Canadian metals exploration to see continued growth In 2006

Canadian metals exploration to see continued growth In 2006

Winnipeg (Platts)--4May2006

Mineral exploration investment in Canada is expected to increase by 9% in
2006 to C$1.4 billion ($1.26 billion), the largest level in more than five
years, according to preliminary estimates from Natural Resources Canada.
However, an analyst thought a number of factors may limit any increase.

In 2005, precious metals accounted for about 37% of the exploration
dollars in Canada, while 21% of the spending went to base metals. The most
spending was seen in Ontario, British Columbia and Quebec. Similar ratios are
projected for 2006.

In its 2005 report, Metals Economics Group, a Nova Scotia-based company
that tracks global exploration trends, forecast a 10% overall increase in
global spending from the US$5.2 billion seen in 2005. In 2005, Canada was the
second destination behind Latin America for exploration dollars, accounting
for 19% of the total.

While he was fairly confident that global expenditures will be up, Jason
Goulden, a research analyst with Metals Economics Group, said it was still too
early to determine how much of the total international exploration investment
will come to Canada in 2006. He noted that Canada's Investment Tax Credit for
Exploration (ITCE) program, which allowed companies to pass on tax breaks
directly to investors, expired in 2005. However, the money raised during 2005
can still be spent in 2006. In addition, many junior companies which had been
spending a large amount of money domestically are starting to branch out
globally, although it was uncertain if that trend would continue.

On the other hand, the increasing nationalization of natural resources in
Latin America may make some people wary about investing in the region,
according to Goulden. That being said, early indications are that a fair
number of companies are still working in Latin America. Goulden also pointed
out that Bolivia and Venezuela, the countries experiencing the most
nationalization, don't typically garner a lot of investment money. The
majority is spent in Peru, Mexico, Chile and Brazil, which have more
established mining laws.

--Phil Franz-Warkentin, newsdesk@platts.com

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