Junior mining firms in ‘revolt’ over native deals – by Jeff Gray (Globe and Mail – March 28, 2012)

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On the sidelines of the mining industry’s massive annual conference in Toronto in early March, a group of disgruntled junior exploration companies held a private meeting.

Calling themselves Miners United, the ad-hoc group of about 60 small-firm executives shared concerns about the concessions and cash they say native bands expect from companies looking for minerals on Crown lands that are considered traditional aboriginal territory, where bands retain hunting and fishing rights. Scores of disputes between native groups and mining companies now end up in court.

A landmark 2004 Supreme Court of Canada decision said the Crown has a “duty to consult” native bands about development on Crown land that is considered part of a band’s traditional territory. Courts have allowed governments to delegate part of this duty to resource companies, many of whom then negotiate agreements with native groups. But there is a growing backlash among junior miners about these agreements.

“There’s a revolt taking place, frankly,” said Neal Smitheman, a lawyer with Fasken Martineau DuMoulin LLP who acts for junior mining firms in disputes with aboriginal groups and who spoke at the Toronto meeting. “What’s being asked of them has nothing to do with consultation. It has everything to do with compensation.”

Confrontations between native bands and mining companies, particularly in Northern Ontario, have been increasing. However, the province’s long-awaited new Mining Act regulations, recently released in draft form, would alter Ontario’s “free entry” system of exploration on Crown land. Exploration companies would first have to file plans with the government and native groups, as well as seek permits in some cases, before drilling.

Meanwhile, conflicts continue. The Miners United meeting came just days after the Ontario government withdrew from exploration a large tract of Crown land about 600 kilometres north of Thunder Bay. The move was in response to opposition by the Kitchenuhmaykoosib Inninuwug First Nation, which has refused to allow mining on Crown land it considers its traditional territory.

The band, which saw six members go to jail for contempt of court for blocking drilling by Platinex Inc. in 2008, is still protesting against the presence of a junior mining company, God’s Lake Resources Inc., whose president and chief executive officer, Eduard Ludwig, attended the Miners United meeting.

Also at the meeting was Darryl Stretch, whose Solid Gold Resources Inc. was hit in January with a rare court injunction suspending his drilling on claims near Lake Abitibi in Northern Ontario and ordering him to consult with the nearby Wahgoshig First Nation.

Mr. Stretch, whose lawyer is Mr. Smitheman, has appealed the injunction and plans to launch a lawsuit against the Ontario government. He said a $1-million financing deal he had lined up fell through because of the controversy.

Mr. Stretch said the Wahgoshig wanted him to pay for a $100,000 archeological study to determine if his drill sites were disturbing burial grounds. He refused, saying Solid Gold could not afford it. He argues that his company has no legal requirement to consult the band. “It’s not my obligation to go find arrowheads for those people, period,” he said in a phone interview.

For the rest of this article please go to the  Globe and Mail website: http://www.theglobeandmail.com/report-on-business/industry-news/the-law-page/junior-mining-firms-in-revolt-over-native-deals/article2383041/

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