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Canadian Mineral Exploration Information Bulletin

(published in May 2021)

Mineral exploration plays a key role in ensuring the long term viability of Canada’s mining industry. It leads to the discovery and development of mineral deposits that may become future mines, creating jobs — often in remote and northern communities — and attracting significant investments.

Find out about the latest trends in mineral exploration in Canada:

Overview

Spending on exploration and deposit appraisalFootnote 1 activities remained resilient in 2020 despite the challenges imposed by the COVID‑19 pandemic. Spending intentions for 2020 reported by companies just prior to the pandemic were revised downward by just 2% to $2.1 billion in the latest survey.

Despite resilient exploration and deposit appraisal expenditures in 2020, spending declined 9% compared to 2019.

Exploration activities in Canada were largely interrupted with the onset of the pandemic in the first part of 2020. However, rising mineral and metal prices and eased restrictions helped the industry recover later in the year.

Sustained mineral and metal prices and a positive outlook brought on by the rollout of vaccines, government stimulus and increased demand for metals for the green transition are expected to boost exploration and deposit appraisal spending by 38% to $2.9 billion in 2021.

Higher spending in 2021 is mostly attributable to exploration for gold, which is anticipated to account for 70% of the total exploration expenditures, up from 57% just two years ago. Exploration spending for all other commodities is expected to increase with the exception of coal and iron ore.

Exploration spending is set to increase for all jurisdictions in 2021, with Quebec taking the lead from Ontario and experiencing the largest increase, an impressive 93% compared to the previous year.

Both junior exploration and senior mining companies plan to increase spending in 2021 by 34% and 41%, respectively.

Spending on mineral exploration and deposit appraisal activities largely depends on market conditions and commodity prices. Figure 1 shows how expenditure variations in Canada and globally have been consistent with price trends over the past decade.

Figure 1: Exploration and deposit appraisal expenditures, by type of company, global exploration spending index and monthly metals and minerals price index, 2011–21

Figure 1 bar graph
Figure 1 - Text version

This bar chart shows exploration and deposit appraisal expenditures by type of company for the years 2011 to 2021. Each bar is subdivided into two segments: one for senior companies and the other for junior companies. A line graph depicting the Bank of Canada’s metals and minerals price index is superimposed over the bar graph. A second line graph shows the global exploration spending index. The combined chart shows the strong correlation between metal and mineral prices and exploration and deposit appraisal spending.

Sources: Natural Resources Canada, Institut de la statistique du Québec, Bank of Canada, S&P Global Market Intelligence.
p = preliminary expenditures, si = spending intentions.

Metal and mineral prices reached a cyclical peak in 2011 that was driven by rapid growth in China and other emerging market economies. Prices subsequently decreased as supply outpaced demand.

Prices began to recover later in 2016, a trend that continued into the last half of 2019, but shifted for most metals in early 2020 due to the economic lockdowns implemented in response to COVID‑19. Metal prices recovered later in the year as supply diminished and demand recovered. Demand from China recovered more quickly than demand from any other country.

Gold followed a separate trend as investors flocked to the safe‑haven commodity during the uncertainty brought on by the pandemic, which pushed prices to record levels, more precisely over US$2,000 per ounce by mid‑2020. Gold prices have since come down, but remain at historically high levels.

A few other key indicators of the activity in the sector were on a downward trend in conjunction with spending between 2019 and 2020, including:

  • The number of projects, which declined by 11% (from about 1775 to 1587)
  • The number of companies, which declined by 10% (from 664 to 596)

However, surface diamond drilling increased slightly by 1% in 2020, from 3.5 to 3.6 million metres, as a result of an increase in drilling by junior exploration companies for precious metals.

Junior and senior companies

The number of junior companies decreased by 11% to 478 in 2020, while their combined spending increased by 8% to $1.03 billion. Spending intentions reported by junior companies indicate an increase of 34% to $1.4 billion in 2021.

Canada is well known for its large contingency of junior companies, which usually have no operating revenue and rely on equity financing. They tend to be small and flexible, and to specialize in higher-risk, early-stage exploration activities. While some junior companies may decide to develop a project on their own or with a partner, senior companies (producers) are traditionally more likely to bring a mine into production.

In 2020, junior exploration companies accounted for 71% of the active projects in Canada and 80% of the project operators.

Although junior companies are characterized as small and nimble, the 20 largest spending junior companies had expenditures over $10 million each and accounted for about half of the total expenditures by junior companies in 2020.

Expenditures by junior companies reached historic peaks exceeding $2 billion in 2007, 2008 and 2011, but fell to a 12‑year low of $578 million in 2015. Spending started to recover in 2016 and surged by 70% to $1.1 billion in 2017. It remained at the same level in 2018, before falling back to just under $1 billion in 2019.

Since junior companies traditionally rely on financing raised through equity markets, the variations in their spending share closely correspond to broader market and economic conditions. Therefore, these companies experience more volatility with regard to spending than senior companies, who have operating revenues that can help sustain exploration efforts.

Over the course of the past decade, junior companies accounted for an average of 45% of total spending, but the proportion varied from 31% to 57% annually.

Spending distribution between company types can be affected by other events, such as the sale of a project by a junior company to a senior company or a junior company going from the development phase to the production phase of a project and consequently becoming a senior company. These events can have a greater effect on the overall results when they involve a top‑spending project.

In 2020, the number of senior companies and their combined spending decreased by 9% and 20%, respectively. However, spending by senior companies is anticipated to surge by 41% in 2021 to $1.5 billion. A large portion of the increase (+$230 million) is attributable to activities at mine sites as senior companies look to capitalize on high prices, especially the price of gold.

Provinces and territories

In 2020, Ontario maintained its position as the leading jurisdiction with $570 million in spending, which accounts for 27% of total exploration spending in Canada. However, with an anticipated surge of 93% in exploration spending, Quebec is expected to overtake Ontario as the leading jurisdiction in 2021.

Figure 2: Exploration and deposit appraisal expenditures, by province and territory, 2019–21

Figure 2 bar charts and map
Figure 2 - Text version

This map of Canada with superimposed bar charts (three bars for the years 2019, 2020 and 2021) shows exploration and deposit appraisal expenditures by province and territory. Each bar is subdivided into two segments: one for exploration and the other for deposit appraisal. The top spending jurisdictions in 2021 are expected to be Quebec ($988 million), Ontario ($650 million) and British Columbia ($575 million).

Sources: Natural Resources Canada, Institut de la statistique du Québec.
B = billion, p = preliminary expenditures, si = spending intentions.

All jurisdictions experienced exploration spending decreases in 2020 with the exception of Newfoundland and Labrador, British Columbia, Ontario and Quebec, where spending rose by 33%, 18%, 9% and 2%, respectively.

The largest contributions to the spending increase in 2020 came from British Columbia (+$69 million), Ontario (+$46 million), and Newfoundland and Labrador (+$17 million). These contributions are largely attributable to higher activity at gold projects, namely in the Golden Triangle district of British Columbia.

Saskatchewan experienced the largest spending decrease in 2020 ( $119 million), followed by Yukon ( $90 million), Nunavut ( $45 million) and Northwest Territories ( $44 million). The spending decrease in Saskatchewan corresponds with depressed uranium markets and prices. In the north, COVID 19–related travel restrictions made it especially difficult to sustain activities and weak diamond markets contributed to the spending decrease in the Northwest Territories.

With the rollout of vaccines in 2021 and the prospect of a recovery, all jurisdictions are anticipated to experience increased exploration and deposit appraisal spending. The most notable gains are anticipated in Quebec (+$477 million), British Columbia (+$117 million) and Ontario (+$80 million). If these gains occur, Quebec will register a record level of exploration spending and become the leading jurisdiction ahead of Ontario.

Mineral commoditiesFootnote 2

Precious metals (mainly gold) remains the leading commodity group (Figure 3) in 2020, accounting for 65% of the spending and up from 57% of the spending in 2019. Spending targeting precious metals is anticipated to exceed $2 billion in 2021 and account for 70% of total exploration expenditures, the largest share in a decade. An all time record share of 80% was reached in 1987–1988, when gold prices were also high and the mining exploration depletion allowance was still being distributed.

Precious metals was the most sought after commodity group in every Canadian jurisdiction in 2020, except Manitoba, Saskatchewan and Alberta.

Figure 3: Exploration and deposit appraisal expenditures, by mineral commodity, 2019–21

Figure 3 bar chart
Figure 3 - Text version

This bar chart shows exploration and deposit appraisal expenditures by mineral commodity for the years 2019 to 2021. For each year, there are bars for precious metals, base metals, uranium, other metals, coal, non metals, diamonds and iron ore. Precious metals, which includes gold, maintains a sizeable lead on all other commodity groups throughout the entire period.

Sources: Natural Resources Canada, Institut de la statistique du Québec.
p = preliminary expenditures, si = spending intentions.

Base metals (copper, lead, nickel and zinc) is the second most important commodity group with regard to exploration, accounting for 19% of total spending in 2020. Exploration and deposit appraisal expenditures for base metals declined 6% in 2020 to $400 million, but are expected to rebound by 25% to $502 million in 2021. Exploration spending targeting base metals has been following prices for these commodities and trending upward since 2017.

Because of difficult market conditions, spending on exploration and deposit appraisal activities for uranium declined 45% to $88 million in 2020, the lowest level in over 10 years. Expenditures are anticipated to slightly recover to $95 million in 2021, but will remain low compared to historic levels. Saskatchewan accounts for almost all of the spending for uranium exploration in Canada.

Other metals, which includes cobalt, lithium and rare earths, have received a lot of attention in recent years due to their use in advanced technologies and energy storage. Spending on exploration and deposit appraisal activities for other metals has followed in lockstep with cobalt and lithium prices, which were up in 2017 and 2018, but decreased in 2019 and through most of 2020 due to abundant supply. However, the price of battery minerals turned a corner at the end of 2020 and initiated a recovery based on strong anticipated demand from the global transition to a green economy. This recovery extended into 2021. Spending on exploration and deposit appraisal activities for other metals was down 67% in 2020 to $35 million, but expenditures in 2021 are anticipated to surge 145% to $87 million.

In 2020, 13 of the 31 active lithium projects were located in Quebec. Exploration activities for lithium were also conducted in Ontario, Alberta and Manitoba. Most of the cobalt projects were located in Quebec and Ontario, followed by New Brunswick, Saskatchewan, British Columbia and Yukon. Cobalt is usually produced as a by‑product of base metal mining in Canada.

Exploration and deposit appraisal expenditures for coal (metallurgical and thermal) rose by 5% to $97 million in 2020. The increase is mostly attributable to higher spending at advanced coal projects in British Columbia. However, spending intentions for 2021 indicate an anticipated 23% decrease in spending to $75 million.

Exploration and deposit appraisal expenditures for non‑metals (mainly potash) decreased by 44% to $33 million in 2020. Spending in this category has been on a downward trend since reaching a peak of $314 million in 2012. The trend largely coincides with potash prices that reached an 8‑year low in 2020, but are anticipated to recover in the next few years. Spending intentions for 2021 signal a turning point with a 24% increase for non‑metal exploration to $41 million.

The pandemic contributed to exacerbating an already challenging diamonds market and bringing related spending on exploration and deposit appraisal activities down 70% in 2020 to a 20‑year low of $39 million. Two Canadian mines, Renard in Quebec and Ekati in Northwest Territories, suspended their operations in 2020. Spending intentions for 2021 are expected to remain at low levels, consistent with those of 2020.

Spending on exploration and deposit appraisal activities for iron ore increased by 85% to $32 million in 2020, one of the highest rates in the last ten years. Following a peak in spending for iron ore exploration of 359 million in 2012, expenditures decreased to just $9 million in 2017. Although intentions for 2021 signal a 28% decline in spending for iron ore exploration, a recent jump in prices, which reached a ten‑year high in early 2021, will most likely contribute to more exploration activity in the sector. The majority of Canada’s iron ore projects are located in Quebec, Newfoundland and Labrador, and Nunavut.

On March 11 , 2021, the Government of Canada released its list of 31 critical minerals, which are considered vital for the sustainable economic success of Canada and its allies. Together, critical minerals (except aluminum and helium) incurred $548 million in exploration and deposit appraisal spending in 2020, which accounts for 26% of the total spending for all minerals. Base metals (i.e., copper, nickel and zinc) and uranium accounted for the bulk of the spending at 88%. Exploration and deposit appraisal expenditures for critical minerals declined 25% year over year in 2020, mostly due to decreases in spending for uranium, zinc and lithium. While 2021 spending intentions are not available for this particular group of commodities, we can expect that expenditures will increase with government actions, rising prices and increasing global demand for critical minerals, driven in large part by their role in the transition to a low‑carbon and digitized economy.

Work phases are parts of the stages of exploration and development:

  • Exploration includes grassroots (early) exploration until it is confirmed that the project is economic
  • Deposit appraisal turns into detailed work included in feasibility studies, which inform a production decision
  • Mine complex development (not covered in this report) includes the construction of mines, plants and associated infrastructure
  • On-mine-site activities offer insight on efforts by producing companies to extend the life of existing operations

Work phases

In 2020, on mine site expenditures increased while off mine site expenditures declined. This trend likely reflects the impact of travel restrictions imposed in response to the pandemic and the difficult conditions for mobilizing people and equipment in remote areas:

  • On‑mine‑site exploration and deposit appraisal expenditures increased 19% and 24%, respectively
  • Off‑mine‑site exploration and deposit appraisal expenditures declined 13% and 12%, respectively

On‑mine‑site exploration spending increased $42 million to $270 million in 2020. The most notable increases were in Ontario (+$28 million) and British Columbia (+$23 million).

Off‑mine‑site exploration spending declined $182 million to $1.2 billion in 2020. Declines were reported in most jurisdictions except British Columbia and the Atlantic provinces. Notable decreases were recorded in Nunavut (‑$72 million), Saskatchewan (‑$51 million), Quebec (‑$50 million) and Northwest Territories (‑$26 million).

Intentions for 2021 suggest a 66% increase in on‑mine‑site exploration spending to $449 million and a 56% increase in on‑mine‑site deposit appraisal spending to $143 million, as companies work to add reserves and take advantage of high commodity prices, especially gold in Quebec. Off‑mine‑site exploration and deposit appraisal expenditures are also anticipated to increase in 2021 by 35% and 25%, respectively.

 

Figure 4: Exploration and deposit appraisal expenditures, on and off mine sites, 2020–21

Figure 4 pie charts
Figure 4 - Text version

These pie charts show exploration and deposit appraisal expenditures for on and off mine sites for the years 2020 and 2021. For each year, exploration accounts for a large portion of overall spending compared to deposit appraisal.

Sources: Natural Resources Canada, Institut de la statistique du Québec.
B = billion, M = million, p = preliminary expenditures, si = spending intentions.

Notes

Notes

  • Totals may be different because of rounding.
  • Values are in Canadian dollars.
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