Loading ...TORONTO – Canadian gold projects once shunned by miners in favour of more alluring opportunities overseas are regaining their sheen, as a weaker currency, new tax breaks and greater security of tenure are wooing miners to return home.
In the gold rush during the last decade, Canadian miners had largely focused on projects in far flung countries that often offered much larger potential output than what was available at home.
But a rash of windfall gains taxes, political turmoil and even outright expropriation have caused those miners to rethink their strategies.
“Canada is, for all intents and purposes, one of the best places you can explore,” said Ian Ball, president of Abitibi Royalties. “It had fallen out of favour a bit, but it is coming back quite rapidly.”
At this week’s Prospectors & Developers Association of Canada convention, the world’s largest mining gathering, the mood was sombre. Many junior mining companies ravaged by the downturn in metal prices have struggled to raise financing, or attract the interest of larger rivals.
But that trend is beginning to turn for some of those with gold projects in Canada.
“We have noticed that mining companies are really, really looking at Canadian projects,” said Richard Boulay, a director with Moneta Porcupine Mines. He said Moneta, which owns gold projects near Timmins, Ontario, had been approached by five major miners at the convention seeking details on its assets.
These Canadian mines generally do not hold the promise mega projects like Barrick Gold Corp’s Pascua Lama asset, in South America, and Kinross Gold Corp’s, Tasiast mine, in West Africa. But bets like those soured badly and resulted in billions in write-offs.
Miners are now keen on smaller assets in safer jurisdictions that cost less and are faster to build.
And even though project permitting can be arduous in Canada, much of the recent takeover activity in the sector has centred around Canadian gold assets.
In January, Canada’s Goldcorp agreed to buy Probe Mines in an all-stock deal that valued the owner of the Borden Gold project in Ontario at C$526-million.
Late last year, Osisko Gold Royalties agreed to buy smaller rival Virginia Mines for C$479-million, winning control of royalty interests in two major Quebec mines.
Those deals came less than a year after Yamana Gold and Agnico Eagle Mines bought Osisko’s Canadian Malartic gold mine in the province of Quebec and other assets in the area for C$3.9-billion.
“Investors have yet to catch up with the corporates who see value in these assets. In time, that trend is likely to change, as it has in previous cycles,” said James Wilson, mining analyst for Morgans Financial, in Perth.
He sees a similar trend eventually playing out in Australia as well, as a weaker Aussie dollar pushes miners take a closer look at gold assets there.