Legal Notices

Legal Update

New Mining Act in Ontario
Regulations designed to increase early consultation with First Nations

By Herb Mathisen

A new Mining Act in Ontario requiring companies to submit plans and apply for permits before conducting exploration work is being phased in. When companies wish to conduct low-impact exploration activities - such as small-scale line cutting and trenching - they will need to submit plans to the provincial government, which in turn will inform potentially affected private and Aboriginal landholders of the work. When this work surpasses quantitative thresholds, or requires mechanized equipment, the company will have to go through a permitting process that will give affected groups a chance to ask questions and suggest conditions for the project. For line cutting, the threshold is 1.5 metres wide.

For now, compliance is voluntary but it will become mandatory on April 1, 2013. The government is encouraging companies to submit petmits during this voluntary phase by making the process free; a permit fee has yet to be determined.

Garry Clark, executive director of the Ontario Prospectors Association, said many in the industry have expressed concerns that the new rules will require extra work, cause delays and ultimately cost companies money. A company cannot start work until 30 days after iL has submitted an exploration plan, and permit approvals are expected to take 50 days; plans expire after two years and permits after three. Clark said companies will have to build these timelines into their project plans, noting that added uncertainty exists over potential temporary holdups dealing with site-specific terms and conditions that could prolong the consultation process.

"That's the biggest worry," he said. "There's going to be a slowdown on how you get a permit."

Rob Merwin, director of the Ontario Mining Act Modernization Secretarial, offered a different view. "We think that these new rules and tools just provide that clarity and certainty that people were looking for," he said, adding the process compels companies and First Nations to build positive relationships early on. Merwin said the new rules still allow prospectors to stake claims without consultation but also to recognize Aboriginal and treaty rights by providing First Nations with free, prior and informed consent over the use of their traditional lands.

The new rules do not require companies and First Nations to reach formal agreements before permits are issued, but Merwin said the government encourages these types of contracts, as they "provide certainty and stability that a permit alone can't achieve."

The Mining Act does layout some guidelines for effective formal agreements. The new rules state that any contract should not place excessive burden on companies or undermine the feasibility of a project. These contracts can consist of ongoing monitoring and information-sharing commitments, while also including financial components relating to administrative fees or future employment, depending on the scale of the proposed project. "These arrangements do not mean a payment of an access fee or a drill-hole fee ," said Merwin.

Since the regulations came into effect, Shawn Batise, executive director of the Wabun Tribal Council (WTC) , said his phone has been busy. The WTC, which represents six First Nation communities around Timmins, Ontario, has signed more than 15 agreements with exploration companies and, by this time next year, Batise believes that number could be as high as 40: "We signed two agreements in the last week."

The council negotiates a standard agreement with companies, which includes information-sharing commitments along with financial accommodation measures accounting for a "very small percentage" of the work being proposed. For a $250,000 drill program, Batise said the council would ask for an amount "in the thousands," which would assist the communities in monitoring the project and in accessing technical and legal reviews. "The expense to the company at the early exploration stage is pretty minimal," he said, adding that the council also asks for company options and share advances. The new process may, however, have a heavier impact on smaller companies with limited resources.

Kenning Marchant, a lawyer and Aboriginal engagement advisor, said larger companies have more flexibility to negotiate deals, but junior companies may not be able to pursue some properties, especially if an agreement cannot be reached and a dispute has to be resolved through litigation. The federal flow-through shares program -a major means for junior companies to raise money for drilling -needs to be tweaked so that companies can access this financing early in consultation and engagement work, which is a precondition for drilling, according to Marchant.

"Everyone wants to have good relations between mining companies and First Nation and other stakeholders, because that is good for everybody," Marchant said, noting that the speculative nature and limited economic benefits available at the exploration stage must be acknowledged during negotiations. 'The big benefits come when you actually find a mine," he added.

The province has held nine industry workshops and will reach out to 44 First Nation communities to explain the new rules and the basics of the mining sequence, while also training community members to assess and provide comment on plans and permits.

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