Boom Times for B.C. Gold

In 2007 when Kinross Gold Corp. bought out Vancouver-based Bema Gold Corp., it looked like a takeover of a type only too familiar in B.C. “I guess we are a victim of our own success,” Bema founder and CEO Clive Johnson told the Financial Post’s Diane Frances at the time. But who was the victim?

Bema shareholders received a 38 per cent premium from Toronto-based Kinross in the $3.5-billion acquisition, and Bema officers and employees had options to cash in. The only losers appeared to be the city and province, which waved goodbye to yet another head office. And of course there was the province’s once-proud mining industry, which was a decade into a historic losing streak, during which not a single mine had opened.

Yet as is so often the case with both gold and mining, not everything was exactly as it appeared. Bema had solid reasons for entertaining Kinross’s unsolicited offer. The market had always discounted its rich Russian gold-and-silver project due to political uncertainties, while a 49 per cent-owned Chilean gold-and-copper property discovered by Bema would require some $2 billion to develop.

Nor was this quite the head office disaster it appeared to be. In the place of Bema rose B2Gold Corp., run by much the same executive team. “Kinross didn’t really have a place for us,” says Ian MacLean, vice-president of investor relations, “and we didn’t want to move to Toronto anyway.” But Kinross did take a stake in the company and entered into joint ventures that in effect left B2Gold taking care of much of the major’s exploration. Meanwhile, Johnson and company had a quarter century of experience under their belts and an ace or two up their sleeves. A little over two years later, B2Gold employs almost 30 in its head office on Burrard Street, about two-thirds of the old Bema component. Could the company also reach Bema’s production levels and market capitalization? “That’s the goal,” Johnson says. “And I don’t want it to take 25 years this time.”

With gold and other mineral prices high, big dreams are pervasive again in a mining industry that only a few years ago looked to be down for the count. The optimism was apparent during the third week of January when downtown Vancouver streets and hotel lobbies were crammed with throngs of people who weren’t there because they’d made the mistake of transposing January and February on their Olympics-year calendars, but rather had been drawn downtown by two mining conferences. One was the annual Mining Exploration Roundup, catering to the exploration industry; the second was the Cambridge House Vancouver Resources Investment Conference, geared to investors.

At the first, Jean Chrétien and Robert Friedland were among the speakers, and Lyn Anglin of Geoscience BC tantalized prospectors, geologists and the exploration companies they work for with the unveiling of technologically advanced surveys that indicate unexpected mineral resources across large swaths of southern B.C. At the latter, crowds spilled out the doors during presentations by some 30 speakers, while about 100 exploration and mining companies pitched potential investors on chunks of ground that were ripe to be sliced and diced.

Somewhere the ghost of Murray Pezim was smiling – but maybe the ghosts of the men and women who’d built B.C.’s mining industry weren’t unhappy either. Because, losing streak or not, while the province is responsible for only a tiny fraction of Canada’s mineral production – 12 per cent in the case of gold – 60 per cent of Canadian exploration companies are still based here, some 700 in all. Nor is B.C. the complete basket case it’s recently seemed to be when it comes to the actual digging of holes. In 2008 some $367 million was invested in exploration, and provincial mineral sales totalled $6.6 billion, up from $2.9 billion in 2001. Numbers for 2009 will be lower, but 2010 should mark a significant bounce back, and looking a few years down the road, the numbers could be in another sphere entirely. With a logjam of environmental, First Nations and economic obstacles apparently loosened, there are now about 30 mines and expansions seeking approvals.