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Explorers reboot mining sector fieldwork, but COVID-19 protocols slow the pace

As COVID-19 restrictions ease around the world, metals explorers have started to reboot field programs as they look for new deposits and flesh out existing ones.

But working under COVID-19 protocols has meant making significant changes to field operations, while other issues such as travel restrictions remain a key obstacle to efficient exploration, industry veterans told S&P Global Market Intelligence.

"It took us one day to shut down, and it's taking us a month to get back up and running," said John Burzynski, president and CEO of Osisko Mining Inc., which is running one of the world's larger mineral exploration drill programs at its Windfall Lake gold project in Quebec. The company is scheduled to close a C$150 million placement later in June, after adding 250,000 meters to its 2020 drill program at Windfall in February.

SNL Image

A drill rig operating in Quebec.
Source: Sayona Mining Ltd.

A slew of other explorers that suspended operations as the pandemic spread have also returned to the field. Among them, Aston Bay Holdings Ltd. said June 10 that it would resume exploration June 15 on its Buckingham gold project in Virginia, after shutting down drilling in late March. Azimut Exploration Inc. restarted drilling its Elmer gold project in Quebec in late May, and Kootenay Silver Inc. said June 11 that it resumed drilling on its Copalito silver-gold project in Mexico.

But as exploration resumes, operations must pay special attention to new rules that, in some cases, slow the pace of the work.

John-Mark Staude, president and CEO of Riverside Resources Inc., which actively explores in Mexico and Canada, told Market Intelligence that the speed of exploration restarts is asymmetric, depending significantly on the country or domestic jurisdiction. "Almost everywhere it is becoming easier, but not ... anywhere like a year ago," the executive said.

In Staude's view, about 20% of the sector is back to normal, while restrictions curbing international and domestic travel continue to limit what can be done in the field. Without easy travel, the sector will not exceed about 40% of normal activities, Staude said. Domestic restrictions in particular pose a challenge for basic reconnaissance work, where travel to multiple targets by company geologists may be required. The CEO said that in some cases, exploration projects can get back to about half of typical exploration activity, but it can be difficult to extract value from field findings where experts from abroad, such as Canadian geologists, cannot simply fly to a site to manage operations.

Peter Megaw, chief exploration officer of MAG Silver Corp., told Market Intelligence that international travel remains "a mess" that has kept him from visiting exploration targets in other countries. He said he continues to do more desktop work in the meantime and, as restrictions ease, local exploration that does not require taking an international flight.

In Quebec, where Osisko Mining is ramping up exploration with over a dozen drills, Burzynski said some of the key challenges have been in meeting new coronavirus protocols. The company operates in a relatively remote area where spread to First Nation communities is a top concern.

"The Cree Nation government is actually using our project as kind of a template for how they'd like to see other companies respect the protocols," Burzynski said.

At Windfall, about 200 people can be on-site, many of whom come from nearby communities, while others travel from farther afield. Burzynski said Osisko started with about 25% of its exploration crew in May and has been steadily adding numbers since, with a goal of operating at full capacity by the end of June.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

At the site level, new protocols include having fewer people in vehicles at a time to limit viral spread as well as a two-week isolation period for people coming from outside the local communities. "If you look at drillers, where they might have used to jam four guys in a pickup truck and drop them off at the drills, now they're using twice as many trucks for the same number of people," Burzynski said, noting that such changes come with marginal increases in costs.

Casual site visits, for example from shareholders or analysts, are also off the table. Meanwhile, Burzynski said Osisko is building a COVID-19 testing lab on-site with three full-time nurses to assess all incoming and outgoing personnel.

"It's made the logistics a little more challenging, but it'll work," Burzynski said.