Thank you for the opportunity to speak. I'll drop right into it.
Diamonds North has been operating in the north for about 10 years, most of them involved with another company called Uranium North. These two companies have spent probably in the order of $100 million in the last decade or so.
I've been working in the Arctic since about 1985. The far north is a great place for mineral wealth, but it also contains almost every commodity of economic value. You have copper, zinc, lead, gold, silver, uranium, diamonds, and rare earths, so it's a good place. That's not including oil and gas, water resources, and coal. It's a strategic place for Canada and I think that's the point I want to get across.
It is a great place to look for minerals. One of the downsides is that it's a very expensive place to operate. It's expensive to operate for a couple of reasons: mainly, short seasons and a harsh climate. There's also a lack of infrastructure and the lack of a labour force. Anybody who goes up there and any equipment, anything that goes up into the Arctic, has to be flown in and flown back out. That really does a lot to the cost.
Another one of our concerns is Arctic sovereignty and mineral title. The Prime Minister has said that the Arctic is a place where you have to use it or lose it and that the government was intending to use it. I think those are very encouraging words, but I think it suggests that one thing is missing, which is that we are actually using in terms of mineral exploration and mining, and I think a lot of Canadians overlook that, and so do the international communities.
Here's why I say that. In the Arctic, you have thousands of people working there each year. They're on the mainland. They're on the Arctic islands. They're looking for different commodities. They're employed by Canadian companies. They're funded by Canadian investors. This isn't the wild west. All these people are operating under Canadian law: mining law, Transport Canada law, and Canadian environmental policy. So this is truly a Canadian-regulated place, and I think mining plays a large part in exercising our sovereignty. We're excited that they're bringing in a larger presence from the military, but you also have to look at building the presence of mining and other resource industries in the Arctic.
As the government builds up the presence of the military in the Arctic, we hope the work of mining and exploration companies is also being promoted and grown through different incentive programs. I want to mention a few incentives that would really help grow the mining business in the Arctic.
It comes down to cost. The biggest issue that we have up in the Arctic is cost. Whenever you can reduce the cost, that will be another incentive to bring people in. We're competing with British Columbia, Quebec, and all these places that have much lower operating costs than we have in the Arctic.
Our biggest thing is infrastructure. That's our biggest issue. What we'd like to see in the Arctic is roads or rails that connect the south to the north.
We could bring a road up to a northern port so that you could extend the transport. It's a super project. It's a large, expensive project and the funding for it would have to be done in partnership with government and industry. I'm sure that people in different companies that can't make it economically by building the road entirely themselves would like to contribute to a road or rail that was funded partially by the government.
There would be great benefits from building a road across parts of the Arctic. First of all, there's the construction portion of it and the jobs you would generate from the construction of the road. Secondly, putting a road into the Arctic that goes past several deposits that are not economical now may in fact make them economical; there's a chance and an opportunity to take different deposits, make them economical, and take them into production, which gives a legacy of employment that may last for 10, 20, or 30 years, depending on the life of the mines. Royalties are paid directly to the government. I think those are big benefits.
There would be another benefit. There are northern communities that have absolutely no contact with the south. It's all fly-in and fly-out. This would make the communities more sustainable and self-sufficient.
In addition, it would generate mineral exploration. You would see a vast amount of exploration for 50 kilometres to 100 kilometres on either side of the road or track. It generates jobs and it's very good for the economy, but it's also a good way to demonstrate that we are exercising our sovereignty in that part of the world.
In the interim, the military is building a bigger presence in the Arctic. They're patrolling the borders and the Arctic islands with sea vessels and aircraft. Some of the equipment could be used to transport supplies and equipment for the mining industry and other industries up there. The user would pay. It would subsidize the military, but it would also give industry a dependable means of transportation for goods and equipment in that part of the world.
There are also smaller initiatives that I think would be very beneficial in the Arctic.
Right now, when you stake a claim for minerals, you physically have to put a peg into the ground. This was done back in the days when you had prospectors walking around and putting in sticks. It's now 2011, and other jurisdictions, such as British Columbia and Quebec, are staking online. It would lower costs.
We have to hire fixed-wing aircraft and helicopters to stake in the Arctic. It's a very expensive process because of the fuel. We bring in people. There's a safety issue. If it could be done online, all the money that goes into helicopters and whatnot wouldn't be lost: the money would be transferred from staking to mineral exploration. Mineral exploration is what actually finds the mines, not the physical staking of the ground.
We need to streamline the regulatory process. We have a short season in the Arctic. All the companies understand the need for a regulatory process. We need it streamlined so that we don't miss seasons. Every time we miss a work season, it's a setback of a year. It means a year longer that mineral surveys aren't finished. We also lose credibility with our investors. The investment dollar, because it can't wait forever, goes to southern projects or to companies working in southern parts of the world. Streamlining would make it more productive.
Another fairly big issue has to do with first nations land. For example, Nunavut is completely settled land, as opposed to the NWT. To put it into perspective, the NWT expects to have a GDP decrease of 2.3% in the next year, and Nunavut expects a 16% increase. From our point of view as a company, we spend 95% of our budget in Nunavut and about 5% in the NWT, which is based solely on the fact that the land is not settled. A huge amount of money is not put into the NWT for that reason.
The Geological Survey of Canada does mapping. A lot of areas in the Northwest Territories have had very little mapping. Geological initiatives help us find mines. They're of great assistance. I don't think the planned government program to look at different commodities is a good thing, because commodities are on a cyclical basis. We'd like to see pure scientific and geological initiatives that look at the potential for all commodities in a region. It's of great assistance to us in generating geological models for exploration.
The last point I have is an incentive that is financial in nature. Right now in Canada, we have flow-through investment in the different provinces and territories. Some provinces have a super flow-through, which is more beneficial to the investor. I'd like to see something that is very beneficial to the territories where you have very high cost: a flow-through mechanism that gives the investors a very high incentive to put money into these territories. Access to capital helps to find mines. It's a very high-cost place to work.
Another good initiative would be a tax credit like you see in Quebec. For every dollar that's spent, the company gets a certain amount of that cash back, and then it can go into the next exploration program.
These are the types of things that really help to extend the dollar and help us to make discoveries.
Thanks for the opportunity to speak.
If you have any questions, I'd be happy to answer.