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Canadian Mineral Exploration Information Bulletin

(published in July 2022)

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

Following a dip in spending on exploration and deposit appraisalFootnote 1 activities in 2020, a rebound was observed in 2021 as spending surged 66% higher, reaching a nine-year high of $3.6 billion. Spending in 2020 was modest due in part to a protracted period of lower commodity prices combined with the challenges imposed by the COVID‑19 pandemic. A subsequent rise in mineral and metal prices, the rollout of vaccines, government stimulus and an anticipated increase of the demand for metals for the green transition combined to propel spending to a nine-year high in 2021.

Spending on mineral exploration and deposit appraisal activities is anticipated to increase by a modest 3% in 2022 to reach a total of $3.7 billion as economies continue to reopen following the latest wave of COVID-19, and as prices for many minerals and metals continue to climb due to the economic uncertainty and the market disruption caused by Russia’s invasion of Ukraine.

Following an impressive 62% surge in exploration spending for precious metals (i.e., mostly gold) in 2021, spending is anticipated to slide by 5% in 2022, falling to a total of $2.3 billion, which remains a historically high level. Gold will remain the leading commodity sought, accounting for 61% of the total in 2022. Exploration and deposit appraisal expenditures for base metals increased by an impressive 91% in 2021, reaching a total of $737 million, and spending is expected to increase by another 15% in 2022. Spending for all other commodity groups is expected to increase in 2022 with the exception of coal and iron ore.

Exploration spending is set to increase for most jurisdictions in 2022, with the exception of Nova Scotia, Quebec and Nunavut. Ontario is expected to regain its status as the leading jurisdiction for exploration and deposit appraisal expenditures ahead of Quebec in 2022.

An anticipated 8% increase in exploration spending by junior companies in 2022 should offset a planned decline of 4% by senior companies. These trends would extend the increase of the portion of spending attributable to junior companies from a recent low of 42% in 2019 to 58% in 2022.

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, 2012–22

Figure 1 bar graph
Figure 1 — Text version

This bar chart shows exploration and deposit appraisal expenditures by type of company for the years 2012 to 2022. 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 in 2016, a trend that mostly continued into 2019, but abruptly 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 and have since been on an upward trajectory, especially base and clean energy metals, as electric vehicle sales continued to grow. In early 2022, several metal prices (e.g., nickel and aluminum) hit historic records subsequent to Russia’s invasion of Ukraine. Russia is a major producer of precious, base and industrial metals and trades significant volumes of metals with Europe and Asia. Supply chain disruptions, economic sanctions and retaliatory measures contributed to a rise in prices for a number of commodities, including palladium, nickel, aluminum and potash.

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 subsequently came down as economies slowly reopened, but Russia’s actions and the economic uncertainty that ensued briefly pushed gold prices over US$2,000 per ounce once again in early 2022.

Other key indicators of sector activity were on an upward trend in conjunction with spending between 2020 and 2021:

  • The number of projects, which increased by 13.4% (from 1,793 to 2,034)
  • The number of companies, which increased by 11% (from 667 to 743)

Surface diamond drilling increased significantly by 66% in 2021, from 3.7 to 6.3 million metres, as a result of an increase in drilling by junior exploration companies for precious and base metals.

Junior and senior companies

In 2021, the number of junior companies increased by 13%, to 612, while their combined spending increased by 86% to reach $2.0 billion, a 10-year high. Spending intentions reported by junior companies indicate an increase of 8% in 2022, to $2.2 billion.

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 2021, junior exploration companies accounted for 76% of the active projects in Canada and for 82% of the project operators.

Although junior companies are characterized as small and nimble, the 20 largest spending junior companies had expenditures over $18 million each and accounted for about 40% of the total expenditures by junior companies in 2021.

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% in 2017, reaching a total of $1.1 billion. It remained at the same level until 2020 before almost doubling to $2.0 billion in 2021.

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 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 58% annually.

Spending distribution between company types is affected by overall budget allocations and the ability of companies to find financing, as well as by 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 or company.

In 2021, the number of senior companies and their combined spending increased by 7% and 47%, respectively. However, spending by senior companies is anticipated to decrease by 4% in 2022, falling to a total of $1.6 billion. A large portion of the decrease is attributable to activities at a single mine site.

Provinces and territories

In 2021, Quebec was the leading jurisdiction with $964 million in spending, which accounted for 26% of total exploration spending in Canada. In 2022, the exploration spending is anticipated to increase by 4% in Ontario and to decrease by 16% in Quebec, which means that Ontario is expected to overtake Quebec as the leading jurisdiction.

Figure 2: Exploration and deposit appraisal expenditures, by province and territory, 2020–22

Figure 2 bar charts and map
Figure 2 — Text version

This map of Canada with superimposed bar charts (three bars for the years 2020, 2021 and 2022) 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 2022 are expected to be Ontario ($912 million), British Columbia ($852 million) and Quebec ($807 million).

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

All jurisdictions experienced exploration spending increases in 2021 with the exception of Alberta, where spending decreased by 44%.

The largest contributions to the spending increase in 2021 came from Quebec (+$430 million), Ontario (+$312 million) and British Columbia (+$300 million). These contributions are largely attributable to higher activity at gold projects. The most significant increases in percentage were recorded in Nunavut (+111%), Newfoundland and Labrador (96%), Manitoba (+95%), Nova Scotia (+91%) and Quebec (+81%).

Most provinces and territories are anticipated to experience positive but much more modest year-over-year growth into 2022. Sustained high mineral and metal prices will help to further increase spending, most notably in Saskatchewan (+35%, mostly for uranium), Newfoundland and Labrador (+30%, mostly for base and precious metals), New Brunswick (+30%, mostly for precious metals) and Manitoba (+28%, mostly for base, precious and other metals). Decreases are anticipated in Nova Scotia (-19%), Quebec (-16%) and Nunavut (-4%).

Mineral commoditiesFootnote 2

Precious metals (mainly gold) remained the leading commodity group in 2021, accounting for 67% of the spending. Consistent with high gold prices, spending on exploration and deposit appraisal activities for precious metals increased by 62% in 2021, attaining a total of $2.4 billion, the highest value in over 15 years. Precious metals was the most sought-after commodity group in every Canadian jurisdiction in 2021 except Manitoba, Saskatchewan and Alberta.

In 2022, spending on precious metals is expected to decrease by 5%, with notable reductions in Quebec (-$110 million) and British Columbia (-$70 million).

Figure 3: Exploration and deposit appraisal expenditures, by mineral commodity, 2020–22

Figure 3 bar chart
Figure 3 — Text version

This bar chart shows exploration and deposit appraisal expenditures by mineral commodity for the years 2020 to 2022. For each year, there are bars for precious metals, base metals, uranium, other metals, non-metals, diamonds, coal 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 20% of total spending in 2021. Exploration and deposit appraisal expenditures for base metals increased by an impressive 91% in 2021, reaching a total of $737 million, and spending is expected to increase by a further 15% in 2022 to reach $846 million. Exploration spending targeting base metals has been following prices for these commodities and trending upward since 2017.

Thanks to a recovery in uranium markets, spending on exploration and deposit appraisal activities jumped by 105% in 2021, climbing to a total of $137 million. Spending is expected to experience a further 69% surge in 2022 to rise to $232 million, the highest level in over 10 years. 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. Spending on exploration and deposit appraisal activities for other metals rose by 167% in 2021, reaching a total of $95 million, and is anticipated to increase by another 77% in 2022 to amount to $169 million.

In 2021, 37 of the 63 active lithium projects were located in Quebec. Exploration activities for lithium were also conducted in Ontario, Alberta, Saskatchewan, Manitoba, Newfoundland and Labrador and the Northwest Territories. Most of the projects that reported cobalt as one of their primary commodities were located in Quebec and Ontario, followed by New Brunswick, Saskatchewan, British Columbia, Newfoundland and Labrador and the Northwest Territories. Cobalt is usually sought in combination with other commodities, since cobalt is most commonly produced as a coproduct of base metal mining in Canada.

Exploration and deposit appraisal expenditures for non-metals (mainly potash) increased by 21% in 2021, reaching a total of $43 million, which is the first increase in seven years. Spending in this category had been on a downward trend since reaching a peak of $314 million in 2012. The trend largely coincides with potash prices, which reached an eight-year low in 2020. Potash prices rose sharply in early 2022 after the invasion of Ukraine by Russia. Canada is the top global producer of potash, followed by Russia and Belarus. Spending intentions for 2022 are expected to grow by a further 57% to reach a total of $60 million.

The pandemic contributed to exacerbating an already challenging diamonds market and bringing related spending on exploration and deposit appraisal activities down by 21% in 2021 to a 20-year low of $50 million. Although the Northwest Territories has been Canada’s leading producer since diamond production first started in 1998, Saskatchewan has been leading exploration spending since 2019 and an anticipated 12% increase in 2022 is mostly attributable to higher spending in Ontario.

Exploration and deposit appraisal expenditures for coal (metallurgical and thermal) decreased by 36% in 2021, amounting to $61 million. Spending intentions for 2022 point to a further 14% decline in spending, to $53 million.

Spending on exploration and deposit appraisal activities for iron ore briefly spiked in 2021 as spending, mostly in Quebec, surged by 277% to reach an eight-year high of $115 million. 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 2022 currently point to spending receding back to $31 million, a recent jump in prices, which reached a ten-year high in 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 $1.0 billion in exploration and deposit appraisal spending in 2021, which accounts for 28% of the total spending for all minerals. Base metals (i.e., copper, nickel and zinc) and uranium accounted for the bulk of the spending for critical minerals at 84%. Exploration and deposit appraisal expenditures for critical minerals increased by an impressive 89% year over year in 2021, mostly due to increases in spending for copper, nickel, uranium, zinc and lithium. While spending intentions for 2022 are not available for this particular group of commodities, we can expect that growing expenditures will extend to next year 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

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

In 2021, expenditures increased for both work phases, on and off mine sites:

  • On‑mine‑site exploration and deposit appraisal expenditures increased 18% and 121%, respectively
  • Off‑mine‑site exploration and deposit appraisal expenditures increased by 64% and 83%, respectively

On‑mine‑site exploration spending increased by $47 million in 2021, reaching a total of $304 million. The most notable increases were in Quebec (+$20 million) and Manitoba (+$15 million).

Off‑mine‑site exploration spending increased by $840 million in 2021, climbing to a total of $2.2 billion. Increases were reported in most jurisdictions except Alberta. Notable increases were recorded in Ontario (+$254 million), British Columbia (+$219 million), Quebec (+$177 million), and Newfoundland and Labrador (+$66 million).

Intentions for 2022 suggest a 5% increase in on-mine-site exploration spending to $318 million and a 65% decrease in on-mine-site deposit appraisal spending to $88 million. In 2022, off-mine-site exploration and deposit appraisal expenditures are anticipated to increase by 7% and 11%, respectively.

 

Figure 4: Exploration and deposit appraisal expenditures, on- and off-mine sites, 2021–22

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 2021 and 2022. 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.

Notes

Notes

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