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Hawk Junction mining firms utilize government exploration incentives.

Hawk Junction mining firms utilize government exploration incentives

Since its creation in May of last year, the Ontario Mineral Incentive Program (OMIP) has provided more than $10 million for exploration programs throughout Northern Ontario.

A total of 174 projects received assistance last year. Of the total, 25 per cent were undertaken in the Larder Lake mining district, 19 per cent in the Thunder Bay mining district and 16 per cent in the Sault Ste. Marie mining district.

The Porcupine mining district recorded 13 per cent of the projects and 12 per cent of the funds. The Patricia mining district, while registering just six per cent of the projects, received 10 per cent of the allocated funds.

"The program helps a lot," said George Babcock, the owner of several Hawk Junction-based exploration firms. "Because of OMIP we're able to do more exploration work on a property."

Babcock operates Reed Lake Exploration, Soocana Exploration, Golden Point Exploration, Van Ollie Exploration and Blue Heaven Resources. The latter two firms use OMIP funds for exploration work near Wawa and north of Thessalon.

Under the program, announced in Sudbury by then-Mines Minister Hugh O'Neil, companies can receive grants for 30 per cent of the eligible expenses associated with exploration activity, including diamond drilling and some underground work. In addition, companies can receive grants to offset the costs of marketing, laboratory analyses and pilot plant studies.

The program has also been enhanced to spur exploration in areas which are being affected by either mine closures or a downturn in the economy. Exploration companies operating in the Elliot Lake, Kirkland Lake, Manitouwadge, Beardmore-Geraldton, Ignace and Atikokan areas can recapture half of their eligible costs.

Since the northwestern Ontario areas gained the special designation only recently, officials with the Ministry of Northern Development and Mines say it is too early to determine the impact the program is having.

However, Beardmore-Geraldton resident geologist John Mason said he expects the new designation will eventually result in an increase in the number of projects in his area.

"There are a lot of prospectors in the area who took advantage of OPAP (the Ontario Prospectors Assistance Program) and I hope to see them take advantage of OMIP," he said. "It's a natural progression."

Ed Solonyka, supervisor of the ministry's incentive office, predicted that Beardmore-Geraldton will experience an increase in exploration activity because the legal battle between Metalore Resources Ltd. and Ontex Resources Ltd. over the 18-claim Brookbank property north of Beardmore is nearing an end.

The property has estimated reserves of 1.4 million tons with an average grade of .26 ounces.

Solonyka noted that companies in Beardmore-Geraldton were hesitant to do any exploration work near the area of claims being fought for by the two mining firms.

While it is too early to gauge OMIP's effects in northwestern Ontario, in the case of Elliot Lake and Kirkland Lake the program has received mixed reviews.

"In Elliot Lake there have only been a few applications. It (OMIP) hasn't had a great impact," said Solonyka. "It's been a bit disappointing."

Besides Babcock's project, one of the few additional exploration projects to receive OMIP assistance is being, undertaken in Algoma Mills. Both projects involve the exploration of base metal deposits.

Sault Ste. Marie resident geologist Gerry Bennett said it is difficult to gauge the exact impact of the enhanced program on Elliot Lake.

"It's a hard question to answer, because you're always comparing apples with oranges," he said. "You never know what would have happened if there wasn't a program."

Characterizing the activity in Elliot Lake as "slow," Bennett said many smaller companies are encountering difficulties raising funds to cover capital costs.

OMIP is structured as a rebate program. This means companies must raise money either through equity shares or loans before they can apply for OMIP.


Meanwhile, exploration activity in the Kirkland Lake district has been brisk.

"Kirkland Lake has always been busy, so it's hard to say whether it (OMIP) has had an impact," Solonyka said.

Several Northern Ontario communities, including Wawa, are attempting to also receive enhanced OMIP standing. Wawa has seen a number of local mines shut down and exploration projects suspended due to poor gold prices.

Solonyka said he recommended that any new designations be postponed until the end of last month in order to determine whether there were sufficient funds available to handle the added applications.

"But if there is any area which deserves the designation, it's Wawa," he noted.
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Title Annotation:Mining Report; Ontario Mineral Incentive Program
Author:Krejlgaard, Chris
Publication:Northern Ontario Business
Date:Jun 1, 1991
Previous Article:Operational changes cut costs and boost productivity at Kerr.
Next Article:Environmental assessment could cost firm $2 million.

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