Investment Risk Index: AA
Total Score: 78
Miners have literally just scraped the surface of Finland's mineral potential. Most, if not all, of the major projects in the country have come from outcrop deposits, which make up 1-2% of its mineral wealth.
This major geological potential, coupled with a supportive mining code and reliable infrastructure all over the country, means Finland should be high on any explorer's list.
According to Mining Finland, there are nine mines in operation currently, and dozens of exploration projects. These are spread from south to north, with the highest concentration in Lapland, home to the Central Lapland Greenstone Belt.
The major working mines include Europe's biggest gold mine, Kittilä, which produced 200,000 ounces in 2016, and Boliden's Kevitsa nickel and copper mine, which produced 8,805 tonnes of nickel and 17,204t of copper in 2015.
Projects in the exploration phase include Anglo American's Sakatti nickel site in Lapland and Mawson Resources' gold and uranium project Rompas, on a greenstone belt further south.
Finland has only been viable for foreign miners for 20 years but rigorous geological exploration allowed explorers to move in quickly once allowed.
Like anywhere, it can take years to get an exploitation licence, but the current administration has a pro-mining bent and the 2011 mining code update means exploration rights are more easily obtained.
In the Mining Journal World Risk Report (feat.MineHutte ratings), the country scored highly across the board.
The infrastructure score of 94/100 is particularly impressive because of Finland's ice cover and swamps, with road access to much of the country possible year-round, even in the Arctic Circle.
Because of this infrastructure, mines keep running all year and drillers only need avoid the few weeks of the snowmelt.
Finland operates on a reservation-exploration-exploitation model. Explorers can look up geological data from the Geological Survey of Finland (GTK) that has been gathered over decades of mapping.
Geologist Jim Coppard, who led the team that found Anglo American's Sakatti nickel sulphide project, said the mapping done by the department gives explorers a leg up from the very beginning.
"Finland has probably got the best geological database in the whole world; all of Finland has been flown at 200m line-spacing, and most of it by electromagnet as well," he said.
Once an explorer has picked a spot, the company can reserve it through the Finnish Safety and Chemical Agency, known as Tukes. This is an easy process and holds an area in place while the exploration application goes through.
Magnus Minerals is a Finnish project generator currently working closely with Boliden. Magnus CEO Carl Löfberg said permission from Tukes can be harder if, like across 30% of Lapland, the site is in a protected area.
"In a natural bog, or a natural forest area, then it takes longer [because] you need to make an environmental assessment," he said. "But then with the environmental agency, it's very straightforward."
Löfberg said drilling plans in protected areas also brought more opposition from environmental organisations but the mining code meant exploration would happen eventually provided the project was cleared on environmental grounds.
"It will take one or one-and-a-half years after going to court," he said. "The licence will be granted, but it will take time."
The system is bringing more explorers to Finland. Tukes reported a 37% year-on-year increase in drilling in 2016, to 178km. There were 98 exploration applications in 2016, and the agency said it would bring on more workers to get through them all.
Finland has the lowest population density in the European Union (eight people per square kilometre) and Lapland even lower, lowering the chance of local community concerns.
Once an exploration licence is granted, costs can stack up for explorers, with licences costing €2,000 (US$2,379) per square kilometre. This has been described as an ‘inverse royalty system' because the money goes to the landowner but, in any case, explorers must have ample cash.
Moving on to exploitation licences has not been tested by any major projects recently but Kittilä's experience in the early 2000s could be instructive; previous owner Riddarhyttan submitted its environmental impact assessment to authorities in 2000 as it kept further defining the resource, put in for a full licence in 2002 and then received the permit in early 2003.
Agnico Eagle took over Riddarhyttan after becoming a major shareholder in 2004 and then made the decision to build the mine in 2006. Production began in 2009.
Finland was one of the highest ranking countries in the Mining Journal World Risk Report (feat.MineHutte ratings) for governance, coming alongside or ahead of more familiar destinations for mining investors and explorers, including most Australian states and Canadian provinces.
Agnico Eagle Finland CEO Jani Lösönen said relations between his company and the government were strong.
"Our relationship with the authorities and government is good," he said. "It's transparent and open.
"Of course our expectation is that politicians and decision-makers would have a long-term view of the industry, so there are no surprises in terms of rules and regulations."
The government's attitude towards mining depends on those in power at any given time, like anywhere else, and Finland's explorers found life harder under former environment minister Ville Niinistö (in office 2011 to 2014), according to Mawson Resources CEO Michael Hudson.
The government is "pro-mining" now according Harry Sandström from the GTK, who also said the mining code meant there would be consistency even if governments change.
Finland ranks highly on ease of doing business (13th in the World Bank's 2016 rankings) and Transparency International put it at third on its corruption perception index, behind Denmark and New Zealand.
Below the national government level, where would-be miners deal with Tukes and the GTK, there are the regional state administrative agencies, which replaced provinces in 2009.
The country's push for foreign investment is reasonably advanced, considering foreign companies could only own 20% of projects until the 1990s, when the economy was liberalised as Finland prepared to join the European Union.
Public support for mining varies from place to place, with companies like Agnico Eagle operating near supportive communities but explorers like TSX-listed Mawson Resources fighting legal challenges for years against environmental organisations.
Mawson CEO Hudson said the opposition to his company drilling the Rompas-Rajapalot site on a belt south of Kittilä came from the area's Natura 2000 designation, an EU initiative to project the habitats of vulnerable wildlife and plants.
Hudson said he doubted Finland's commitment to mining in the depths of the court cases but also highlighted government support throughout the process.
"We've spent a lot of time and energy lobbying and trying to understand whether the country wants to be in mining," he said. "We had a lot of opposition a number of years ago but it's got a lot better."
Keeping Mawson and its backers motivated would undoubtedly have been bonanza-grade intercepts of 617g/t Au from 2010.
Hudson said the change of government in 2015 had made Finland a much easier place to be a miner.
The Talvivaara toxic tailings release in 2012 didn't help the industry's image, and Hudson said it made politicians much warier around mining projects - not surprisingly when the government ended up lending the bankrupt miner (Talvivaara Sotkamo) over €100 million.
Lösönen from Agnico Eagle had a contrasting story to tell on the local image of mining.
Agnico is one of two major employers in Kittilä itself, with mining and tourism supplying the vast majority of jobs.
The company employs around 800 people (including contractors) and Lösönen said the region's outdoor activities made workers keener to move to the Arctic Circle town.
"It's very good the ski resort is nearby, because it's easier to attract employees," he said.
Overall, Lösönen's backed up Finland's place near the top of world business rankings.
"This is a stable country, there is very little corruption, the collaboration with authorities and the government is transparent and fair and the basic education level is good," he said.
The royalty rate in Finland is simple.
Tukes asks for an annual excavation fee of €5,000 euros per square kilometre and 0.15% of the "calculated value" of minerals or metals pulled from the ground.
Agnico Eagle, which got its mining licence before the most recent mining code update, pays a net smelter return royalty of 2% to the government.
The corporate tax rate was reduced from 26% to 24.5% in 2012 and then down again to 20% in 2014.
Looking at the overall economic picture, the country has struggled for growth in recent years but its GDP has now grown for seven consecutive quarters, a breakthrough after a recession that ran from 2011 to 2015.
As mentioned above, one of the surprising positives of Finland is the accessibility of sites even in the Arctic Circle in winter. In the northern part of the country, winter temperatures range from -10 to -30 degrees Celsius, and summer temperatures range from 10 degrees to the mid-twenties.
There are well-maintained roads that stay open through winter and bulks can be shipped from the country's Baltic Sea ports like Kemi. Miners also transport materials internally all year; Boliden produces copper and nickel concentrate at the Kevitsa mine in Lapland, before trucking it south to its Harjavalta smelter in the southwest.
For explorers, winter also provides some of the best ground conditions. Löfberg said there were real advantages to drilling in winter in Finland.
"Winter is the best time to drill," he said. "We have two drilling seasons in Lapland - the only time where you cannot do anything is from late-April through May, maybe June, because you have a metre of snow, and when the snow melts, everything is really wet.
"Even on the forest roads, it's just muddy and if you drive on them, the roads get damaged, and you have to reconstruct them."
Coppard agreed, saying you only had to avoid a few weeks in spring. "The only time drilling is a complete no-no is during the melt time," he said. "For early stage exploration, it's important you minimise environmental impacts and up north [and] if you drill in the winter, no one knows you've been there."
Finland's prospectivity is without doubt. The country's section of the Fennoscandian shield holds major gold, nickel and copper reserves and there are diamond and uranium prospects, as well as battery metal opportunities. The gold mineralisation is concentrated in Aegean belts, like the Lapland Greenstone Belt.
Coppard, who ran Anglo American's Scandinavian exploration for years, said the style of the mineralisation in Paleoprotezoic-era belts meant there was much more to be found.
"The fundamentally great part of Finland is the Lapland Greenstone Belt," he said. "You've got a world-class deposit [Kittilä], and then the next deposit is 300,000oz - there's no greenstone belt in the world where you've got a world class deposit, and then the next one is only 300,000oz."
Kittilä went from openpit to underground in 2012 and recent resource expansion drilling at Kittilä has delivered intercepts of over 5g/t Au at depths below 1,000m.
Outside the Arctic Circle, south of Kittilä is Hudson's Rompas project, on the Peräpohja Greenstone Belt. He said the structures were similar but discovery came later, in 2008.
"It's the same set of rocks - same age rocks, same age gold," Hudson said. "But before this discovery this greenstone belt wasn't thought to be prospective. There's the right-aged greenstone belt with 7 million ounces of gold to the north of us that had never been touched until seven or eight years ago."
Hudson said after a 12,000m drill programme last winter the aim was to just keep defining the Rompas deposits.
"We're putting 60% of the budget into drilling out the areas we know a lot more about, but 40% is allocated to exploring the much larger area," he said. "We've only tapped approximately 5% of our target horizon, over 100 square kilometres."
So while there must be major gold reserves in Lapland waiting to be discovered, the other exciting geological feature is that the existing discoveries have been outcrops. Sandström from the GTK said further exploration would open up far more of the various greenstone belts.
"Most of our current mines and mine development projects were found from outcrops and are very shallow," he said. "While we have a huge range of geophysical and geochemical data, we have still only scraped the surface for the time being."
Boliden's Kevitsa nickel, copper, gold and PGE openpit mine is also in the Lapland Greenstone Belt but targets older mineralisation separated from the Kittilä group with a tectonic contact.
Fellow nickel operation Talvivaara - now in the hands of state mining company, Terrafame - is a different beast, with the orebody in the Proterozoic Kainuu Schist Belt in the centre of Finland. The nickel, copper, zinc and cobalt mineralisation is mostly found in black schists, and there is greater expectation for the operation now Trafigura has taken a 15% stake in Terrafame.
On top of the above-mentioned projects, there is First Quantum's remaining zinc and copper mine, Pyhäsalmi; Boliden's Kylylahti polymetallic project; Endomines' Pampalo gold mine in the east; Dragon Mining's neighbouring Orivesi and Jokisivu projects; and Outokumpu Chrome's chromium operation in Kemi.
Anglo American is taking its time with the Sakatti project, which is similar in make-up to Boliden's Kevitsa mine.
Outside of gold and copper, Sandström said Finland could benefit from the energy metals boom.
"Gold is gold, we have high potential for gold, and there is still quite a lot of unexplored areas," he said. "But on the other hand, we have quite a lot of potential for cobalt, nickel and lithium.
"Certainly we have potential in lithium, we have hard rock, which is different from the brines. Our chance there is to refine it further so the final product is better than that coming from the brines."
Finland has proved a popular spot for explorers wanting to add a lithium project to the portfolio.
London-listed Savannah Resources has done rock-chip sampling of pegmatite outcrops at its two projects in the south of Finland and nearby an Avalon Minerals and Nortec Minerals joint-venture has found high-grade spodumene-bearing pegmatites, with intercepts of 9m at 2% Li2O.
Nordic Mining is further along the development path, with its Finnish subsidiary Keliber publishing a prefeasibility study in 2016 and aiming for production in 2018. The PFS - using 2015 pricing - modelled a 9,000t per annum lithium carbonate operation and plant with a joint cost of just over €200 million.
Drilling over the 2016-2017 winter brought an updated measured and indicated resource of 8Mt at 1.19% Li2O, which will be incorporated into the upcoming DFS.
Judging from the experiences of explorers in Finland in the past 20 years, it's clear there's plenty more to be found in the country. Jim Coppard - whose Sakatti discovery has been much feted in the industry - said some geological imagination was needed for the next big discovery.
"Everybody else has that same geological data - you've got to actually look at it and apply it on the ground," he said.
"For the discovery of Sakatti, it was just using exactly the same data that everybody else had for a decade, but just applied slightly differently and having an open mind and using experiences from around the world. Even though they have the greatest database in the world, it's how it's applied."
Coppard estimates in the Lapland Greenstone Belt there were "many more" 1-2Moz gold deposits to be found.
Mawson Resources' Hudson made clear just what future exploration could deliver.
"Most of the discoveries have been found in outcropping areas," he said. "Ninety-nine percent of the country is under a thin glacial cover. Most of the mines, if not all, have been made in that 1% of outcrop.
"That's where the real frontier is, under thin glacial soils. It's like going into new, untouched terrain with some dark glasses on. It's not as if you're looking deep, you're looking under 3-5m on average."
This compares favourably with more developed countries.
"Exploration has moved sub-200m in Australia, and you only need to move sub-5m in Finland," Hudson said.
Time to hit the ice road.