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Small Canadian Mining Outfits Gear Up For Renewed Exploration Push

Written by Tim Morral
Published: 3/5/2014

Reuters survey shows that more than three out of four Canadian drilling companies expect to drill this year as the industry emerges from a period of dormancy.

A significant majority of Canada's small mining companies are on track to resume drilling activities in the coming months after a two-year hiatus, according to a recent report by Reuters.

Canadian Oil Drilling Rig

In a survey of 60+ mining industry executives, more than three out of four mining interests indicated that they will resume drilling at some point in the next twelve months, even though less than 60 percent said they had drilled during the previous twelve months.

In recent years, it has been difficult for smaller mining operation to raise the investment capital needed to fund drilling activities. Combined with rising drilling costs and lower gold prices, this has dramatically scaled back activities in global mineral exploration among Canadian firms.

Now, with the cost of drilling falling and the price of gold on the rise following a 28 percent drop in value last year, these companies are once again interested in attracting investors and eying opportunities to make their fortunes on the next big strike.

"This is the best time to drill, the drilling contractors are very cheap," said George Topping, chief executive at Wolfden Resources Corp.

When cash is available, miners drill columns of earth and rock in search of gold and other precious minerals. Although the work is speculative, it's possible for smaller mining operations to generate significant earnings from promising drill cores.

But the lack of cash has caused many junior miners to reduce their drilling activities, raising concern that many would leave the industry and jeopardize the industry's development pipeline. Although current industry conditions aren't as robust as some would like, increased drilling is seen as a positive development for exploration.

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