Will Quebec’s Plan Nord boost its cachet as a jurisdiction of choice? – by Alisha Hiyate (Mining Markets – December 2011)

http://www.miningmarkets.ca/

It’s probably safe to say that no one is happier about Plan Nord — Quebec’s 25-year plan to stimulate investment in the province’s vast northern reaches — than André Gaumond.

The founder, president and CEO of project generator Virginia Mines (VGQ-T) has been preaching the gospel of northern Quebec’s mineral potential for more than a decade, well before the provincial government unveiled its official Plan Nord policy this May.

“We’ve been selling or promoting the ‘Plan Nord’ for 15 years, travelling everywhere, talking with investors and the investment community and telling them that this. . . area has a huge potential,” Gaumond says. “We will find many mines, many deposits there: It is the future of the mining industry in Canada. This is what we’ve been telling people for years and years.”

Under Plan Nord, the Quebec government will spend $2.1 billion over the next five years to make Quebec north of the 49th parallel — an area that accounts for 72% of the province’s landmass — more accessible for exploration and development. That amount includes $1.2 billion earmarked for infrastructure, such as roads and airports. Over the next quarter century, the government predicts Plan Nord will stimulate a total of $80 billion worth of investment — most of it from the private sector. The Plan also includes investments in social programs and housing for northern communities.

Gaumond confirms that the plan has generated a positive response from the investment community, including financial institutions that previously showed little interest in Quebec exploration.

“This is still early stage in the Plan Nord — we are still putting in place the entity, the law — everything that will manage, regulate the Plan Nord,” he says. “But already I am seeing lots of interest and already I can feel that everybody wants to be positioned to be there, to be part of that — they don’t want to miss the opportunity to be there.”

For Virginia, the largest landholder in northern Quebec, with 25 active exploration projects, a treasury of more than $43 million and a dozen or more joint ventures with well-funded partners, Plan Nord validates its early move into and sole focus on a challenging but prospective area.

Not that it needed validation. Over 15 years, Virginia has made six discoveries in northern Quebec, including the grassroots Éléonore gold project in the James Bay lowlands in 2004. Now owned by Goldcorp (G-T, GG-N), the $1.4-billion mine is slated to begin production, averaging 600,000 oz. gold a year, in late 2014. Virginia has a 2.2-3.5% sliding-scale production royalty on Éléonore, which is already paying out $100,000 a month.

“Éléonore is only the beginning,” Gaumond says. “This territory is huge, completely virgin, (and has) extraordinary potential.”

An engineer, geologist and former mining analyst, Gaumond estimates the in-the-ground value of mineral deposits already discovered in the James Bay area of Quebec at more than $50 billion.
With the investment the government expects to facilitate and participate in through Plan Nord — ranging from new power generation, roads, airports, airstrips, ports and more — it hopes to unlock that potential and much more.

Quebec has already seen what generous exploration incentives can do.
While Virginia spent about $70 million to find Éléonore, the government gave back around $30 million to the company in tax credits, Gaumond says.

“You can see with Goldcorp’s investment of $1.4 billion, the Quebec government will have the salaries, taxes that will compensate many, many more the $30 million they gave me in tax credits,” Gaumond says. “So they do the math and they know that at the end of the day, they are a big winner.”

Mining-friendly Quebec?

While Quebec claimed the top spot in the Fraser Institute’s global ranking of mining jurisdictions three years running, in the 2010/11 survey, it fell to number four. Rising taxes (the rate will be 16% of mine profits in 2012, up from 12% as recently as early 2010) and a revision to the mining code in 2009 have started to take some of the shine off the province.

For the rest of this article, please go to the Mining Markets website: http://www.miningmarkets.ca/news/will-quebecs-plan-nord-boost-its-cachet-as-a-jurisdiction-of-choice/1000767912/