Canada is a premier destination for mineral exploration and mining, but the nation’s exploration-stage companies are still struggling to attract investment dollars.
The country’s appeal is showcased in the Fraser Institute’s most recent Annual Survey of Mining Companies, which tracks the investment attractiveness of global mining jurisdictions. It places the Canadian provinces of Ontario and Saskatchewan among the world’s top mining jurisdictions, behind only Nevada.
The Canadian mining industry “serves as a proxy for the global (mining) industry” as it is home to “the largest concentration of public mineral companies in the world,” with Toronto at “the center of the mining finance universe,” said Douglas Silver, partner and senior advisor at Benwerrin Investment Partners, during his presentation at this year’s Prospectors & Developers Association of Canada (PDAC) convention, held last week.
Jeff Killeen, director of policy and programs for PDAC, shared similar sentiments in his own presentation, telling conference attendees, “Almost 30 percent of every dollar raised somewhere in the world for the (mining) sector comes through the Canadian marketplace: the TSX, the Venture and the CSE.”
Canada’s unique tax incentives crucial for mining investment
Canada owes its leading position in the global mining industry to its large landmass and abundance of natural resources. However, both Silver and Killeen pointed out that the nation’s flow-through share tax incentive — unique to Canada — is also “incredibly critical” to the success of the natioin’s mining sector.
Flow-through shares are a highly specialized financing tool that allow resource companies to transfer eligible exploration and development expenses to investors, who then deduct them from their own taxable income.
Under the Mineral Exploration Tax Credit (METC), funds generated from this type of capital raise must be put into a project within 18 months. There’s also the Critical Mineral Exploration Tax Credit (CMETC), which applies to critical minerals used for batteries and magnets, including rare earths, nickel, uranium, lithium and graphite, among others.
Generational shift shrinking pool of mining investors
Although Canada dominates the global mining finance sector and is teeming with multiple types of mineral deposits, it’s becoming increasingly difficult for the nation’s exploration-stage companies to attract investment dollars.
The tight financial landscape for today’s explorers stems in part from both a complex regulatory system that limits the areas open to mining activity, and a lack of proper infrastructure in the more remote regions of the country. Both of these shortcomings strike at the heart of perceived jurisdictional risk for both retail and institutional investors.
During his presentation, Killeen highlighted a few of the key financing trends affecting access to capital in the mineral industry, noting that last year saw a dramatic uptick in investment in the mining sector.
Where is capital originating from? Most of it was equity raised through private placements, which poses a problem as it represents a very narrow investor base that consists of friends and family of the management team and strategic investors that probably already own shares in the company.
“That just tells us that we’re not broadening the investor base. We’re not pulling in more investors. There’s no more new retail folks coming in investing in shares in Canada. This tells us that we’re in a very risky balance in terms of who actually can fund the sector through the next generation,” he warned the PDAC audience.
“There is a lesser population of retail investors as time goes on. You know that the Boomer generation is going away in terms of an investment pool, and the next generation isn’t necessarily replicating that.”
Silver also views the generational shift in the investment landscape as a problem for raising money in the mining industry. “There’s no question from what I’ve read and heard that the younger generations don’t pick individual stocks. They tend to lean towards ETFs or crypto or other stuff,” he said. “Crypto is definitely competing with mining.”
Gold grabbing all the dollars
Canada’s minerals industry did experience a strong rebound in terms of equity investment in 2025, but it was heavily targeted at producers and developers with large-scale, near-production projects. Gold dominated, but investment also increased in projects associated with critical minerals like lithium, nickel, copper and graphite.
“How much is going to the bottom end, to those sub-$100 million market cap companies, the lion’s share of the junior explorers that are out there? Well, in the Canadian marketplace, only about 10 percent of every dollar raised is getting down to those size of companies,” explained Killeen, highlighting the discrepancy.
In his view, the lack of investment over the past decade is bringing about a decline in grassroots exploration.
Gold is grabbing many mineral investment dollars, not only because its price is surging to unprecedented highs, but also because there’s a faster return on investment compared to other metals. Killeen said that’s due to the fact that gold mining doesn’t require large amounts of infrastructure such as railways and ports.
“In some cases, you don’t need roads. The capital to develop a gold mine might be one-sixth of, one-10th of or one-20th of a copper mine or a zinc mine,” he commented. “So the rate of return for the average investor who’s looking at an exploration stock saying, ‘Could I get money back into this? Could I get value back into this?’ Today that timeframe is much shorter, and the capital to bring it to market is much lower.”
Looking at copper, which is much more capital intensive, Killeen said production is down nearly 30 percent from seven or eight years ago. Reserves are also down, even though rising copper prices have resulted in more resources being upgraded to reserves. Silver agreed with that take — his research shows that the Canadian mining industry is overflowing with gold companies. Of the 1,555 mining companies in Canada in 2024, 42 percent of them were gold-focused firms compared to only 17 percent for copper, the second highest amount.
“So why do we have so many gold companies? I think the answer is pretty obvious to me, which is if you want to build a porphyry copper mine, you’ve got to go raise $5 (billion) or $10 billion,” said Silver. “That’s very difficult in the mining industry, because we just don’t have that much gross capital available to us relative to what some of the other industries have … but you can build a gold mine for a couple hundred million (dollars).’
Despite the massive focus on gold, Killeen and Silver both noted that Canada is actually seeing increasing exploration activity for rare earths, lithium, cobalt, graphite and uranium.
Improving the investment case for Canada’s juniors
Killeen said PDAC and its members are pushing for the Canadian government to make the METC and CMETC permanent to bring more investment into mineral exploration in greenfield regions and making new discoveries.
Last year, flow-through shares generated C$1.6 billion in investment into the sector, according to Silver’s research, or about 76 percent of funding received by mineral exploration companies in Canada.
“When you look at the role of Canadian flow through, it’s so incredibly critical to Canadian mining,” he said. Silver too is advocating for the mining industry and investors to “fight for flow through way more than you do.’
To address infrastructure challenges for bringing critical metals projects into production sooner for a quicker return on investment, Killeen suggested more pension funds investing in Canada and easing government regulations.
“We need them cooperating together with the federal government to develop major infrastructure that doesn’t exist beyond 100 kilometers from the border,” he said.
Killeen noted that “the world is changing” and governments, including Canada’s, are becoming more focused on securing domestic sources of critical minerals. For example, at PDAC, Tim Hodgson, Canada’s minister of energy and natural resources, announced a C$3.6 billion suite of investments targeting the critical minerals sector.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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