Death of an Industry: The Decline of Canadian Mineral Exploration – by Brent McNiven, B.Sc Geology, MBA-PM (October 2012 – Part 2 of 2)

Brent McNiven holds a B.Sc Geology from the University of Calgary, and MBA-PM from Athabasca University. Working in 12 countries in the Americas since 1993, he has been a business consultant involved in market and industry analysis, owned / operated various consulting and contracting businesses related to mineral exploration, and has extensive experience in cross cultural project management. Fluent in Spanish, he is a former resident of Peru, Venezuela, and Brazil. He can be contacted at: sedex@shaw.ca

Lowest Common Denominator:

Of interest are the results of an informal poll conducted at the PDAC 2012, where Canadian students soliciting field exploration work were asked “what does a geologist do”. The responses to the question were disturbing in that none could provide more than simplistic one word answers, and not a single response presented a higher level, or comprehensive understanding of the field of study, even when prompted.

The results of the poll, combined with their demonstrated lack of field experience, present an equivalent level of preparation of the recent graduates interviewed in Mexico and Peru. Latin American labor laws (and culture) generally eliminate the possibility for students to gain summer work experience, so their response was expected, but it is not the historical condition of Canadian graduates.

The quality of education, and by extension the quality of the graduates varies widely across countries, and universities, however the findings and cost benefit analysis are, that provided interview and selection process were valid ie the best candidates were carefully selected and duds weeded out, that in actual field exploration conditions, the difference in performance by nationality is not significant.

The cost benefit in observed and measured productivity are that over the past two years, the all included costs of importing a geologist vs hiring a Canadian recent graduate works out to about 1 : 1.7, and exporting a Canadian junior vs hiring a local geologist is up to 1 : 9.2. In other words, for the same cost, one can import 1.7 geologists vs hiring a Canadian, or up to 9.2 local geologists (in developing countries) for the same cost of exporting a Canadian junior. It must be pointed out that imported geologists salaries are competitive to that paid to Canadians, so the difference noted was due to increased productivity, sharply reduced training costs and churn rate.

In comparison, in the 1993 / 97 boom it was unthinkable that any geologist would be imported into Canada, and in those same years it was well proven that, with few notable exceptions, a Canadian junior geologist would easily outproduce local exploration geologists in most markets.

The message is clear: the lack of explorationist skills and field experience have eliminated the once strong Canadian advantage. We now compete across a relatively level playing field, but the bar has been lowered, not raised.

Talent Replacement and Substitution:

Entry level opportunities once held by geology students and recent graduates have been largely replaced by lower cost trained local workers, often First Nations, and the so called “bush rats” both of whom are usually better skilled in field operations, and this trend is expected to continue, placing increasing downward pressure on wages and creating fewer opportunities.

The talent shortage for high quality junior and intermediate geologists can be addressed simply by importing the necessary skills to cover the short Canadian exploration season. It is legal, simple, fast, cost-effective and allows a capable and flexible workforce.

For example, UK and Australian geologists have proven to be very well prepared, highly productive, have excellent attitudes and are in near endless supply. Another source is Latin America where geologists generally work year round, are keen and often well trained by Canadian companies, and who can be legally imported quickly. Wages are equivalent (legal requirement) but there is an overall increase in productivity by matching the right talent with the job, and by eliminating often tens of thousands of dollars in training expenses.

Contractors, and their clients depend on reliability, productivity and predictability as core competencies in order to complete a project, and clients are not keen on either paying for half a project, or having the contractor demanding more money to make up for productivity losses.

While companies may post lofty slogans on a website with respect to hiring and operating policies, when push comes to shove, the most important item on the job quote is the bottom line cost. In no observed cases over the past 10 years, have clients ever volunteered to pay higher prices in order to employ Canadian geologists, and in all cases demanded the lowest cost alternative.

It can be expected that opportunities and income will continue to erode for junior geologists.

Geologist as Knowledge Worker:

Universities cannot create knowledge workers or exploration geologists with the necessary skill set and knowledge base, although they can and do continue to produce some very good academic geologists which is a very different skill set.

The universities, government and industry in the past have partnered, working together to produce professionals with the necessary skills, and this partnership had been a core competency in training Canadian geologists. Unfortunately this link no longer functions, and too many graduates are being prepared for a labor market in exploration that has not existed in 15 years.

Data, Information and Knowledge:

To properly discuss the concept of knowledge it is necessary to first define the components as they are being applied in this discussion:

 Data is defined as “absolutely everything” without reference or restriction, and is constrained by the underlying accuracy of the data acquisition processes used, and the defining metrics in establishing what data should have been acquired in the first place. Failure to acquire data using the appropriate parameters or methodologies and QA/QC, introduces fatal errors into the entire process. In many cases critical errors in basic data acquisition (sampling) resulted in an invalid and entirely useless data set, but one that was used without examination, and led to project failure.

 Information is defined as only that data relevant to a clearly stated and constrained objective. Information is only as good as the quality of the data, the accuracy and constraint of the stated objective, and the quality of the data query (comprehensive, appropriate, accurate and precise).

 Knowledge is defined as the synthesis of the relevant information obtained in response to a query in combination with all personal learnings, previous experience and intrinsic knowledge, comparisons with equivalent situations, and potential extrapolations when applied to a clearly stated and constrained objective. Knowledge cannot extend beyond the context of the stated objective, and is constrained by the quality of the supplied information.

A geologic map is an excellent example where data, information and knowledge can be presented at the same time. A simple example would be where all assay data, lithology and structures relevant to an particular exploration target are displayed, and then the synthesis by the geologist determines where to drill, and what is expected to be encountered.

Mentoring and Intrinsic / Extrinsic Knowledge:

Knowledge is divided into two types: Intrinsic knowledge which are the experiences and learnings that are held internally, whereas extrinsic knowledge is that which is outside of the person usually in the form of reports, maps, published research etc. It is estimated that (depending on sector) greater than 80% of all knowledge is intrinsic.

The most effective method to share intrinsic knowledge is direct communication, which is an integral component of mentoring, and allows it to be learned within the specific context. In other words, to acquire a professional body of knowledge requires extensive experience and practice operating within the appropriate environment working directly with others with the required knowledge, and who are willing to share it. It cannot be acquired otherwise.

Mentoring (pre-1990) was usually accomplished by sending a senior geologist to head up a project, several intermediate geologists to operate, and juniors to undertake the grunt work. This approach is no longer economic, but did ensure that intrinsic knowledge was shared.

The pre-computer knowledge management process consisted of creating hand drawn maps and in doing so, forced an iterative discipline whereby each geologist evaluated the entire data set, interpreted the map in comparison with all other contributors, and developed a collaborative knowledge base on which to plan the following days work, or in other works: created knowledge.

The resulting maps represented the body of knowledge of the project, and had been fully checked, confirmed and interpreted and most importantly this has been shared.

Currently the focus is on data collection, and not on knowledge creation.

Various groups, for example the Society of Economic Geologists (SEG) recognize that mentoring is a critical component in career development, and have provided excellent resources that are available for the asking. The SEG effort could serve as a model on which to provide an expanded and universally available resource to all geologists.

Geologist as Data Collector:

Knowledge Management is a fundamental component of Project Management, and until the early 1990’s had been a default core competency. It has been replaced by Data Management, and the critical iterative process of acquisition / interpretation / synthesis no longer occurs. The migration from knowledge worker to data collector has been observed worldwide and is largely the result of “direct to digital” data collection and misguided strive for efficiency, when what is actually required is productivity.

The evolution of the change from a geologist with strong interpretive and reasoning skills, to a data collector dependent on technology and software began in the early 1990’s when inexpensive satellite communications could be installed in camps, helping companies to cut costs.

The once well qualified explorationist geologist has been replaced by the geologist as the data collecting geo-tech focused on acquiring data by GPS, downloading the point data into a “data base”, sending it off to a GIS worker often in another location, and then happily disappearing to their shack to consume expensive bandwidth, eliminating the interchange of ideas, of lessons learned and by extension, loss of intrinsic knowledge.

Data to be useful had to be sent in an easy to enter format, and the field geologist was often forced to make ridiculous concessions to the data controllers. In one instance, we were requested to not prepare a geologic map that the GIS expert PhD Geologist could not in any case understand, and instead to “walk around the contacts” taking waypoints so this “expert” could connect the dots.

Mapping while in the field became an obsolete practice, and by switching to a focus on point data, the geologist no longer worked in 3 dimensions, interpolating or extrapolating structures in real time, and isolated the field observations (intrinsic) from the process of geologic interpretation.

Over the past 8 years, experience has shown that field level mapping itself was ignored completely, or undertaken at a very limited and basic level on the majority of projects reviewed.

The move to direct to digital “efficiency”, removal of critical training and mentoring, elimination of intrinsic knowledge sharing has created a near complete separation between the reality observed in the field, and the pretty colors on the maps presented to investors.

Why The Fundamental Shift in Skillset?

Organizational Theory tells us that “form follows function” or that any organization will develop its internal skill set, corporate structure, and knowledge base in response to it’s purpose. Historically, and we are going back a long way, Canadian mining industry was made up of hundreds of small mining companies that actually produced ore, or were determined to do so. Wealth was created by actually mining ore (although there were some great stock scams in the day) and the skills required to do so resulted in the companies being heavy on engineers, geologists, process professionals, and the skilled trades to get the job done. On a percentage basis, few lawyers, accountants or “promoters” made up the head office, although they all had key roles to play.

As time progressed and the industry matured, increasing costs, more complex mines, and demands for high productivity created barriers to entry for small companies, and industry consolidation followed, creating the senior mining companies, some of which still exist.

While junior companies came to rely increasingly on promoters, many still worked closely with the senior companies forming joint venturing projects, and were in turn funded in part or in whole by them, often operating projects on their behalf. This was still relatively common up to the late 1980’s, but sharply decreased soon thereafter, increasing the reliance on promoters. The junior companies were still heavily loaded towards technical professionals (geologists, engineers, geo-techs) and managers were still primarily technical although this continued to change.

From the early 1990’s a contextual tipping point was reached and industry management became dominated by financial promoters, accountants, lawyers and relatively few retained active / competent senior technical staff in executive positions, and what few technical staff that remained, continued to be weeded out during the ever increasing dramatic market swings.

While many senior geologists are very capable, competent, and have been critical to companies success, too many of the PhD appointees that remained could be best described as “trophy” positions intended to impress investors, and have been observed to lack even the most basic field skills of mineral identification or compass use.

The result is that an industry that once contained all the necessary knowledge base and provided the critical training for engineers and geologists, now holds the knowledge base and provides training dedicated to financial markets trading and promotion.

The focus on short term, high return investment, often with Flow-Through in mind, has resulted in literally thousands of companies being formed specifically to exploit it. While this is the normal and expected response to the business opportunity, it does little or nothing to support the industry or suppliers. On the other hand, it is where investors are able to obtain the greatest opportunities for profit, and so makes sense that this will be the preferred business model.

Form has therefore adapted to fit function, in both company strategy, and managerial ability. The only constant, is that the industry has always sold dreams of vast wealth to investors, and that has not changed much since Agricola penned “De Re Metallica”.

Why Don’t Junior Companies Become Producers:

An organization requires a particular knowledge base and skill set to undertake it’s activities. Change those activities and the relevant skill sets must also change, or the organization will fail. As the junior companies have moved from a technical to financing focus, they no longer have the necessary skills to become producers and arguably, many lack the skill set to manage exploration in the first place.

The issue is one where too many companies felt it was possible to simply outsource or contract the necessary skills, akin to calling a plumber to clear a blocked pipe, failing to recognize that the critical skill set lacking was management ability in the “C” suite. An operating mining company has a very different management requirement, and environment, than a stock promotion and financing group.

It is an attractive idea that management would one day wake up and decide to fire themselves and hire competent people, but it is not likely, and most companies that attempt the transition fail due to internal conflict and technical incompetence. For those that did adapt from promotion to production, few escaped without significant and potentially catastrophic internal conflict, management did get replaced, and only luck and strong personalities saved the day.

Those few junior companies that have been successful in becoming producers without major conflict have generally been an “old school” group that is managed by, and focused on, technically qualified staff, or had a strong leader with a clear vision and the necessary resources to drive it from promotion to production. Golden Predator and Osisko Mining (there are others) come to mind as recent examples of juniors who successfully made the transition.

Fundamental Change in World Market:

Systematic changes in the international market and aggressive competition from State Owned Enterprises have affected Canadian juniors who once promoted and explored for all metallic minerals but are now largely limited to Au, Ag, U, some Cu, and “orphan” elements such as REE. The definition of State Owned Enterprises (SOE) can be expanded to include state operated/directed enterprises in that many of the examples observed are actually semi-private companies with significant state ownership and extensive state control executing state directed strategy.

SOE do not comply with “normal” market drivers or conditions and instead comply with strategic objectives set by governments to meet national goals frequently skewing the market. SOE do not operate under the same ethics and investment rules and are often able (required) to pay more than market value to purchase deposits, and can offer incentives that would attract interest from the RCMP if undertaken by a Canadian company.

SOE have aggressively sought to acquire base metal deposits everywhere they can be found, which has in turn solicited a strong response from local mining companies, for example in Peru where local mining companies are fighting for the deposits they need to survive, and are expanding at home and abroad, increasing barriers to entry to any competitor lacking deep pockets and a strong local presence.

The observed result is that the TSX junior companies are vulnerable to a collapse in activity once investor interest moves on from Au / Ag. Looking back over the past 30 years, it was the norm that while one commodity invariably dominated the market, when that commodity fell out of favor, there were sufficient juniors with other assets and they could move with the market, however the hyper-focus on Au / Ag and international competition restricts that flexibility.

Excess Capacity = Junior Company Reduction:

To use the McDonald’s analogy, today well over 1,000 junior exploration companies are promoting the same hamburger, dividing an already decreased investor base, and are unable to dedicate sufficient resources on any one property to achieve the necessary results to sustain investor interest, or advance the property to where it could be sold. A contraction by up to 60% would not be impossible, and may be necessary before a sustainable balance in supply / demand can be achieved.

For an underfunded junior with limited resources to attempt to explore properties located in 3 or 4 countries, often in as many continents, and across a wide range of commodities just to please the investor market is absurd. Experience has shown that resources are sucked into administration and fees, and nothing hits the ground. This may be good for the executive and insiders, but does nothing to advance the company or the industry.

To survive, let alone prosper, companies will have to focus the right resources, on a very limited number of good opportunities, in relatively low risk / corruption jurisdictions with clear law, and where potential buyers will be happy to operate.

The market is the only mechanism that can thin out the number of companies, and history has shown that the overall number will decrease in any downturn. History also shows that (some) companies with sound fundamentals and good properties will have a better chance to grow, but many (most?) that survive will be those best able to provide high rates of return through aggressive promotion, and not through generating value add in the ground.

This apparent dichotomy would just be returning the market balance to its historic roots whereby much of the investment is strictly promotional, but a significant percentage would be directed to companies with a good chance to discover mines. Historically, to ensure investment occurred in a targeted sector, government policy skewed the market to provide incentives to investors, and some tweaking may again be required.

Skewed markets have been the norm for two hundred years, and while it can work well, it has been out of balance for some time. The difficulty lies in how to skew the market in a direction that will both assist the industry as a whole, yet still reward investors. Changing policy and perceptions may not be possible, and if not then we will continue to operated in a oversupplied and weak industry.

A critical and fundamental component of the industry is what is generally referred to as the “investor”. The investor is simply an individual focused on obtaining the maximum rate of return, and not some demon responsible for the downfall of the industry. Adam Smith’s truism that capital will be directed to the best opportunities for profit, and provided that government policy is well executed, then the shrewd investor will soon figure out how to exploit the opportunity. In other words, a return to business as usual where the supply of investment capital is adequate to meet the needs of the exploration companies, and all benefit.

Future Direction – Not so good for Geologists:

It is obvious that the exploration industry cannot return to the “old ways” however the basic fundamentals of training, knowledge management, and field expertise including project management could be re-instituted in Canada, but this would first require a fundamental shift in how the industry functions.

Canadian funded / operated exploration activity has collapsed while other countries exploration groups continue to operate and until balance is restored in Canada, and longer term exploration employment opportunities exist, it will be impossible to develop the necessary talent.

Fundamentally, the issue is self reinforcing as geologists are unable to meet the needs of the mineral exploration companies, the exploration companies are unable to meet the career objectives and development goals of the Canadian geologists, the financing industry is unable to support either (and does not care), and universities continue to pump out graduates into a market that can accommodate only a lucky few.

Unfortunately, the geologists have the least leverage or influence. Unless a way can be found to return the value add to historic levels, then all things being equal, just as Walmart guarantees the lowest price, exploration companies will through economic opportunity will continue to demand the lowest cost talent.

The optimistic outcome would be that only those few exceptional candidates will enter the field, leading to a much smaller, high quality industry core group, with short term labor requirements being replaced by “bush rats” and imported talent.

For the rest of the graduates, one hopes that they find meaningful employment in petroleum, environmental or some other field that is not related to making coffee, although taking a barrista course may not be a bad idea.

Recent political events in Venezuela are expected to push several thousand more well trained and qualified petroleum geologists and engineers onto the international market, and many of these can be expected to move to Canada, further reducing opportunities for graduates.

Environmental opportunities continue to be placed under pressure by continued government program and funding cuts, and reduced international activity by Canadian based contractors.

Future Direction: Junior Companies:

The level of investment is once again in a down cycle and the normal bottom feeding, company dissolution, and properties being returned to owners is occurring.

Excess capacity exists in the junior mining sector, leading to unsustainable demand on investment dollars, management ability, and a fundamental issue on branding. A major consolidation is required if the sector is to maintain credibility, and that will be painful. Such a consolidation may result in the promotion of competent technical managers and exploration geoscientists who can return the focus on exploration and development, and not just flipping stocks (although that will remain a critical function).

For the next up cycle, it is reasonable to expect that the level of international activity will be lower than the last round (which was much lower than the one before, or the one before that….) and will so continue the overall reduction in international activity, although some activity will always occur.

Intermediate and large Canadian contracting and consulting companies should remain strong players in the international market, but will continue to be challenged and replaced by Australian and other competitors, which the ongoing contraction and lack of underlying support fundamentals in Canada will exacerbate.

The Canadian exploration market is still largely protected from international competition, and increased attention is expected on our own backyard, although as recent Chinese investment in Nunavut has shown, increased competition in remote areas once considered unthinkable, will become common.

Local mining companies particularly from Peru, Brazil, and Mexico will continue to expand into neighboring markets and increase their market share, have the resources and drive to establish the necessary fixed support infrastructure, and will become the dominant players at others expense.

In every case we examined throughout the Americas, fewer opportunities for local graduates, and reduced local investment and support for education, and training have occurred after foreign takeovers.

Foreign takeovers of Canadian producers is normal and expected, and is just part of operating in an open market, however as Vale demonstrated in Sudbury, corporate cultures will change, and this will continue to impact the historic relationship between industry, academia, and training of students.

Dehua International’s demand to import thousands of Chinese workers into Canada to operate it’s mines, is the norm, not the exception for Chinese companies operating abroad, and is a good example of the cultural divide separating the FDI companies from supporting Canadian universities and graduates.

If one examines the activities of Canadian companies international activities, that outside of token schools, clinics or “feel good” investments, rarely do they (or are they able to !!) make significant contributions to the local economies, although there are some notable exceptions.

The Vale and Dehua provide very different examples of how FDI companies operate, but in a general sense, all companies operating offshore will exhibit these same characteristics, which has result in conflict in the host country. This topic is outside of the scope of this paper, but does identify issues that must be managed for FDI in Canada, but also for those Canadian companies operating internationally.

Conclusions and Observations:

The Canadian exploration industry will remain hostage to investor whim until supply / demand are balanced, the number of companies decrease, corrupt jurisdictions are avoided, and the industry is again able to respond to economic realities.

The necessary conditions of protected home market, lack of international competition, and a captive financing industry cannot return, and the industry will continue to change and adapt to international competition, but no evidence suggests it could return to anything resembling it’s former level of activity or influence.

The explorationist geologist function undertaken by an individual will continue to decline, and be replaced by the international model of a technically competent geologist, working with an infrastructure and operating team. This will increase costs, but still get the job done well.

Increasing pressure from special interest groups, shrinking contractor base, and lost centers of critical density, will ensure continued fragmentation and contraction of the industry, and restrict what had briefly been a world leader, to a parochial if highly capable, local player. Perhaps Canada will follow the lead of the USA which has no shortage of geologists, but it is rare to encounter them working internationally in mineral exploration.

Federal Government policy has over the years migrated focus from commodities to other market sectors, and is expected to continue to reduce funding and support for science, infrastructure and academia related to mineral exploration.

The Federal Government is unwilling / unable to develop a timely or cohesive policy with respect to land use that will ensure a healthy mineral exploration industry in Canada, continuing to increase risk, and reducing both investment and opportunities.

The ongoing changes will continue to be reflected in the complexion of contractors and consultants, with increasing internationalization and mobility of professional talent, and diversification to non-traditional contractors within Canada such as First Nations. This will demand increasing in-house management capacity and ability in the companies themselves, however staffing up will add significant costs, and few companies are expected to be competitive.

Canadian engineering and medium and large consulting companies are expected to remain strong in the international markets, but most likely through JV and strategic alliances with local companies that will provide them with the necessary local support and credibility.

Canadian mining companies with economic deposits, should continue to do at least as well as the overall state of the international industry, although economy of scale will be difficult to retain and many are expected to be sold in the next round of international consolidation.

The race to the bottom is not sustainable, but in order to compete, the value added by each participant in the value chain must improve to justify the economics, and that challenge has not yet appeared on the radar.

Trends in Education:

The trend towards fewer students entering geology will hopefully result in fewer, and smaller programs that will invest their cost savings to increase the quality of education, and not focus on cranking out large numbers of (often) heavily indebted geologists to meet a non-existent demand.

This begs the question that with constantly decreasing demand for earth scientists, can we really afford to fund and operate over 20 geology schools, with undergraduate courses offered in over 30 campuses? Environmental and Petroleum cannot hope to absorb all of the graduates who do not elect mineral exploration, and being a well educated barrista will not pay the student loan.

Government funding for students is decreasing constantly, and has not increased in over the past 20 years. This trend is not expected to change, so that if a university is going to survive, moving from bricks and mortar to online education for at least a significant component of its courses will become economic necessity.

Online education, developed from what had been known as “distance” or “correspondence” education, has undergone a revolution and is now best described as Open Education, whereby large consortia of Tier One universities have collaborated to make courses available to anyone. The once costly proprietary material, often delivered using proprietary software, can be delivered to any student worldwide for pennies. Instead of studying with just 20 other students, access is now available up to (currently) 5,000 times more, and the combined and shared resources and collaborative learnings can provide a quality of education that no university acting independently could not hope to match.

The trend towards strategic and operating alliances between universities is expected to continue, and the advancement in on-line education (coursera.org, Athabasca U etc) will make it much easier for students to take selected courses from the best universities. Coursera offers free online courses from the likes of Princeton, U of T, MIT, London, UBC (and many more) and had at last count over 1.6 million students registered, with classes of more than 100,000 students. And this after less than 6 months in operation.

Students will vote with their wallet and seek the best return on their investment, demanding access to the best courses available. The student can avoid accumulating unsustainable levels of debt, and the resulting drag on the economy can be eliminated. Just as the junior mining industry must adapt to economic reality, so too must education, and if done correctly, the student and by extension the industry will benefit.

Once the requirement that demands a student to be physically present at one site for 4 years is broken, and that same student is able to select specific courses from any university, the expected response from the universities should be to create centers of research and teaching excellence around which to service graduate and undergraduate students, regardless of where they take their courses.

The corollary is that as Coursera has shown, that if one professor can teach 100,000 students, then why do we need so many expensive universities with duplicate courses.

Open Education has also clearly demonstrated that no one country can hope to maintain leadership in education when everyone has access to the same quality of eduction, material and overall learnings.

Mediocre universities (and/or professors) should be nervous, and government should be laying awake nights dreaming up policy direction to cut costs and improve overall quality in Canadian Universities, or our graduates will not be able to compete against the rest of the world.

Last Words:

Change is constant, and significant change has occurred in the mineral exploration industry. To fail to accept, identify, quantify, and develop a response will result in a failure to adapt, and that would be fatal.

Change represents risk, but also presents new and potentially lucrative opportunities. The challenge is to ensure that these opportunities are recognized and exploited in a timely manner. Luck is often defined as what occurs when preparation meets opportunity. In an industry that is being redefined and marginalized in both international and home markets as we speak, planning and preparation is therefore critical.

If Government policy assisted universities to become world class centers of research excellence, undergraduate student levels were re-aligned with demand, and online courses could be selected by the student from the best institutions, Canada should be able to produce world class graduates, and by leveraging the existing strong foundation, become a world leader of exploration excellence.

Mentoring networks, possibly modeled on the SEG example, should be a focus of both industry and government. Unfortunately as the senior mining companies are no longer available to provide a role, and junior companies lack resources and coordination, it would be up to the government to coordinate, preferably through policy and incentives, and not through direct intervention.

It is critical that comprehensive Government policy is implemented to establish land use and environmental regulation to eliminate uncertainty, reduce risk and conflict, and encourage investment in Canada.

Government policy was fundamental in creating the junior exploration industry in the first place, and benign neglect has resulted in the industry becoming fragmented and ineffective. The historic partnership between financing / promotion / exploration could be mended at least for exploration within Canada, perhaps by changes to the Flow-Through or other program that rewarded long(er) term risk, rather than short term profit.

The industry does not require government handouts, nor would welcome government interference. Policy that directs and focuses investment and private resources on exploration has proven effective in the past and should do so again. The market will do the rest.

Click here for part one of: Death of an Industry: The Decline of Canadian Mineral Exploration – by Brent McNiven

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