Mining incentives may be project savers

In the best of times, a government-sponsored mining incentives program could be a wise investment of public revenue to stimulate economic development in a mining-intensive jurisdiction like Yukon Territory.

In a sustained capital drought like the one currently scorching the industry, funds awarded through the Yukon Mining Incentives Program can be the deciding factor in whether boots even hit the ground on many mineral exploration projects across the territory.

Designed to promote and enhance mineral prospecting and exploration activities in the Yukon, the mining incentives provides a portion of the risk capital required to locate, explore and develop mineral projects to an advanced exploration stage.

Applicants are invited to submit prospecting and exploration proposals, and only well-conceived, technically sound applications are considered for funding.

For 2013/14, Yukon officials more than doubled the mining incentives program's funding level to C$1.17 million from C$570,000 a year ago. Though applications increased only slightly in 2013 to 86 from the 70-80 submissions the program has typically received in earlier years, the Yukon government offered funding for substantially more projects this year.

Some 56 projects received YMIP grants in 2013/14, up more than 70 percent from the 34 comparable ventures funded in 2012/13, which together spent C$2 million on their exploration programs.

"This new money will encourage more investment in mineral exploration during a period when raising capital is extremely challenging," said Yukon Minister of Energy, Mines and Resources Brad Cathers when an initial funding increase to C$770,000 was announced in January.

Cathers said the incentive program has a proven track record of leveraging exploration dollars, with the grants typically being matched by investors at a ratio of four to one.

"The program also provides economic incentive for individuals and companies to operate locally and invest in the Yukon economy," he added.

Derek Torgerson, mineral development geologist for the Yukon Geological Survey said the biggest difference he has seen in the industry this year when compared with the 2012 season is the lack of available capital, especially with the juniors.

Torgerson told Mining News that "several projects were offered funding but their operators couldn't contribute matching funds."

"The majority of successful applicants are either private companies or individual prospectors. These applicants typically have the money available to do the work; however, some are proceeding with caution and performing reduced programs," he said. "Many of these project generators have had option agreements terminated over the past year and are preparing for difficult times in selling or optioning claims to juniors. But they are continuing to do grass roots work."

Exploration driver

Yukon's mining incentives program contains three modules, "Grassroots - Prospecting, Focused - Regional, and Target Evaluation." In grassroots - prospecting, qualified prospectors can seek up to C$15,000 per year to cover basic operating expenses while searching for new mineral occurrences in Yukon. All of the approved expenses are reimbursed.

The focused - regional category is open to all types of applicants, from individuals to corporations, which undertake basic exploration directed at exploring and appraising the potential of an under-explored area may apply for a contribution of up to C$15,000 per year. Some 75 percent of approved expenses are reimbursed.

In target - evaluation, all applicants undertaking basic exploration work directed at appraising the potential of an under-evaluated occurrence or target may apply for a contribution of up to C$35,000 per year. Half of approved expenses are reimbursed. The intent of this funding is to enable the recipient to carry out exploration work aimed at developing a mineral project to an advanced exploration stage.

The mining incentives program has been instrumental in assisting prospectors who have made some of the most significant recent mineral discoveries in Yukon. For example, several large discoveries and projects in the White Gold District in central Yukon were initially assisted by the program.

Northern Tiger Resources Inc., for example, recently reported that its Korat and Del projects won Yukon mining incentives grants for half of the C$70,000 exploration programs the junior is planning for each of the projects this season.

"The cost-sharing agreement allows us to advance two of our promising early-stage projects on a very cost-effective basis," said Northern Tiger President Greg Hayes.

The Korat Property is fully enclosed within Comstock Metal Ltd.'s QV Property, where a recent discovery returned drilling results up to 2.3 grams per metric ton gold over 89.9 meters. Korat hosts an 800-meter-long gold-in-soil anomaly within a larger 1,600-meter pathfinder anomaly that straddles the same prominent regional magnetic high feature that is closely associated with both Kinross Gold Corp.'s Golden Saddle deposit and Comstock's QV discovery.

The Del project is located about 30 kilometers (19 miles) southeast of the Capstone Mining Corp.'s Minto high-grade copper-gold mine, and 10 kilometers (six miles) north of Copper North Mining Corp.'s Carmacks Copper deposit. Work from 2010-2012, including soil sampling and induced polarization and magnetic geophysical surveys, have identified potential copper mineralization.

One prospector's view

Bill Harris, a longtime Yukon prospector, won a grant for target evaluation of the Donjek-Arch project in the latest round of program funding.

"I have used the YMIP program many times in my life as a prospector. When times slowed down during down cycles in the mining industry, the program would give me access to some seed capital, which would allow me to bring raw prospects up to the drill-target stage," Harris told Mining News July 22.

"Junior companies find it difficult to raise money for very grassroots projects, which need a huge output in dollars for prospecting, geophysics and soil sampling. If a company can option or buy a drill-ready prospect, they can spend their money on drilling, which is a much more promotable activity," he explained.

Harris said the incentives program has enabled him personally to develop and option many properties over the 30 years he has worked as a prospector in the Yukon. Grants from the incentives program to explore the Freegold (Mountain)-area, for example, did not total even C$100,000, but they helped result in more than C$50 million in exploration spending there, he explained.

Harris said funding from Yukon's mining incentives program will be very important this year to the mining industry.

"It has become very difficult to raise money in the public markets for projects all around the world, and the small amount of YMIP money expended on these projects this year and in succeeding years will have a huge return," he predicted. "Many good targets were found during the latest "gold rush" in the Yukon, but because it was curtailed after only a few years, many of them received only cursory attention. Being able to follow up on these many small discoveries during the present slowdown with the financial help of the YMIP program will mean that the Yukon will have a large number of 'drill-ready' targets to bring to the table during the next, inevitable up-cycle of the industry."

The Arch-Donjek property straddles the Donjek River in the Kluane Ultramafic Belt of southwestern Yukon. The belt also hosts the 11-million-ounce Wellgreen PGM-nickel-copper deposit, which is tied onto the Arch claims to the southwest. Previous exploration by Conwest and Teck resulted in promising showings, and Harris is exploring the property for occurrences of platinum, gold, copper and nickel.

"The Teck Showing is a two-meter-wide exposure in a cliff face of good grade copper, nickel, platinum and gold," said Harris. "It has been explored by hand-trenching, ground geophysics and geological mapping, but no drilling. The Teck showing will be one tested with several innovative geochemistry and geophysical methods in the 2013 YMIP Program," he added.