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Drones taking flight in mining

Unmannedaerial vehicles, also known as drones or UAVs, are growing in prevalence in theglobal mining sector and are now being used to conduct aeromagnetic surveys,providing a more cost-effective option for explorers.

The globalUAV market was valued at around US$10.1 billion in 2015 and is tipped to reachUS$14.9 billion by 2020, according to research firm MarketsandMarkets.

Spending,meanwhile, is set to triple over the next decade to US$14 billion by 2024.

Whilein the past the use of UAVs has largely been within the military sector,according to the Canadian Trade Commissioner Service, the market is now beingdriven by a growing demand for nondefense applications and for UAVs withgreater capabilities.

Canada'sAlta Vista Ventures has begun its foray into the sector with the plannedacquisition of three UAV companies.

Currentlya medical marijuana company, Alta Vista Ventures spotted an opportunity tobreak into the lucrative UAV market through the acquisition of High Eye AerialImaging Inc., Aeromao Inc. and the UAV division of Pioneer ExplorationConsultants Ltd.

"Westill have the 10,000 [kilogram per year], [Marijuana for Medical PurposesRegulations] application in with Health Canada, but while waiting on thelicense and for new regulations to be put into place, we came across thisincredible industry and our focus has changed," Alta Vista Venturesdirector Don Shaxon told SNL Metals & Mining.

Hesaid the appeal of the UAV market for the company is that it is a new andrapidly growing sector and more and more uses are being discovered on a dailybasis.

"Wecan offer services at a fraction of the cost companies were previouslypaying," he said.

AltaVista's goal is to acquire a varied group of companies to create a consortiumof businesses that will cover all aspects of the UAV industry.

Aeromaosells drones in 50 countries, while Pioneer Exploration services the U.S. andCanada and has done some work in the Middle East. High Eye is currentlyfocusing on Ontario, but Alta Vista has plans to expand the division acrossCanada.

"Ourgoal is to be a dominant worldwide player in the drone industry," Shaxonsaid. "We eventually want to cover all aspects of the business."

Thiswill include building custom drones, servicing drones, mining applications,real estate, racing, police, military and rescue drones, training pilots andagriculture.

Mining,however, will be a large part of the company's client base, according to Shaxon.

"Thecompany's management cut its teeth in the mining sector, so it's great to beable to get back into it via the only company to provide commercially testedUAV-based aeromagnetic surveys," he said. "This is going to be a highpriority for sure."

Currently,use of UAVs in the global mining sector is limited to the larger players, with the likes ofRio Tinto, , ,Freeport-McMoran Inc.and AREVA S.A. allusing the technology.

"Alot of junior companies do not perform these types of surveys because they canbe prohibitively expensive," Shaxon said. "UAV-based surveys are muchcheaper than helicopter-based surveys. We feel that the demand growth for thisone product will be huge."

Meanwhile,Alta Vista has not yet finished its buying spree and has other acquisition targetsin its sights.

"Wewill soon be doing a financing to start paying for these acquisitions,"Shaxon told SNL. "We have several interested investors. So depending onhow much we raise will determine how many more acquisitions we can bring intoAltaVista."

SNL Metals & Mining is anoffering of S&P Global Market Intelligence.