There are some anxious faces at this year's Prospectors and Developers Association of Canada convention, underway in Toronto as economic uncertainty is making it tough to raise exploration capital.
Junior mining companies say they're having trouble attracting investment — and that's not good news for the industry in northern Ontario, or the rest of the country.
The president of Alto Ventures Limited, a junior mining company with an exploration property near Geraldton, said these are tough times for companies like his.
"We've essentially gone into stand-still mode," said Mike Kozial, at his booth at the PDAC convention.
"We have enough money to preserve our properties and keep ourselves afloat, but we don't have any money for any major exploration projects."
Mineral exploration is a high risk activity — one Koziol said investors aren't willing to back right now.
And no money also means no progress in terms of the company's timeline
"I lost a year in exploration work that could have been done," he added. "But since there is no money, it won't get done till next year."
Over in Timmins, the director of geology with Lake Shore Gold — a junior miner with property in the area — said he considers the company lucky to have a mine in production that it can focus on while exploration is put on hold.
"The changes in the market have been very drastic in the last couple of months," Dean Crick said.
"I don't know whether that's just a minor blip on the horizon and if that's just a reflection of localized economics in the Ontario area."
Having an operating mine "helps to facilitate exploration both on the mine sites and on the portfolio of [the company’s] projects on the Timmins and Quebec properties," he added.
‘Going out of business’
The decline in exploration spending is something Gerry White said he's seeing across the board.
The regional resident geologist with the Ontario Geological Survey in Thunder Bay said he's seen a 40 per cent drop in exploration in the northwest since last year.
"If there's less junior exploration companies, there's going to be less people doing exploration in the field and we'll have a reduced chance of finding the next gold mine or the next platinum-palladium mine," he said.
White added he's seen many junior mining companies go bankrupt, and others resort to joint ventures or fall victim to foreign take-overs.
"The junior exploration sector is very important because they are the ones that are doing the hard exploration work in the field," White said.
"They're the ones who usually find the good properties and then they're usually optioned off to large companies who develop it into a mine, if it goes that far."
A mining consultant in northeastern Ontario said mineral exploration in the northeast has dropped by 60 to 70 per cent since last year's PDAC convention.
"We're seeing juniors going out of a business, some joint ventures, some takeovers — even the majors are cutting back on their exploration, so it's significant," Bill MacRae said.
He noted this downward trend will be a long-term problem for the province.
"I think Ontario will probably have to see the bottom — virtually no exploration and no new mines opening — before they realize that the government has to support mining and, in doing so, bring back probably one of their biggest contributors to their gross national product."
MacRae said the Ontario government is focusing too much on the specific deposits in the Ring of Fire region and needs to value exploration elsewhere in the province.
"A lot of it is due to the difficulty to raise money. Markets are low, nobody wants to put their shares out at 2 to 3 cents because they can't get enough money to do anything at that level, so most of them are just kind of sitting on it and trying to figure out things to do with their properties that they do have," he said. "There's not much [they can do]
because without money, you can't do anything."
'Bottom of the food chain'
The Ministry of Northern Development and Mines also says spending for mineral exploration is continuing to decline across Ontario.
It forecasts $750 million in spending for 2013, down from an all-time high of more than a $1 billion in 2011.
"Hopefully this won't continue for too long, but as more and more companies fall off the edge it sort of fuels itself after awhile," White said.
"Hopefully we'll see some of the investors getting back into the market, but at this point in time, we don't see anything that's going to trigger that."
For junior miners like Alto Ventures, the predicament highlights the importance of junior mining — and the precarious position entrepreneurs like Koziol are in.
"We're at the bottom of the food chain for the mineral commodities," Koziol said.
"So if we don't do any exploration — and we don't find anything — then there's nothing for the mid-size companies to develop and then there's nothing for the large-scale companies to buy."