 49% overall (see Figure 20). However, recent and significant price fluctuations for gold, which began in late 2012, are likely to impact the share of expenditures allocated to precious metals in the future.

Between 2002 and 2012, iron ore saw the most dramatic jump in exploration spending, rising 195-fold over the decade, with many projects located in Newfoundland and Labrador and northern Canada.

Base metal exploration’s share of total investment, despite having grown in monetary terms, has shrunk from 24% in 2002, to 17% in 2012, reflecting the depletion of Canadian base metal reserves already discussed. Currently, the replenishment of reserves is not keeping pace with global demand for these highly important metals. Without sustained and effective exploration, Canadian base metal production will outstrip reserve additions, with profound implications for the communities and people who benefit from the economic opportunities the industry directly and indirectly generates.

Coal exploration has also seen dramatic increases over the past decade, a large percentage of which has taken place regional economies that benefit from strength in these

sectors will weaken.

EXPLORATION AND DEPOSIT APPRAISAL IN CANADA The financial health of the mineral exploration sector can be measured by spending on exploration and deposit appraisal. Gauging spending levels also assists in predicting the future of Canada’s mineral production. Natural

Resources Canada, which provides the numbers below, defines the two kinds of spending as follows:

• Exploration expenditures: Spending on activities up to and including the first delineation of a previously unknown mineral deposit.

• Deposit appraisal expenditures: Spending on activities that bring a delineated deposit to the stage of detailed knowledge required for a production feasibility study.

The two expenditures combined are generically called “exploration spending.”

Exploration investment reached $3.9 billion in 2012, but recent estimates (see Figure 18) indicate a decline in Canadian exploration investment. Spending intentions for 2013 anticipate investment levels of $3.3 billion for the year—a near 14% decrease over 2012 levels. While overall investment intentions for 2013 remain high, exploration’s share of the pie is shrinking relative to deposit appraisal. Exploration spending intentions for 2013 are estimated at $1.8 billion, down 38% (or $1.1 billion) from 2011 levels. Deposit appraisal expenditures for 2013 are expected to hold at $1.6 billion, the record high set in 2012.

As for the companies that undertake exploration, junior firms have historically accounted for 50% to 60% of

spending. The consistency of these pre-recession spending levels suggests that federal and provincial flow-through share programs were successful in stimulating investment by firms that can take advantage of them. Recent data, however, show this trend is fluctuating downward as the share of junior firm spending has decreased over the past six years. In 2012, junior firms sunk below their historic threshold for the second consecutive year to $1.7 billion, or 44% of exploration dollars (see Figure 19). Spending intentions for 2013 indicate a moderate increase to 46%, but a further decrease in monetary value to $1.5 billion.

The decline in exploration investment can be partially attributed to the challenges faced by junior firms in raising capital. Although also true for some major firms, access to capital has been particularly hard for junior companies. Quarterly cash balances show that as of March 31, 2013,

in British Columbia, with its high-quality metallurgical coal deposits. The “Ring of Fire” region in northern Ontario, west of James Bay, is attracting large exploration investment for a variety of minerals and metals. In Quebec, the North for Everyone plan (formerly the Plan Nord) aims to attract over $80 billion of new mineral development investment in the northern regions of the province. Such development would enhance the economic viability of significant nickel, cobalt, platinum group metals, zinc and iron ore developments. These factors help explain why Ontario, Quebec and British Columbia were host to more than 60% of exploration expenditures in 2012.

INTERNATIONAL EXPLORATION

Globally, Canada has been the top destination for mineral exploration investment for 20 of the past 34 years. Canada dropped to second place in 1992, surpassed by Australia, but regained the top position in 2004 and has remained there ever since.

The SNL Metals Economic Group (SNL) has tracked world mineral exploration since 1989. Based on data from nearly 3,500 companies, SNL determined that worldwide exploration investment in 2012 reached US$20.53 billion—a 13% increase from 2011—and nearly 2.5 times the 2009 low of US$8.4 billion. Exploration figures for iron ore are excluded from the above figures, and would have increased the 2012 total by an estimated US$970 million.

SNL analysis shows that although Canada led in global exploration investment in 2012, our share of the global pie shrank from 18% to 16%. Latin American and African

countries saw the largest growth in exploration investment, while Canada’s allocations—up only 4% year over year— was the smallest percentage and dollar increase of any region (see Figure 21).

In spite of high global exploration spending, only a handful of major discoveries and projects will come into production within the next five years. There are various reasons for this predicament. The industry is still paying for the period of low exploration spending in the 1990s and early 2000s. The dramatic rise in this spending through the 2000s was offset to some extent by the rising costs of drilling, assaying, geosciences expertise, fuel and other inputs. As well, environmental and infrastructure challenges are lengthening the time it takes for new discoveries to develop into producing mines.

This gap is slowly closing, however, as a strong cohort of projects, from the start of a pre-feasibility study to a production commitment, are in the pipeline. More than 100 of these advanced projects have been identified in Canada since 2011. These projects and others, contribute to the $160 billion in potential mining investment Canada could see over the next five to 10 years.