Mining A Sunrise Industry in B.C.

By: Richard Mills | Fri, Oct 18, 2013
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As a general rule, the most successful man in life is the man who has the best information

Vancouver BC is undoubtedly one of the greatest mining centers in the world and British Columbia should be a mining powerhouse, consider:

Many of the world's largest mining companies use to have a strong presence in British Columbia - they left in the 1970's after the political landscape changed. In the wake of the electoral collapse of the New Democratic Party (NDP) the Gordon Campbell led Liberals won an overwhelming majority in the 2001 provincial election. Since then the Liberal government has been trying to remake B.C. into an investable and attractive place for the mining industry to do business again. Are they succeeding?


Mining Facts from the Mining Association of B.C. (MABC)

In November 2010, after mounting public opposition to a new tax and the controversial ending of a political corruption trial (and a popularity rating as low as 9 percent) Premier Campbell announced his resignation. On February 26, 2011, Christy Clark was elected as the party's new leader and became the 35th Premier of British Columbia.

In September of 2011 Clark introduced her jobs plan, "Clark's $300-million jobs plan, which she introduced last week after a province wide tour, includes promises of eight new B.C. mines by 2015 and nine upgrades to existing mining operations.

She didn't name any of the new mines, but spoke glowingly of the economic rewards and family-supporting jobs mines bring to B.C. communities, citing the recently reopened Copper Mountain copper mine at Princeton in the B.C. Interior.

"We need more Princetons," said Clark about the mine that now employs 10 per cent of the community's workers." CBC, Mining industry sees gold with Premier Clark's plan

Clark is on record promising her jobs plan will return $1.6-billion per year of additional revenue for the government and provide 1,800 new jobs.

The BC Jobs Plantargets eight new mines and nine upgrades and expansions to currently operating mines by 2015. Significant progress has been made toward this goal over the past two years.

Two new mines are operating:

Five more are under construction or permitted:

Major expansions have been approved for six existing mines:

The Notice of Work backlog has been reduced by 80 per cent and the Notice of Work application average turnaround time has been reduced from 110 days to 63 days.

In 2012, more than 30,000 people were working in B.C.'s mining, mineral exploration, and related sectors, more than double the number working in 2001.

The production value of mining in 2001 was $2.8 billion. In 2012, it was $8.3 billion.


Mining is big business

Teck Resources Ltd. (Canada's largest diversified miner) and Teck Highland Valley Copper Corp. (in which Tech Resources holds a 97.5 percent interest) gave $222,400 to the Liberals - just $62,500 to the NDP.

Teck Resources operates the first six largest (out of the ten largest) mines in B.C.:

Tech was number two on the BCBusiness 100 Biggest Companies in 2013 by Revenue. Out of the top ten revenue producing mines in B.C. eight are coal mines.

Business Vancouver has published a list of the biggest mining companies in B.C. in 2012, the list may be accessed here.

"The mining industry is a cornerstone of our provincial economy." ~ former BC Premier Gordon Campbell


The importance of exploration

British Columbia Exploration Spending (1998-2013)
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Exploration Graph
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As you can see from the above graphs exploration spending under a Liberal government has exploded from a not so awe inspiring $29.1mm in 2001 under the NDP to an estimated plus $650mm in 2013. Well over two billion dollars worth of exploration (expenditures include exploration and deposit appraisal) have been spent in the province of British Columbia just over the last three years!

Sixty per cent of Canadian exploration companies are based in BC, and 69 per cent of TSX and TSX-V stock exchange listed companies based in BC are involved in the mineral exploration and mining sector.


Junior v Senior

It's a fact in the mining world that most discoveries are made by junior mining companies and old time individual prospectors. Juniors, not majors, own the worlds future mines and juniors are the ones most adept at finding these future mines. They already own, and find more of, what the world's larger mining companies need to replace reserves and grow their asset base.

Why are the juniors so successful at making discoveries and finding mines? Well, the good ones are lean mean boots on the ground exploration and development companies run by people who have been out there and know what it takes. They know how to raise money from the suits and they know how to get the story out to the retail investor.

They are not tied up in bureaucratic red tape and can make the important decisions without commissioning a six month study or running it up through 12 layers of pencil pushers and then sitting on their butts waiting for an answer while somebody else scoops the prize. They can and do make up their minds very quickly and can execute immediately on plans.

Old time prospectors are independent minded, bush savvy and, geologically speaking, very knowledgeable. Unfortunately for them they lack the wherewithal to advance their discovery and most often option their property, or project if you will, to a junior they hope will raise money and develop it to the point where a more senior company wants to get involved, or perhaps take it over outright.

It's hard to invest in a prospector, fortunately if you want to invest in a potential discovery or the building of something of value - be in on the discovery of a mineral deposit and be there as the company moves it down the development path towards a mine there are quality junior companies, both private and public, to choose from. There are enormous opportunities to back excellent management teams with your investment money.


Conclusion

A junior resource companies place in the food chain is to explore for, find and develop, to a certain point, the world's future mines and nowhere are juniors more important to mining then right here in British Columbia, a vast and under explored treasure trove of minerals.

B.C.'s Liberals say they are committed to opening up the province to free enterprise and that they realize that the exploration for and development of natural resources is a cornerstone of the provincial economy. The terrific rise in exploration dollars being spent in the province says to me many believe what they are saying and trust them to keep their word.

There's no doubt mining brings a great deal of revenue to the province, but let's remember one important point - juniors find the deposits and prove them up to the point where a major would step in and buy them. Consider another point - when was the last time you heard of a major mining company making a discovery?

Today the relationship between juniors and majors is so inextricably linked that it's doubtful a major mining company could replace its mined reserves, let alone grow them, without keeping a close eye on junior's activities and a check book handy.

Perhaps the importance of junior resource companies in the exploration and mine development food chain should be on all our radar screens but especially so for our dear liberal leaders. Are they on yours?

If not, they should be.

 


 

Richard Mills

Author: Richard Mills

Richard (Rick) Mills
www.aheadoftheherd.com

Richard Mills

Richard lives with his family on a 160 acre ranch in northern British Columbia. He invests in the resource and biotechnology/pharmaceutical sectors and is the owner of Aheadoftheherd.com. His articles have been published on over 400 websites, including: SafeHaven.com, WallStreetJournal, USAToday, NationalPost, Lewrockwell, MontrealGazette, VancouverSun, CBSnews, HuffingtonPost, Beforeitsnews, Londonthenews, Wealthwire, CalgaryHerald, Forbes, Dallasnews, SGTreport, Vantagewire, Indiatimes, Ninemsn, Ibtimes, Businessweek, HongKongHerald, Moneytalks, SeekingAlpha, BusinessInsider, Investing.com and the Association of Mining Analysts.

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