Northern exploration spending to plummet in 2009: report

Mineral exploration in the Yukon and the Northwest Territories is predicted to plunge by nearly 80 per cent in 2009, says a new report by Natural Resources Canada.

The report — which surveyed the spending plans of companies this year —expects $25 million will be spent on Yukon projects this summer and $28 million on work in the Northwest Territories.

That's down considerably from 2008 when more than $100 million was spent in each territory.

"We were cognizant that the numbers were going to be down, but not this much," said Mike Vaydik, general manager of the Northwest Territories and Nunavut Chamber of Mines.

Falling commodity prices and the credit crunch have combined to dampen interest in looking for new mineral deposits in the North, he said.

Even companies with strong projects are having a tough time raising the money needed to do the work, Vaydik said.

Yukon industry questions dismal numbers

Yukon Chamber of Mines president Carl Schulze said he is skeptical about the federal government's gloomy forecast and expects the drop to be more like 50 per cent in 2009.

Many companies have not yet finalized their spending plans. "Normally in the Yukon, for example, we don't compile that [data] until about May because companies are still raising money now," he said.

'Overall I think the mood is that the mining industry will survive. It will be slower, but it will survive.' — Carl Schulze, Yukon Chamber of Mines president

Several advanced exploration projects, such as Alexco's silver project near Keno City, should bolster the bottom line on exploration spending, Schulze said.

Strong gold prices also bode well for the territory, which is known worldwide for its history with the precious metal. Several new discoveries made by junior companies will probably see more work this summer, he said.

"Overall I think the mood is that the mining industry will survive," he said. "It will be slower, but it will survive."

Nunavut in for less dramatic drop 

The report also forecasts exploration spending in Nunavut will be down, but not by the 80 per cent expected for the Yukon and the N.W.T.

Companies plan to spend $168 million on Nunavut projects in 2009, down from the $273 million spent in 2008, the report says.

All three territories saw less activity in exploration in 2008 compared with the peaks reached in 2007.

The federal government offered a helping hand to exploration companies by extending the flow-through share plan for another year to make it easier for companies to raise money.