Fewer mining companies are seeking permits to explore for minerals in Nunavut this year, as the number of prospecting permits the federal government has issued for the territory is at its lowest since 2004.

A total of 122 prospecting permits were issued for Nunavut this year, which is almost 100 fewer permits than last year, according to figures released by the federal Indian Northern Affairs Department on Monday.

This year's number of permits marks a five-year low. However, federal officials stress the number is not a clear sign that Nunavut's exploration industry is ailing.

"It would be speculation to try to tie the issuance of prospecting permits to the health of the exploration industry or the mineral industry," Michael Nadler, the department's regional director general in Nunavut, told reporters on Monday.

"We have never seen a direct correlation between exploration expenditures and the number of prospecting permits issued."

Nadler estimated that $330 million was spent in 2007 on mining exploration in Nunavut, but dropped by about $30 million in 2008 — to about $300 million — despite more permits being issued that year.

Most of the permits issued for exploration this year are located on Baffin Island: "In fact, the majority of permits issued in the Baffin region [are] between Iqaluit and Pangnirtung," he said.

'Very difficult season' ahead for companies

Even if fewer permits may not necessarily mean less spending overall, companies that help mining exploration companies say they'll be hurting from fewer mining firms coming with permits to explore in the territory this year.

"It's going to be a very difficult season and we see a significant downturn in our business," said Simon Morton, marketing vice-president with Canadian Helicopters, which operates three Nunavut bases that mostly serve exploration companies.

"In a very general sense I would say it's more than 50 per cent off."

Canadian Helicopters has 130 aircraft across Canada, and Morton said the helicopters will go where the work is.

"I think that there'll be substantially less helicopters working in the Arctic this summer," he said.

The federal government's prospecting permits start at areas covering 8,000 hectares in size. They allow mining firms to prospect in their chosen area for three to five years without any competition.

Of the 122 permits issued this year, 86 went to Peregrine Diamonds Ltd. of Vancouver. Mineral samples from that company's Chidliak property, located 150 kilometres northeast of Iqaluit, have turned up hundreds of tiny diamonds to date.