Pace of claim staking slips in Far North

Claim-staking and other mineral tenure activity in Canada's Far North appears to be following the downward trend seen in recent exploration spending.

Officials report that the number of mineral claims and leases and prospecting permits issued in 2012, generally, have plummeted from comparable activity a year earlier, reflecting not only the dearth of financing available for new mining ventures but also new worries about future access to mineral prospects across Yukon Territory, Northwest Territories and Nunavut.

Several challenges, including a late spring, a major storm in June that washed out roads along with the prolonged risk-capital drought that is dampened industry enthusiasm for mineral exploration, slowed activity in the Yukon in 2012, according to the Government of Yukon.

The staking of new quartz mining claims slowed dramatically in 2012, totaling 11,733 claims, as explorers consolidated exploration properties staked in 2011. By comparison, Yukon explorers staked a record-setting 114,697 mineral claims in 2011, thereby shattering the previous record of 83,261 claims staked in 2010.

The Yukon, however, recorded 257,937 mineral claims in good standing as of August 2012, compared with about 248,000 mineral claims in good standing a year earlier. Prospecting leases held in good standing also increased to 225 in 2012, compared with 189 in 2011.

"Companies are evaluating and consolidating their exploration properties that were staked during 2011 and earlier years," reported Government of Yukon officials in a fall 2012 newsletter. The primary commodity of interest among exploration companies in the Yukon remains gold.

The outlook for 2013, so far, appears to be gloomy. Staking activity fell to zero claims in January, compares with 1,689 quartz claims staked in the Yukon during the same month a year ago.

"Staking is usually more or less zero in January," said Yukon spokesman Jesse Devost. "The last few years were the exception."

DeVost also observed that the slower pace of claim staking in 2012 was about average when compared with any year prior to 2009.

"Lack of capital is a factor," he continued. "The difficulty in raising financing has hit every jurisdiction. Companies aren't looking for new areas right now but consolidating in known areas.

"Most importantly, companies who are active in Yukon are putting efforts into exploring their properties and not staking new ground. The industry has moved on from the initial phase of land acquisition to exploration," he explained.

Some speculate that the slow start this year may stem, at least partly, from industry reaction to a Yukon Court of Appeal issued a decision in December that has called into question the legality of the territory's mineral claim-staking system.

In a unanimous ruling Dec. 27, a three-judge panel of the appellate court found that the Government of Yukon's "open entry" registration system for quartz mineral claims falls short of its obligation to consult with First Nations. Observers say the ruling could jeopardize the standing of mineral claims in as much as one-quarter of the territory.

Yukon officials, however, "don't believe this has been a factor on whether companies decided to stake or not in January," DeVost said

"The recent Yukon Court of Appeal decision, as it sits now, has asked for changes to be made within a year. Nothing has currently changed with regard to staking," he explained.

Downward trend

In Northwest Territories, where mineral exploration spending was expected to take a modest upswing in 2012, the latest data from the NWT Mining Recorder's Office shows industry acquisition of claims and leases decreased substantially and prospecting permits lapsed more quickly than they were being acquired.

Ninety-six claims covering 90,454.92 hectares were recorded in 2012, compared with 710 claims covering 543,993.89 hectares recorded during the previous year. One hectare is equal to 2.471 acres.

Claims in good standing at the end of 2012 totaled 3,337 covering 2,575,458.94 hectares in the NWT, compared with 4,218 claims covering 3,307,996.48 hectares at the end of 2011.

The NWT Mining Recorder's Office issued 46 leases covering 25,533.98 hectares in 2012, down substantially from 102 covering 96,949.13 hectares a year earlier. However, total leases in good standing in the territory increased slightly to 1,358 covering 901,005.74 hectares at year's end 2012, compared with 1,335 leases covering 895,226.13 hectares at the end of 2011.

Lastly, prospecting permits issued in the NWT in 2012 totaled 11 covering 179,051.51 hectares, or less than a quarter of the 46 permits covering 682,836.91 hectares issued in 2011. Permits in good standing at the end of 2012 numbered 97 covering 1,534,882.20 hectares, compared with 108 covering 1,687,734.96 hectares at year's end 2011.

The area currently occupied by mineral tenure in claims, leases and permits in Northwest Territories totals just 3.72 percent of the entire territory, according to a recent NWT & Nunavut Chamber of Mines report.

A downward trend for prospecting permits in the territory began in 2006, while the downward spiral in claim-staking began in 2007.

The chamber said the trend reflected declining interest among investors in exploring in the NWT in recent years, but industry interest in mineral prospects in Northwest Territories may rebound in 2013.

A concerted effort by government, industry and Aboriginal communities in the territory may be attracting renewed interest in NWT mineral prospects. This is due partly to an aggressive effort underway to remove regulatory bottlenecks that previously clogged the mine project review process, a Mineral Development Strategy being advanced by the territorial government, ongoing work by regulatory boards to improve their internal systems and efforts of the chamber of mines and the government to engage Aboriginal communities.

Complex picture

In Nunavut mineral tenure in good standing in 2012 totaled 259 prospecting permits and 6,066 mineral claims, down significantly from 314 prospecting permits and 6,777 mineral claims a year earlier.

The number of mineral leases in good standing in the territory in 2012, however, increased 10.6 percent to 627 from 567 leases in 2011.

The number of mineral tenure applications received each year does not necessarily reflect the amount of mining activity in the territory, according to officials at Aboriginal Affairs and Northern Development Canada who track mineral tenure in Nunavut.

Many wide-ranging factors affect the number of prospecting permits and mineral claims applications received in a year, and each year brings its own unique circumstances.

International market conditions, report of metal inventories and commodity prices can impact the amount of exploration that occurs within a given period.

Forecasted metal demands that outpace supplies can trigger commodity over a certain period. From time to time, exploration interest can suddenly increase or decrease in a specific region following announcement of a significant discovery.

Based on 2012 statistics, 112,657 square kilometers of Crown land in Nunavut, or about 5.7 percent of the territory's land area, is covered by prospecting permits, mineral claims, coal licenses, and mineral leases.

Of the estimated C$426.5 million spent on exploration and development in Nunavut in 2012, junior mining companies accounted for C$154.7 million in expenditures, and comparable spending from senior mining companies totaled C$271.7 million, according to Natural Resources Canada. That compares with a total of C$535.7 million spent on mineral exploration and development in Nunavut in 2011, which included C$163.0 million by juniors and C$372.6 million by seniors.