Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.
It’s a grim market reality for mineral explorationists trying to raise capital for their projects. But there’s one tool available to help prospectors at the grassroots levels with their costs in working their claims.
The Ontario Exploration Corporation (OEC) is a for-profit entity overseen by the Ontario Prospectors Association that allows successful applicants to access as much as $85,000 to fuel their work.
The OEC was established in 2002 to invest in mining lands that may produce prospects with high economic potential. The three-phase program delivers financial assistance in exchange for a royalty on the lands, up to 1.5 per cent net smelter return, which prospectors can buy back up to 11 years after receiving the funds.
The net smelter return (NSR) refers to revenues expected from the mill feed, taking into consideration mill recoveries, transport costs of the concentrate to the smelter, treatment and refining charges, and other deductions at the smelter.
That hitch isn’t always popular in the prospecting community, said Garry Clark, executive director of the Ontario Prospectors Association (OPA), who admits the program is underutilized.
“Prospectors don’t like giving up the NSR,” said Clark, “but the chances of you making money on the NSR are so slim that you may as well give it up if it means free money. It’s all negotiable. You can buy the whole thing back.”
In 1999, when the Ontario government got out of the Ontario Prospectors Assistance Program, the OPA lobbied the Northern Ontario Heritage Fund for one-time funding of $2.8 million that would set up a corporation based on giving prospectors loans, which would be underpinned by a one per cent net smelter royalty.
The first phase of the program provides up to $10,000 for successful applicants, half of which is given up front. The rest is released after the prospector files his assessment report with the Ministry of Northern Development and Mines.
The money is often earmarked for sampling, mapping and assays, “stuff prospectors can’t afford themselves.” It can also be used for room and board, and gas expenses.
“The only thing we say with the money is you can’t pay yourself,” said Clark.
The OEC takes a one per cent NSR on the initial $10,000.
Prospectors can then apply for to up $25,000 at phase two and up to $50,000 for phase three. The OEC takes a 0.25 NSR at each step.
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