Confusion on the ground [Ontario mineral exploration and Miners United] – by Ian Ross (Northern Ontario Business – May 2012)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. Ian Ross is the editor of Northern Ontario Business [email protected].

Exploration industry mobilizes on new regs, First Nation issues Develop the North, park the south. That was on a popular button making the rounds at the Northwestern Ontario Mines and Minerals Symposium in Thunder Bay last month. The blue sky weather mirrored the optimism at the annual spring fraternity gathering of prospectors and junior

But there was also an undercurrent of dissatisfaction with Queen’s Park over new mining regulations coming into force this summer, and the provincial government’s hands-off approach to smoothing tensions between industry and First Nations.

A March story published in the Globe and Mail covering a Toronto meeting of a group of 60 frustrated prospectors and junior exploration executives – dubbed Miners United – only brought to light what has been talked about in industry circles for years. That secret six-figure deals have been made between some companies and First Nations in order to gain access to claims on Crown land that Aboriginals consider traditional territory. For many small junior miners and prospectors, it’s setting an ever-increasing dangerous pattern of cash payouts that will hurt the early grass roots stages of exploration.

“The precedence has been set and it’s been ratcheted up from agreement to agreement,” said Garry Clark, executive director of the Ontario Prospectors Association.

Ultimately, he suspects, as promising exploration properties are optioned to bigger companies to develop, the stakes could get higher. “The biggest fear I have is that a company makes a deal that’s untenable. They make a deal just to get on the land, they actually find something and the next company comes along, likes the deposit, but wants to renegotiate the deal.

“Eventually the community says, we don’t want to enter into a deal with a junior company because the deal always has be renegotiated when a bigger company comes in, so we’d rather deal with the bigger company, and that’ll stop the juniors from doing any work.” These secret agreements could run afoul of the Ontario Securities Commission if there are cash payouts with investment dollars.

Clark isn’t sure these exploration agreements are allowed to be confidential. “If I option a property, I can’t say that the terms of the agreement are confidential because that’s material to the company and to shareholders.”

Further fanning the flames of discontent are recent high-profile Aboriginal-industry conflicts that have ended up in the courts. In these cases, the province has delegated its legal responsibility to consult with First Nations onto the mining companies, or have taken a wait-and-see approach in the hopes that the two parties will resolve their differences.

Clark, who attended the Miners United meeting in Toronto and chaired a second in Thunder Bay last month, said these frustrations have been boiling up for some time.

While the group has been branded as a radical fringe of mining industry hardliners, Clark concedes there are outspoken members who have attracted media attention, but the movement is born out of the inaction from the government in providing clear direction on consultation. “The reality is Miners United is a group of concerned juniors, prospectors, suppliers and contractors that believes that the government is falling down on what needs to be done.”

Described as a “very ad hoc, loose group,” Clark said, “they’re not revolutionists, they just want to be able to explore and develop the economy of the province.” Clark said what’s emerged from the meetings is an energized junior mining sector that must gather allies from across the industry to effectively lobby government, while addressing the issues with the First Nation communities themselves.

Complicating matters are a slew of new Mining Act regulations requiring companies to file early exploration plans with the province and First Nation groups, and obtain permits before any drilling takes place. The changes to the free entry system are being lauded by government as a social licence to operate, but it’s viewed by some industry types as onerous regulation
that will increase the cost of doing business.

Thunder Bay geologist David Hunt, president of the Northwestern Ontario Prospectors Association, said a modernized act only creates more red tape and will slow down projects.

Ultimately, he said at a speech in Thunder Bay, it will result in “fewer showings entering the mineral development food chain and, thus, fewer mines down the road.

“Instead of tweaking a few regs that would have made things work better, the government has created a sledgehammer to swat a few mosquitoes.”

Clark said the new regulations are meaningless if Queen’s Park can’t define the basics of what constitutes proper consultation, and he isn’t sure that First Nations are even buying into the process.

“The problem is the government hasn’t told us and hasn’t designed the guidelines on what consultation is…and what is enough to meet the needs of a plan or permit,” said Clark. “On the other side, I don’t think the government has asked the First Nations. I think it’s a problem of who to engage and they’re running a bit scared.” Clark said, no doubt, it will increase the cost of doing business and create more paperwork, but other mining jurisdictions are following a similar framework.

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