Drill core samples from Avalon Rare Metals Inc.'s Nechalacho exploration project in the Northwest Territories. The company is expected to continue drilling at the property this summer. (Avalon Rare Metals Inc.)

Mining companies are set to invest twice as much in the Northwest Territories this year as they did last year, but some industry officials say the territory still lags behind the rest of Canada in mineral exploration spending.

Companies intend to spend $66.3 million exploring in the N.W.T. this year, which is up from an estimated $29.5 million in 2009, according to forecasted mineral exploration figures from Natural Resources Canada.

This year's estimate is still a far cry from 2008, when mineral exploration spending totalled $147.7 million.

Compared to the rest of Canada, the Northwest Territories' exploration spending has slid from fifth place in 2005 to eighth place today, said John Kearney, president of the N.W.T. and Nunavut Chamber of Mines.

"What we are concerned about is that the exploration in the N.W.T. is down significantly compared to the rest of the country," Kearney told CBC News.

Kearney said Natural Resources Canada's 2010 estimate of $66.3 million is "a significant improvement from last year, but it's still below where it should have been."

He added that the N.W.T.'s bounce-back is slower than other jurisdictions because of the "difficult regulatory environment," which has often resulted in a lot of paperwork and delays.

Kearney said he hopes the federal government's recently announced plans to streamline the regulatory boards in the N.W.T. will improve the process for companies.

Exploring base metals, rare earth elements

Some of this year's projects are moving away from diamonds — which, for years, have driven the territory's economy — and instead explore for gold and other metals, as well as rare earth elements.

One of the biggest projects starting up this summer is at Seabridge Gold Inc.'s Courageous Lake gold property, located 240 kilometres northeast of Yellowknife.

Seabridge president Rudi Fronk said the time is right to drill at Courageous Lake this year, since the price of gold is about four times higher than it was when the company bought the deposit in 2002.

"We kind of just shelved Courageous Lake for the time being, and now we will get back on it quite aggressively this summer," Fronk said. "We'll spent about $15 million in the territories on Courageous Lake."

Another company, Avalon Rare Metals Inc., plans to resume drilling for rare earth elements at its Nechalacho property 100 kilometres southeast of the N.W.T. capital. As of last month, the company has spent about $18 million on the property.

Avalon president Donald Bubar said his company is trying to prove that the Nechalacho deposit is as large as the company believes it is.

"We're finding that it is quite continuous," Bubar said. "There are some breaks in it here and there, and we're mapping those out."

'Extremely diamond-focused'

For years, the Northwest Territories has been known for its three diamond mines: Ekati, Diavik and Snap Lake.

But interest in rare earth elements has been part of a growing trend in the Northwest Territories, said Scott Cairns, a manager and geologist with the N.W.T. Geoscience Office.

"For some time, we were extremely diamond-focused, to nearly the exclusion of any other commodity," Cairns said.

"Now we're looking at exploration projects that span the scope of commodities: diamonds, lead, zinc, silver, gold, nickel, rare earth elements, lithium. I mean, it's a very diverse suite of minerals that are being sought."

The diversification of the N.W.T.'s mining industry is encouraging, said Malcolm Robb, mineral development manager with the federal Indian and Northern Affairs Department.

"In most sort of long-run economic trends, metals aren't on exactly the same cycle, so some go down in price earlier and then some lag," Robb said.

"It sort of spreads out any downturn, and then when the upturn comes it sort of spreads that out as well and it evens out the activity across the board. So that diversification is nice to see."

Robb said people are generally spending less on diamond exploration around the world, due to the collapse in diamond prices in 2008 and 2009.

The shift toward exploring for other minerals reflects the diversity of the Northwest Territories' geology, he added.