Mineral Exploration

Background

Mandate

Natural Resources Canada (NRCan) coordinates the collection of statistics for off-mine-site and on-mine-site expenditures for the exploration and deposit appraisal phases and the mine complex development phase. NRCan and Statistics Canada cooperate with the provinces and territories to collect, assemble and publish comprehensive national mineral resource development statistics. These are compiled from the annual federal-provincial/territorial Survey of Mineral Exploration, Deposit Appraisal and Mine Complex Development Expenditures. To protect the confidential data provided by respondents, only aggregate statistics are released.

The Federal-Provincial/Territorial Committee on Mineral Statistics ensures harmonization of methodology and definitions on a national scale. Definitions covering activities by work phases of mineral resource development were introduced in the 1997 survey. Since then, complete coverage of project evolution from exploration to mine production allows a better understanding of each of its components now illustrated in the statistical tables. The Generalized Model of Mineral Resource Development describes the mineral resource development and mining process model upon which the survey definitions are based.

Methodology

Programs, policies and other types of decisions need to be taken using the most current information. Since the 2003 survey year, the annual questionnaire requesting final data results has been modified to integrate the revised spending intentions of the following year. This is in order to update the intentions collected several months before the start of the annual survey through the preliminary estimates and intentions survey. Furthermore, to accelerate the final survey, there is a repeat of the preliminary estimates for small spenders with projects lower than $200 000.

The survey response rate was 92% for the 2008 final results (inclusive of all work phases). The remaining 8% accounts for 4.4% of all estimated expenditures for 2008. Final survey estimates for 2008 were mainly based on the previously reported 2008 preliminary estimates, while the 2009 estimates are based on the 2009 intentions. However, more up-to-date project information and financial results are available on-line for the benefit of the investor market, thus helping validate the estimates, or the making of those estimates, if necessary.

Exploration Statistics, How Are They Gathered?

Surveys are conducted through a joint effort between the federal government and participating provinces and territories. Natural Resources Canada coordinates the Survey of Mineral Exploration, Deposit Appraisal and Mine Complex Development Expenditures. About 1500 questionnaires were distributed in February 2009. Some companies receive more than one questionnaire, depending on the number of provinces or territories in which they have activities. Companies were asked to report expenditures for the calendar year.

How Frequently Are These Data Collected? Example of a typical survey cycle using the survey years 2008 and 2009:

The exploration survey is conducted twice a year. The preliminary survey was conducted during the last quarter of 2008 and January 2009. Information was released in the first quarter of 2009 for preliminary 2008 results and 2009 spending intentions. In early 2009, a more detailed survey (final) on 2008 mineral development activity and 2009 revised intentions was distributed and the results are being compiled during the year and were released in October 2009.

Brief History of Exploration Statistics

Canadian exploration statistics have been collected, in one form or another, since 1946. From 1946 through 1963, Statistics Canada compiled "cost of prospecting" data for Canada and the provinces for metal mines. Companies were surveyed from 1964 through 1966, but the data were not compiled. Based on the survey questionnaires for those three years, expenditures were estimated by NRCan. From 1967 through 1987, Statistics Canada compiled and published both on-mine-site and general exploration (off-mine-site) and mine-site development expenditures and capital, repair and maintenance expenditures associated with mine-site development. From 1985 to 1987, NRCan collected, in collaboration with the provinces and territories, detailed field work expenses. Since 1988 NRCan has been fully responsible for the survey of firms with any general (off-mine-site) exploration expenses. Statistics Canada jointly with NRCan coordinated the data collection and dissemination of results and published data for producing companies (on-mine-site expenditures).

In 1997, with the redesigned survey 1997 Preliminary Estimates and 1998 Forecast Expenditures, new definitions were introduced to better describe the full mineral development cycle. For example, exploration was divided between primary exploration and deposit appraisal. New information such as engineering, economic and pre- or production feasibility studies, environment, and land access costs were also collected to better reflect the exploration and mining industry.

Key Definitions

Generalized Model of Mineral Resource Development

Reporting Guide - Survey of Mineral Exploration, Deposit Appraisal and Mine Complex Development Expenditures (in use since 1997; updated in 2008)

Junior and Senior Companies

Senior Companies

Senior companies normally derive their income from mining or other business ventures (they need not be mining companies) rather than from the issue of treasury shares.

Junior companies

The following criteria define a junior company:

  1. It is neither a producing company nor the recipient of significant income from production or from some other business venture.
  2. Exploration funding does not come largely from accumulated cash flow from previous production or from the investment income from such funds.
  3. The exploration funds are not provided by a senior company that controls more than half the issued shares of the subsidiary company in question.
  4. The principal way of raising exploration funds is the issue of treasury shares.
  5. The company is not primaily an oil and gas producer, nor is it the exploration arm of a large company.
  6. It is not a government organization.

The above criteria are essentially identical to those of Kalymon et al (1978, pp. 13-14) and Freyman (1978, Appendix A, p. 2).


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