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These are not the best days to be in the mineral-exploration business in Manitoba.
Metal prices are low — gold prices are at their lowest level in 36 months; nickel, lowest in 48 months; copper, lowest in 30 months; and zinc, lowest in 18 months — investors’ appetite for risky (albeit tax-deductible) exploration plays is just about non-existent and starting this week in Manitoba, there is an additional one percentage point of sales tax on expensive equipment.
On top of that there is the potentially deal-breaking uncertainty over treaty land claims. One exploration company — Mega Precious Metals — that has been diligently working on a Manitoba gold property called Monument Bay for many years was surprised this week with an eviction notice from nearby Red Sucker Lake First Nation in northeast Manitoba.
In a news release, the band referred to the operation as “a mineral-exploration company operating illegally in Red Sucker Lake First Nation traditional territory.” But that same mineral-exploration company has been co-operating with the band for years and signed a memorandum of understanding (MOU) with Red Sucker Lake in 2010.
We all know MOUs don’t mean money will be changing hands, but in the world of mining companies and their legislated duty to consult First Nations, whose treaty lands may be affected by a mining development, an MOU is typically a precursor to a more substantial industrial-benefits agreement.
Officials from the Mega Precious Metals office in Thunder Bay, Ont., are not returning phone calls, but one can only imagine an eviction notice, regardless of how enforceable it ends up being, has to be a setback for a development project that might be getting closer to a final push toward the actual development of a mine.
In a press release less than a month ago, Glen Kuntz, president and CEO of Mega, said its most recent measured and indicated resource estimates show “high-quality ounces with significant potential for resource expansion in a politically safe and mining-friendly Canadian jurisdiction giving Monument Bay the potential to become Canada’s next great gold mine.”
But Manitoba’s status as a “mining-friendly Canadian jurisdiction” is declining rapidly.
In the Fraser Institute’s annual Survey of Mining Companies, Manitoba has fallen from No. 1 in 2007 to 20th place in its 2012 report on mining-friendly jurisdictions.
For the rest of this column, click here: http://www.winnipegfreepress.com/business/eviction-notice-adds-to-gloom-in-mining-sector-214249771.html