_Cropped(1).jpg;w=400)
A million dollars doesn’t stretch as far as it once did; not if you’re in the exploration business in Ontario.
The province may be lauded for its rich mineralogy, but the president of a Sudbury-based junior mining company said it’s become a tad pricier and more risky to find new discoveries compared to Quebec.
“To actually make a discovery takes a huge effort and a lot of money, and you’re going to get a lot farther with that money in Quebec than you are in Ontario right now,” said Tom Morris of Northern Superior Resources.
The exploration community is in dire straits with many junior miners struggling to raise project financing and their stocks trading below 10 cents.
The situation doesn’t appear to be getting any easier based on Morris’ recent presentation at a Sudbury mineral symposium describing the myriad obstacles that small mining firms face to operate in Ontario that go beyond just proving up geology.
Based on his company’s experiences in both provinces, Morris delivered a part-business analysis, part-cautionary tale on where the money is spent on a hypothetical million-dollar exploration budget.
The message from Morris is that the best bang for your drilling buck resides in Quebec where 63 per cent (or $630,000) of the budget is spent on actual on-the-ground exploration compared to only 46 per cent (or $460,000) in Ontario.
The greatest disparity between the two provinces, Morris said, is the difficult process to engage First Nations.
In Ontario, First Nation engagement consumes 20 per cent of the exploration budget, compared to just three per cent in Quebec where Northern Superior works through the James Bay Cree regional authority’s expeditious one-window approach to initiate a program. A pre-development agreement there never exceeds $10,000. In Ontario, those costs can exceed six figures.
“When I go from one community to the next (in Quebec) I know the engagement process is going to be the same,” said Morris in an interview. “It would be good to see the same thing in Ontario.”
Here, engagement is an “inconsistent,” “costly” and “time-consuming” process that can involve multiple communities, each with its own consultation protocol. Navigating that path to work out an exploration or benefits agreement is usually left up to the junior miner’s owner, a geologist.
Factoring in standard administration costs combined with First Nation-imposed “access fees” can reduce that $460,000 drill budget by more than $100,000.
But in Quebec, those costs are offset by a generous exploration tax credit program that can boost that hypothetical $630,000 budget by an additional $252,000 to $882,000.
“It’s almost like laundering money,” joked Morris, “but it’s a great way to keep a company going through times like this.”
Morris calculates his dollars spent in Quebec buy him 4,000 metres of drilling at $170 per metre, compared with 660 metres at $700 per metre in Ontario.
“The focus of funds, which should be directed toward exploration, is being diminished (in Ontario) and the chances of finding that mine are also diminished.”
Exacerbating the challenges in Ontario is the lack of infrastructure.
“In Quebec, I can drive almost anywhere to do my programs,” said Morris.
In northwestern Ontario, reaching his claims requires expensive helicopter and fixed-wing aircraft.
Northern Superior’s plight in Ontario was revealed in late 2013 when it launched a $110-million lawsuit against the provincial government for failing to carry out its legal duty to consult with First Nations.
A series of disputes with a remote northwestern Ontario band, Sachigo Lake, forced the company to abandon exploration on its gold properties. The company claims the band imposed a 24 per cent “administration fee” to be extracted from its $10-million exploration budget.
Northern Superior refused and the band ordered them to leave. The company hasn’t returned since 2011, and while it still maintains those and other gold claims in Northern Ontario, the main focus of its work is in Quebec.
The case goes to an Ontario Superior Court June 1. A mediation process starts in February.
“A lot of people will point a finger to the First Nations and say there’s a problem,” said Morris. “It’s just as much a problem from the industry side.”
Some bands are taxing small miners with “access fees” to reach their claims, with scholarship endowments, and a personal pet peeve of Morris, the granting of shares; juniors are acquiescing to those demands.
Morris said his company spent $15 million exploring their northwest gold properties, of which 25 per cent was reinvested in the community through jobs and training.
“No handouts, no cheques given, just good corporate stuff to move the community forward.”
He wants greater government leadership and more transparency on the industry-First Nation practice of keeping exploration and benefits agreements confidential.
Morris said junior miners already take considerable risks, facing scrutiny from their boards and the financial markets to advance projects while seeking to earn the trust of First Nations that projects will bring benefits without destroying the environment.
“That’s the interesting quandary we find ourselves in.”
With the company’s reputation and credibility “put on the line” each step of the way, “one of the things (we) look at when we invest our intellectual property in these jurisdictions is our chance of success.”
Though not frustrated enough to pull up stakes in Ontario, Morris said there’s nothing in the newly amended Mining Act to prevent this situation from happening to them again. But he’s one of the few within industry circles willing to speak out.
“I live in Ontario and care about what happens with these First Nation communities. I’ve spent time and a lot of my own money reaching out and honestly trying to provide help, and I think the best way I can do that is provide opportunity through our exploration programs.
“But not talking about it is helping nobody.”
.JPG;w=120;h=80;mode=crop)
