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Sudbury Mining Solutions

Commentary

Preserving our mining-friendly reputation

February 13, 2014
by Norm Tollinsky
In: Norm Tollinsky

Delegates to this year’s PDAC won’t be celebrating quite as much as in previous years.

Risk capital is a lot more difficult to secure, exploration budgets have been cut and drills are sitting idle.

The downturn has also exacted a human toll as increasing numbers of geologists, prospectors, drillers, and even Bay Street lawyers find themselves out of work.

Despite the doom and gloom, our review of exploration and mine development activity in Northern Ontario is a lot to take in.

Even in a down year, there is a lot going on and more than enough reason for optimism.

Unfortunately, much of it has to do with Northern Ontario’s incredible mineral wealth and less so with the economic fundamentals necessary to exploit it.

There’s not a lot we can do to influence gold prices, investor sentiment or global supply and demand for base metals, but the critical importance of the mining industry to Ontario requires us to do what we can to get everything else right.

This means welcoming risk capital and safeguarding our reputation as a mining-friendly jurisdiction. Fortunately, most Northerners and First Nations understand the importance of the mining industry and its impact on jobs, families and the well being of our communities. It’s the exceptions that are troubling.

In this issue of Sudbury Mining Solutions Journal, we highlight the case of Northern Superior Resources, which was forced to abandon several properties in northwestern Ontario when one First Nation demanded an exorbitant “administration fee” and another one told the company to pack up and get out.

Northern Superior invested $15 million exploring its three properties and had excellent relations with the First Nations for a number of years before everything started going downhill.

In March 2011, its stock was trading at $1.05. Now, it’s languishing at five cents. The Province of Ontario has gone out of its way to recognize the treaty rights of First Nations and has made a number of changes to its Mining Act to ensure they are consulted and accommodated.

I don’t think the province ever intended to give First Nations veto power over exploration activity in Ontario, but that unfortunately appears to be the reality.

The province has already paid $8.5 million to two mining companies forced to abandon their claims, it’s now being sued by Northern Superior for $110 million, and has withdrawn a 23,000 square kilometre area from staking.

Paying exploration companies not to explore and withdrawing land from mineral exploration aren’t sustainable in the long-term.

One way or another, we will need to establish what is fair in terms of accommodation and clarify this issue of veto power over exploration activity.

Otherwise, we will see more Northern Superiors decamp to other jurisdictions, more payoffs to exploration companies and more land withdrawn from staking.

These are thorny issues to tackle, but tackle them we must.

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