WHY QUÉBEC IS A HOT PLACE FOR EXPLORATION

Transcription

1 Canada WHY QUÉBEC IS A HOT PLACE FOR EXPLORATION Jean-Louis Caty and Sylvain Lacroix Raglan Ni-Cu-PGE Mine Otish diamond Courtesy of Ashton Mining & SOQUEM Inukshuk

2 In the top ten most explored areas in the world 2 Metals Economics Group Worldwide exploration spending by region (US$ million) Top Ten in % of world (US$2400 M) 1 Canada % of world 2 Australia United States % of Canada South Africa Brazil Peru Chile Mexico Russia Argentina Québec s recent trend Year Rank 7 th 7 th 9 th 10 th % US$ M World US$ M IS QUÉBEC A HOT PLACE?

3 In the top five most attractive investment climates in the world, and first in Canada 3 The Fraser Institute annual survey of mining companies Index Investment attractiveness Mineral potential (60%) Mining policies (40%) Jurisdictions Companies Exploration Budgets 2001/ Québec 1. Ontario 3. Australia 4. Chile 5. Brazil US$782 M (2000) 2002/ Chile 2. Québec 3. Australia 4. Nevada 5. Peru US$738 M (2001) 2003/ Chile 2. Nevada 3. W. Australia 4. Québec 5. Brazil US$642 M (2002) IS QUÉBEC A HOT PLACE?

4 Ten good reasons for exploring in Québec 4 1. A steady rate of major discovery 2. A major past producer with world-class deposits 3. A rich and diversified present producer 4. A vast, little-explored and open territory 5. Great geoscience data and infrastructure 6. A reliable and modern mining regime 7. Great access to an overall cost leader 8. Great access to capital 9. Generous tax incentives 10. Partners for a sustainable development AN ATTRACTIVE TERRITORY AN ENVIABLE BUSINESS CLIMATE

5 Ore (million tonnes) 1. A steady rate of major discovery Cu-Zn-Ni deposits over 10 Mt Horne 50.4 Normétal 10.1 Manitou 11.3 Quémont 13.9 Springer 13.0 Copper Rand 16.0 Lac Mattagami 25.6 Selbaie 53.5 LaRonde 37.3 Raglan 23.7 Louvicourt 11.2 Bouchard- Hébert major base metal deposits regularly brought into production 7 in the first 60 years 5 in the last 25 years 5 Gold (million ounces) Lamaque 4.5 Malartic Goldfields 1.7 Beattie 1.2 Sigma years Gold deposits over 1 M.oz. East Malartic 1.6 Joe Mann 1.1 Doyon 6.1 Bousquet Agnico-Eagle years Kiena 1.6 LaRonde 6.4 Bousquet Troilus AN ATTRACTIVE TERRITORY Closed mines Open mines Closed mines Open mines 13 major gold deposits regularly brought into production 7 in the first 60 years 6 in the last 25 years

6 2. A major past producer with world-class deposits : A total value of $220 B Gross value (January 2004) of major Cu-Zn-Ni & Au mines (camps) Raglan 14.4 $B Horne 9.9 Sigma + Lamaque 4.9 (Matagami) (Chibougamau Doyon + + Chapais) LaRonde Bousquet Selbaie Annual production value 4 AN ATTRACTIVE TERRITORY

7 3. A rich and diversified present producer Mineral extraction $2.9 billion / yr 200 establishments > jobs 22 mines including 15 metal mines Substances Ilmenite Titanium slag Magnesium Niobium Aluminium Zinc Nickel Gold Iron Copper Canada 1 st - 100% 1 st - 100% 1 st -89% 1 st - 100% 1 st -90% 2 nd -26% 3 rd - 13% 2 nd -22% 2 nd -37% 3 rd -15% Mines and metals $18 billion / yr 700 establishments > jobs Smelters and plants More than 30 substances produced World 1 st - n / a 2 nd -40% 2 nd -11% 2 nd -10% 4 th -10% 9 th -2.9% 13 th -1.9% 16 th -1.3% 12 th -1.0% 18 th -0.7% 7 AN ATTRACTIVE TERRITORY

8 4. A vast, little-explored explored and open territory 8 Caniapiscau Wemindji Renard Otish Nottaway Lac Beaver Desmaraisville Témiscamingue Torngat Kimberlite fields Diamond mining title Other mining title Raglan-18 Mt-2.9% Ni Canadian Royalties Anglo Am/Knight Res. Otish area: Since fall 2001, 17 diamond-bearing kimberlites Ashton-SOQUEM:10 kimberlites Size: 0.6 to 1.5 ha each Renard (0.5 km 2 ): 0,66 c/t (24 c/36.5 t), incl. 4 c Vast: 1.5 million km 2 Little-explored: New diamond & nickel Québec: 1 st in Canada since 2000 with 17 FTS discoveries (PDAC 2003) $ million ,000 40,000 20,000 0, Diamond Exploration Expenditures Active titles Registered titles , , ,000 80,000 40,000 0,000 Open: Active titles < 5% of Québec AN ATTRACTIVE TERRITORY

9 5. Great geoscience data and infrastructure 9 Acquisition value of $5 billion in SIGÉOM, the mining information system (100 years of geoscience data) 5,500 geological maps and reports 61,000 company exploration reports 2.2 million pages + 266,000 maps 130,000 diamond drill holes 6,500 showings, orebodies and mines 600,000 samples + 12 million results Complete documentary coverage (geochemical, geophysical, geology ) Easy access to this information via Internet Instant free access, any time, anywhere Read and consult all governmental data Download, process or print Order and pay by e-commerce Information upgraded each year $53 million/yr from company reports $15 million/yr (MRNFP) Private-Public Partnership (P3) available AN ATTRACTIVE TERRITORY

10 6. A reliable and modern mining regime 10 A reliable mining regime, based on Free Mining Map designation (claim) Pre-defined land parcels First come, first served Undisputable by third party Exclusive right for all substances Guaranteed to obtain mining title Easy access with Gestim, the mining title management system Instant free access via Internet Consult the mining title register View and download maps Acquire and renew claims Submit work reports Manage portfolio of titles Former ground staked claim (until 2000) $ ha $ ha $ ha $450 (Acquisition) + $60 (Recording) A new, low-cost system $10.6 / ha versus $1.6 / ha Nearly 7 times less expensive in acquisition & recording fees New map designated claim (since 2000) $80 50 ha AN ENVIABLE BUSINESS CLIMATE

11 7. Great access to an overall cost leader Easy access and transportation km of roads Railway networks 10 harbours on Atlantic 3 international airports Roads Power sites Abundant, clean and renewable energy 4th largest hydroelectric power producer in 2000 (207 billion kwh = 8% world) Industrial rates: $0.037/kWh Business cost (KPMG Competitive Alternatives 2004) Ten month study > 1,000 business cases in 11 countries 27 site-sensitive cost components, mostly: Labour, facility, utility, financing and taxes Canada: 1 st cost leader with a 91% cost index (baseline: 100% U.S.) Montréal: 1 st -30 cities (of > 2 million inhabitants) 11 AN ENVIABLE BUSINESS CLIMATE

12 8. Great access to capital Flow-through shares 12 Canada has a unique measure: the flow-through share regime (FTS) Canadian exploration expenses (CEE): To determine the existence, location, extent or quality of a mineral resource in Canada A resource company must issue FTS, incur CEE, and forego CEE deductions to An investor may apply for: 100% tax deduction and deduct $206 (Canada) + 15% tax credit and deduct $150 (Canada) + 150% deduction and deduct $360 (Québec) for a total deduction and tax credit of $716 (Québec) Québec has the best FTS regime with the lowest after-tax cost of a $1000 investment in FTS by an individual investor by province (Source: PDAC 2003 & MRNFP 2004) Net cost in Québec: $284 Net cost in Canada: $444 (average) AN ENVIABLE BUSINESS CLIMATE 0 B.C. MAN SASK ONT NFLD P.E.I. N.S. N.B. YUK NWT NUV ALTA

13 8. Great access to capital Venture funds & partner 13 SIDEX Diversification of Exploration Investment Partnership Equity stake in junior companies involved in Québec for exploration projects Investment up to 10% of a company s equity Substances + regions Initial capital: $50 M - Government: 70% - Solidarity Fund QFL: 30% From 2001 to 12/2003, $18.2 M in 62 projects SODÉMEX Limited partnership to participate in mining development Equity stake in junior and mining companies involved in Québec (Market capital <$125 M) Investment up to 10% of a company s equity Subs. capital: $44 M - CDP Capital - Americas -SOQUEM Portfolio: A market value of over $100 M in 2004 SOQUEM As a Crown Corporation, a partner of choice for exploration A solid expertise Complete data sets High-potential projects A strong knowledge of Québec s vast territory and legislation Exploration: $15 M/year - SOQUEM: 60% - Partners: 40% Since 1965, 8 mines discovered, with 3 still in production (Au, Nb, Salt) AN ENVIABLE BUSINESS CLIMATE

14 9. Generous tax incentives Tax credits & savings 14 Exploration companies Excluding other taxes and deductions Exploration expenditures ($) Refundable tax credit for resources Near & Far North Additional non-refundable credit Credit on duties refundable for losses* Total tax savings Net cost of exploration expenditures in Québec Junior (100) (49.25) Producer Outside Québec (100) (100) (69.25) (43) Apply to: - All companies (*individuals) - Most major substances - All of Québec s territory - Most off-minesite CEE (*minesite) - No maximum In Canada, only Yukon has a similar tax credit for exploration AN ENVIABLE BUSINESS CLIMATE

15 9. Generous tax incentives Mining and development 15 CORPORATE TAX RATE The lowest in Canada Québec: 9% Others: 11-17% Tax rate (%) for large corporations in Canadian jurisdictions (2003) 0 ALTA NWT NUV ONT NFLD B.C. YUK P.E.I. N.S. N.B. MAN SASK A VERY FAVOURABLE MINING TAX REGIME (Mining Duties Act) Attractive rate of 12% Duties holiday new northern mines (First 10 yrs) Credit on duties for the cost of bringing an orebody into production (12% of the lesser of roads-buildings-equipment or capital investment, max: $3 M) Depreciation allowance 100% of cost of mining assets Exploration to mine development allowance (100% of eligible expenses) Processing allowance (8% Au-Ag assets, 15% smelting & refining, + 15% tailings) Additional exploration allowance (50% off-minesite expenses, companies at a profit) AN ENVIABLE BUSINESS CLIMATE

16 10. Partners for a sustainable development 16 A leader for environmental issues Raglan Rehabilitation - All state-owned mining sites ($20 M) with new, low-cost efficient technologies for acid mine drainage Inuit A leader for its partnership with native peoples Crees: Paix des Braves (February 2002) Inuit: Sanarrutik Agreement (April 2002) Crees Troilus Native workforce: 150 workers (25 % of Troilus and Raglan mines) Native mining funds: Crees, Inuit, Innu AN ENVIABLE BUSINESS CLIMATE

17 Québec, a hot place for exploration because 17 Exploration Is High Risk (& Cyclic) Capital Intensive Industry looks for High Reward Low-Risk Setting Access to Capital Low Exploration Costs Québec offers A richr and diversified mineral potential A vastv ast,, little-explored explored & open o territory A dynamic economy & stable context Great access,, infrastructures & energy Best practices, sustainable development & reliable mining regime Canada: A great mining capital market Québec: The most generous - flow-through share regime - venture capital funds Easy,, efficient and low-cost access to mining titles and geoscience data Best fiscal support Partnership culture (SOQUEM, juniors) A FAVOURABLE INVESTMENT CLIMATE

18 HAVE YOU CONSIDERED EXPLORING IN QUÉBEC? A favourable investment climate from exploration to mine development Marketing & Customer Service 5700, 4 e Avenue Ouest, suite A-208 Charlesbourg (QC) G1H 6R1 Phone: (418) Fax: (418)

19 Acknowledgements 19 Geoscience data Pierre Marcoux and Charles Roy Fiscal issues Jocelyne Lamothe and Marc Turcotte Historical production figures François Coté Mining titles and regime Lucie Ste-Croix and Roch Gaudreau Environmental issues Louis Bienvenu Native issues Jean Beaulieu Venture funds Jean Désilets Graphics Charlotte Grenier and André Beaulé Géologie Québec Direction du développement minéral Direction de la politique et de l économie minérales