Northwestern Ontario Prospectors Comments on Renewing Ontario’s Mineral Development Strategy

The following letter outlines the Northwestern Ontario Prospector Association’s (NWOPA) recommendations for Ontario’s new Mineral Development Strategy. NWOPA believes that the new Mineral Development Strategy should focus on three main points:

1) Solving the problem of uncertainty of land tenure
2) Assisting prospectors and junior exploration Companies
3) Acquisition and dissemination of new, high quality geoscience datasets

Recommendations follow the discussion of each point below.

1) Uncertainty of Land Tenure

The new Mining Act has taken a once thriving industry and crippled it with new rules and regulations at a time when global markets are suffering. The new rules and regulations are enough of a deterrent to exploration; however, what has truly driven investors away from the province of Ontario and demoted Ontario to rank 23rd in Mining Attractiveness, according to the 2015 Fraser Institute’s Annual Survey of Mining Companies, is uncertainty of land tenure. Ontario’s Mining Attractiveness ranking has been decreasing in recent years, down from 14th place in year 2014 and 9th place in 2013.

As well as introducing onerous and ambiguous regulations and permitting, the Ontario government has taken a bystander approach to Aboriginal Consultation. This approach has left both parties (Aboriginals and industry) feeling ignored and frustrated. Ontario has stepped away from its duty to consult and left a system that has unclear expectations, few guidelines, no transparency, and does nothing to solve ongoing disputes. The current system will become one in which only major mining companies can afford to do business.

This leads to a gap in the exploration for – and eventual discovery of – new economic mineral deposits that will replace the diminishing reserves at currently producing mines. Much less grassroots exploration equates to a lack of investment dollars being spent in Ontario. Less exploration means fewer discoveries, and fewer discoveries means fewer new mines coming on-line. Fewer new mines producing means an eventual loss in mining tax revenues, resulting in a significant reduction in contributions to Ontario’s GDP.

Without certainty of land tenure, investors will continue to look elsewhere to develop projects. This is the main issue that needs to be addressed by government.

The new Mining Act has the potential to be successful. In order for Ontario to re-establish its place as a destination for mineral exploration, it needs to attract investors with a system that guarantees some level of certainty to stakeholders.

Recommendations:

1) Government needs to play a leading role in Aboriginal Consultation.

2) There needs to be a well-defined framework led by government for Consultation.

3) The consultation process needs to be:
a. fair for all parties involved
b. transparent to the public
c. consistent from agreement to agreement

4) Government needs to commit time and resources to create a comprehensive map detailing Aboriginal land boundaries, sites of cultural significance, etc.

5) Compensation to communities should begin at the stage of mineral extraction (the mining stage, when profits are being generated), not during the exploration and development phases.

6) Government should be responsible for any remuneration If compensation is required at the grassroots exploration stage, and this should follow principles outlined in point 3.

7) The consultation system must guarantee certainty of land tenure.

2) Assisting Prospectors and Junior Exploration Companies

Government also needs to assist Prospectors and Junior Exploration Companies to ensure these essential components in the Mining Cycle can continue to work and contribute to Ontario’s economy.

Prospectors will be losing a large part of their annual income and a competitive advantage to acquire land with the implementation of online staking. Online staking will mean claims cost prospectors significantly more than their “sweat equity” did in the past. Online staking will also mean prospectors, who once had equal opportunity to acquire ground in staking rushes and important claims, will now be competing with computer savvy stakers with faster internet access. Prospectors traditionally spend their own money to explore ground. In order to keep these “boots on the ground”, the explorationists who often are first to discover new showings, Ontario needs to recognize their value and invest in their future.

Ground prospecting can only be carried out during months when there is no snow cover. Some prospectors supplement their summer prospecting income by contract staking, or by staking claims and optioning them to exploration companies. Much of this work is carried out during winter months. The advent of electronic staking will mean that this winter income of prospectors will disappear.

Junior exploration companies have limited budgets and almost never generate revenue. They rely solely on investor dollars and hope their investment in exploration pays off through acquisition, royalties, etc. Investors are avoiding companies working in Ontario due to the risk involved and uncertainty of land tenure. For those who still wish to invest in projects in Ontario, the cost of plans, permits and Aboriginal Consultation often takes a significant portion of the budgeted program.

This is money which would have otherwise been spent exploring for or developing a deposit and creating wealth. Ontario needs junior exploration companies to continue exploring to find new prospects and bring grassroots exploration projects to an advanced stage. Ontario needs to attract junior mining companies and counteract the burden of added time and resources to comply with plans and permits.

Recommendations

Prospectors

1) Government should provide one-time assistance to prospectors who earn a significant portion of their income from contract staking. It is suggested that up to $50,000 per person towards either re-training education or towards a new business start-up be made available.

2) Government should reinstate the long successful OPAP (Ontario Prospectors Assistance Program) in which prospectors can receive funds to do their own small exploration programs with no strings attached.

3) Government should establish electronic staking fees that make staking costs affordable for prospectors.
4) Government should consider a system to provide double assessment credits to companies who perform prospecting as part of their early-stage exploration activities.

5) Government should also subsidize some assay costs of samples from independent prospectors.

6) Government should reinvest in education to attract young people to prospecting by reinstating the Prospecting Courses previously offered by Regional Geologists at MNDM.

7) Government should consider a program to provide an online staking credit to Prospectors equal to the cost of re-staking a claim of the same area for legacy claims that expire, once electronic staking is implemented.

Junior Exploration Companies

1) Government should restore investor confidence by ensuring certainty of land tenure as outlined earlier in this document.

2) Government should provide assistance, such as 50% return for exploration program expenses, as is done in some other Provinces.

3) Government should provide and maintain incentives to explore for minerals in the form of tax breaks.

3) High Quality Geoscience Data

During the last upswing in the mining cycle there seemed to be a disproportionate number of companies trying to develop economically marginal deposits due to the very high metals prices. However, there was a lack of new, economically viable discoveries. It is often argued that the “easy” deposits have already been found and that others are buried under overburden requiring expensive and/or difficult techniques to explore.

In addition to their traditional methods, governments and geological surveys need to increase the amount of funding allocated to the research and acquisition of high-quality data that is both leading edge in technique and new in area being targeted. Now more than ever, a focus should also be on economic geology which would be aided by industry input through organizations like the now dormant Ontario Geological Survey Advisory Board.

Recommendations:

1) MNDM should re-establish the Ontario Geological Survey Advisory Board.

2) MNDM should increase funding to the Ontario Geological Survey to design, develop and implement cutting edge geoscience initiatives modeled after other successful jurisdictions.

Final Word

Ontario’s previous Mineral Development Strategy looked great on paper, but in practice it left the industry struggling, with many companies leaving Ontario to explore elsewhere in Canada or the world. A strategy is only as good as the realities of the government’s capabilities of taking action to carry out the strategy. The new strategy must be supported by tangible actions to ensure that its intended outcomes are met.

If you wish to discuss this further, please contact our organization at [email protected]

 

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