Canadian Mineral Exploration Information Bulletin

(published in August 2019)

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

Canadian mineral exploration and deposit appraisalFootnote 1 expenditures reached $2.3 billion in 2018, an increase of 6% compared to 2017. Intentions for 2019 suggest a slight decline in spending of 7%, bringing the total to $2.2 billion.

In 2018, senior company spending was up 19% for a total of $1.3 billion compared to the previous year, while junior company spending was down 7% for a total of $998 million.

Ontario was the leading jurisdiction with exploration expenditures of $583 million in 2018, followed by Quebec ($498 million) and British Columbia ($370 million). These three provinces accounted for almost two-thirds of total spending.

Precious metals (mainly gold) remain the most sought-after commodity by a large margin, accounting for approximately 60% of spending.

Deposit appraisal expenditures, which entail spending on feasibility studies at advanced exploration projects to inform a potential production decision, accounted for one-third of spending in 2018 and are anticipated to account for the same proportion of spending in 2019.

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, 2009–19

Figure 1 bar graph
Figure 1 - Text version

This bar chart shows exploration and deposit appraisal expenditures by type of company for the years 2009 to 2019. 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 output ramped up and inundated the markets. Prices began recovering later in 2016, a trend that continued into the first half of 2018 but shifted for most metals midway through the year as a result of global trade tensions and weaker industrial activity in China.

Although total exploration spending was up in 2018, many of the other key indicators of activity in the sector were down. Between 2017 and 2018:

  • the number of projects declined by 8%, from about 2000 to 1840
  • the number of companies decreased by 5%, from 706 to 672
  • total drilling decreased by 13%, from 4.4 to 3.8 million meters

These decreases are attributable to a slowdown in junior company activity, which accounts for 70% of the number of projects, 78% of the number of companies and approximately 50% of total drilling.

Junior and senior companies

The number of junior companies and their combined spending both decreased by 7% in 2018, with 526 companies and a total of $998 million. Spending intentions reported by junior companies indicate a further decrease of 4% in 2019 for a total of $961 million.

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.

Expenditures by junior companies reached historic peaks that exceeded the $2 billion level in 2007–08 and 2011–12, but plummeted to a 12-year low of $578 million in 2015. Spending started to recover in 2016 and surged by 70% in 2017 to $1.1 billion.

In 2018, 21 junior companies spent in excess of $10 million, collectively accounting for half of total spending by this company type.

Spending by junior companies accounted for 43% of total exploration and deposit appraisal expenditures in 2018 and this share is anticipated to increase to 44% 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. This affects their ease of raising capital. 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 have a greater effect on the overall results when they involve a top-spending project.

In 2018, the number of senior companies, up 4%, was 146, and their combined spending, increased by 19%, totalled $1.3 billion. However, their reported intentions for 2019 indicate a decline of 9% for a total of $1.2 billion.

Senior company spending followed much of the same trend as junior company spending over the course of the last decade. However, senior companies experienced less volatility than junior companies because they have access to revenues to fund their exploration work and are less exposed to broad economic conditions and equity markets.

Provinces and territories

In 2018, Ontario regained first place as the leading jurisdiction with $583 million in spending, mostly because of a 12% increase in exploration spending for precious metals.

Figure 2: Exploration and deposit appraisal expenditures, by province and territory, 2017–19

Figure 2 bar charts and map
Figure 2 - Text version

This map of Canada with superimposed bar charts (three bars for the years 2017, 2018 and 2019) 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 2019 are expected to be Quebec ($555 million), Ontario ($517 million) and British Columbia ($318 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 2018 with the exception of Nunavut and Quebec, where spending declined by 16% and 13%, respectively.

Nova Scotia experienced the largest spending increases in percentage terms for the second year in a row. Spending in that province more than tripled from $5 million in 2016 to $18 million in 2017, then doubled in 2018 to $37 million.

The largest contributions to the year-over-year spending increase in 2018 came from British Columbia (+$67 million), Saskatchewan (+$56 million) and Ontario (+$43 million).

Intentions for 2019 signal a potential shift in spending trends as exploration spending is expected to increase in only two provinces: Quebec (+11%) and Saskatchewan (+11%). Spending levels in Manitoba and Alberta are anticipated to be consistent with 2018 levels, but declines are anticipated in Northwest Territories (-38%), Yukon (-31%), Nova Scotia (-27%), New Brunswick (-22%), British Columbia (-14%), Newfoundland and Labrador (-13%), Ontario (-11%) and Nunavut (-4%). As a result, Quebec may reclaim first place as the leading jurisdiction with $555 million in spending followed by Ontario ($517 million) and British Columbia ($318 million).

Mineral commoditiesFootnote 2

Precious metals (mainly gold) remains the leading commodity group, accounting for about two-thirds of total spending (Figure 3). This proportion is among the highest in a quarter century and reflects the effect of rising gold prices.

Spending on precious metals exploration surged by 50% in 2017, which reached $1.4 billion and remained at the same level in 2018, but intentions for 2019 point to a 17% decline. In 2018, there were 12 gold projects with spending in excess of $20 million each, collectively accounting for about half a billion dollars in precious metals spending. The advancement and associated spending of these projects coincide with the rise in exploration and deposit appraisal expenditures in 2017 and 2018. Some of these projects are anticipated to transition from the deposit appraisal phase to the mine complex development phase in 2019, which contributed to the anticipated decline in spending in 2019.

Gold remains the most sought-after commodity for all jurisdictions in 2018 and 2019 except New Brunswick, Saskatchewan, Alberta and Northwest Territories.

Figure 3: Exploration and deposit appraisal expenditures, by mineral commodity, 2017–19

Figure 3 bar chart
Figure 3 - Text version

This bar chart shows exploration and deposit appraisal expenditures by mineral commodity for the years 2017 to 2019. For each year, there are bars for precious metals, base metals, uranium, other metals, diamonds, non-metals, 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.

Exploration expenditures for base metals, which increased by 13% and reached a total of $363 million in 2018, are expected to remain at a similar level in 2019. All jurisdictions reported increases in base metals exploration spending in 2018 with the exception of Ontario. In 2019, the trend is anticipated to shift as all jurisdictions are expected to see a decline in base metal exploration spending, except in Ontario, where it should rise.

Exploration spending for uranium is anticipated to remain stable at $165 million in 2018 and 2019, which is 20% higher than exploration expenditures in 2017.

Exploration spending for diamond projects was up 28% in 2018, bringing its total to $107 million. It is anticipated to increase by another 21% or to $130 million in 2019. These increases are mostly attributable to expenditures destined for Saskatchewan.

Other metals includes cobalt and lithium, which have garnered significant attention as a result of their use in power storage and electric vehicles. In 2017, exploration spending for other metals surged by 85% for a total of $89 million. In 2018, it increased by a more modest 16% or to $103 million. In 2019, it is expected to increase again by 29% for a total of $133 million. More than half of the 65 active lithium projects in 2018 were located in Quebec and about half of the 62 active cobalt projects were in Ontario.

Exploration expenditures for coal (metallurgical and thermal) rose by 25%, totalling $70 million in 2018 due to increased spending at advanced coal projects mainly located in British Columbia. Spending intentions for 2019 point to a slight 4% decline in spending or a total of $67 million.

Exploration expenditures for non-metals (mainly potash and graphite) rose by 9% or to $64 million in 2018 and are anticipated to rise again by 29% or to $83 million in 2019. These back-to-back increases would more than offset the 28% decrease registered in 2017. Increases in exploration spending for graphite, another mineral used in advanced battery technology, have been offsetting declines in spending for potash for the past two years.

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

Exploration expenditures for iron ore almost tripled in 2018, reaching $25 million compared to $9 million in 2017. Increases in 2018 were reported in Newfoundland and Labrador, Quebec and Nunavut, while the anticipated increase of 26% for 2019 will be concentrated in Quebec.

Work phases

Off-mine-site exploration spending declined by 4% to $1.4 billion in 2018. Declines were recorded in all jurisdictions except for Alberta, British Columbia, Manitoba and New Brunswick.

In 2019, off-mine-site exploration spending is anticipated to decrease by another 10% to $1.2 billion, with decreases in all provinces and territories with the exception of Saskatchewan and Alberta.

Figure 4: Exploration and deposit appraisal expenditures, on- and off-mine-sites, 2018–19

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 2018 and 2019. 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.

On-mine-site exploration expenditures rose by 65% for a total of $163 million in 2018, due mainly to increased activity in Ontario and Northwest Territories. Intentions for 2019 signal a further 30% increase or a total of $211 million in spending with most increases taking place in Quebec and Ontario.

Off-mine-site deposit appraisal spending increased by 21% or to $724 million in 2018. Gains were reported in all jurisdictions except for Quebec, Manitoba and Nunavut. The bulk of the gains was concentrated in British Columbia (coal and gold), Ontario (gold) and Saskatchewan (uranium). In 2019, spending on off-mine-site deposit appraisal is anticipated to decline by 9% and reach $661 million, with decreases in every province and territory except Quebec, Saskatchewan and Manitoba.

In 2017 and 2018, on-mine-site deposit appraisal spending remained at $51 million, but in 2019, expenditures are anticipated to decrease by 15% or to $44 million.

Notes

Notes

  • Data for 2018 are preliminary and data for 2019 reflect the spending intentions of companies.
  • Totals may be different because of rounding.
  • Values are in Canadian dollars.