Ontario defends lawsuit filed by junior explorer – by Bryan Phelan (Wawatay News – February 11, 2014)


The Ontario government in January filed its statement of defence for a $125-million lawsuit brought against it by a junior exploration company with mining claims near Sachigo Lake First Nation. Northern Superior Resources (NSR), based in Sudbury, had for several years explored for gold in Sachigo’s traditional territory with the First Nation’s consent. However, the company stopped exploration in 2012 when its relations with Sachigo soured.

Later, on Oct. 24, 2013, NSR filed a lawsuit against Ontario, claiming that the province “failed to consult with First Nations as required by law” regarding the company’s exploration. NSR asked for compensation of $110 million for damages it said resulted, including: lost opportunities to finance, develop and/or sell the properties; loss of opportunity to profit from “potentially world-class mineral deposits”; and reduced value of NSR’s stock.

NSR also claimed it should be reimbursed $15 million by Ontario for monies spent acquiring and developing the properties.

“Having obtained all the necessary authorizations for mineral exploration under the Mining Act, and taken every reasonable measure to engage any First Nation … to be affected from its work,” the company stated, “NSR had a reasonable expectation that it would able to explore and develop the claims free of interference and with a view to profit.”

However, in its statement of defence, Ontario argued: “At all times, NSR knew or ought to have known that any rights it enjoyed under the (Mining) Act were potentially subject to competing and constitutionally-protected Aboriginal and treaty rights. The Canadian mining industry was well aware of this.”

Added the province, elsewhere in its defence: “Contrary to NSR’s assertions, any and all duties to consult Sachigo Lake First Nation with respect to NSR’s mining claims were satisfied.” And even if it had failed to adequately consult, “no liability to NSR would result.”

NSR said it had engaged, consulted with and accommodated Sachigo “of its own accord and in good faith” from the beginning of its exploration program in 2005 until about mid 2012.

“Approximately one quarter of the amounts spent by NSR in exploration in the properties was paid to or for the benefit of the Sachigo Lake First Nation under a series of impact benefit agreements (IBAs),” NSR said, with the understanding the IBAs were necessary because of Aboriginal and treaty rights asserted by the First Nation. Those payments were for salaries, infrastructure, capacity funding, and community donations. NSR sometimes worked out of Sachigo’s Echoing Lake Lodge, used the community’s floatplane service, and hired Sachigo members to assist in the exploration.

But NSR alleged that in 2011, Sachigo began making demands “which were unreasonable and incapable of being met by NSR as a responsible corporation and public company. For example, invoices would be submitted to NSR which could not be related to any agreed upon or approved expenditure.”

Further, NSR said, “In the fall of 2011, Sachigo Lake First Nation physically detained two NSR employees (along with some of the company’s equipment) for a day in an attempt to obtain payment from NSR that was not at the time due.” NSR said it made the early payment, put a premature stop to its exploration for that year and suffered a related loss of $40,000.

At the end of 2011, NSR alleged, the First Nation demanded an administration fee of “24 per cent of total project expenditures” for exploration proposed for 2012. According to NSR, Sachigo also demanded the company utilize an aircraft belonging to the First Nation but which NSR deemed unsafe. NSR refused to meet these two demands.

An exchange of letters failed to resolve matters in June 2012, and NSR ended its exploration program.

“These difficulties were made known to Ontario by NSR,” the company said. “No information, assistance, direction with respect to these difficulties, or with respect to any form of consultation with or accommodation of any First Nation … was ever provided by Ontario to NSR.”

But in its defence, the province replied: “NSR at no time made any request of MNDM (Ministry of Northern Development and Mines) that it attempt to facilitate a resolution to these disputes.”

The province said when NSR provided background details of the dispute to MNDM in September 2012, the ministry met with Sachigo chief and council the following month.

“At that time, MNDM heard complaints from Sachigo Lake First Nation about the conduct of NSR, particularly in regard to staking claims without informing Sachigo and conducting exploration activities outside the agreements made with the First Nation.” But Sachigo also expressed willingness to work out difficulties with NSR.

Ontario said it then offered to facilitate a resolution. It also provided NSR the option of participating in a new regulatory process under the Mining Act, effective November 2012, which would require consultation and offer a dispute resolution process. The province quoted a written response from NSR: “… (I)t is clear from the events of 2011-12 that no amount of continuing dialogue or intercession by your ministry has any prospect for creating the conditions that would make it possible for the company to return and again invest in the project.”

In addition to its dispute with Sachigo, NSR noted that in 2012, Kitchenuhmaykoosib Inninuwug (KI) advised that the company’s mining claims might also fall within KI’s traditional territory and were therefore subject to the First Nation’s exploration moratorium. Red Sucker Lake First Nation, based in Manitoba, also asserted an interest in the area.

Responding to a request from KI, also in 2012, the province agreed to withdraw KI lands in general from claim staking until the First Nation finished its own assessment work over several years.

“As a result of this action by Ontario, NSR … lost the option to expand the Thorne Lake and Meston Lake properties,” the company said.

Ontario countered: “NSR had no right, title or interest in the lands withdrawn from staking.”
In asking the court to dismiss NSR’s lawsuit, the province’s lawyers concluded: “Ontario cannot be held responsible for either Sachigo’s demands or NSR’s decision to reject them.”

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