Mining Prospects

Trends and Developments in Mining Law in Canada and Internationally

Climate Leadership Team Makes 32 Recommendations for Updating BC’s Climate Change Policies

Posted in Mining
Selina Lee-Andersen

The following post by Selina Lee-Andersen on our Canadian Energy Perspectives blog may be of interest to readers of this blog: Climate Leadership Team Makes 32 Recommendations for Updating BC’s Climate Change Policies

As reported in our earlier blog, British Columbia (BC) Premier Christy Clark appointed a Climate Leadership Team in May 2015 to provide advice and recommendations to government for its new Climate Leadership Plan.  The Climate Leadership Team’s mandate was based on four cornerstone objectives: (i) achieving BC’s legislated GHG emission reduction targets; (ii) maintaining a strong economy; (iii) mitigating negative impacts on vulnerable populations; and (iv) maintaining BC’s reputation for world-leading climate policies.

A More Detailed Look: Proposed Options for Ontario’s Cap-and-Trade Program

Posted in Mining
Selina Lee-Andersen

The following post by Selina Lee-Andersen on our Canadian Energy Perspectives blog may be of interest to readers of this blog: A More Detailed Look: Proposed Options for Ontario’s Cap-and-Trade Program

As noted in our earlier posting, the Ontario government announced in April 2015 that it would implement a cap and trade program that would eventually be linked with the existing cap and trade systems in Québec and California.  Following extensive public consultations over the summer, Ontario has released its Cap and Trade Program Design Options paper, which is open for public comment until December 16, 2015. As part of the current consultation process, the Ontario government is seeking input on various elements of the program design including timing, scope of the program, caps on greenhouse gas emissions, allowance distribution, price stability mechanisms, market design features, compliance requirements, flexibility mechanisms and enforcement. Feedback will inform the development of a regulatory proposal for the cap and trade program, which is expected to be tabled in early 2016. This will be followed by another round of public consultations before the cap and trade regulation is finalized.

On the heels of Cap and Trade Consultation Paper, Ontario releases Climate Change Strategy

Posted in Mining
Selina Lee-Andersen

The following post by Selina Lee-Andersen on our Canadian Energy Perspectives blog may be of interest to readers of this blog: On the heels of Cap & Trade Consultation Paper, Ontario releases Climate Change Strategy

Ontario’s climate change policy continues to evolve. In February 2015, Ontario released a Climate Change Discussion Paper to help frame the issues for public consultation and in April 2015, it was announced that Ontario would implement a cap and trade program that would link to the existing cap and trade systems in Québec and California.

At Last: Alberta Unveils its New Climate Leadership Plan

Posted in Aboriginal and Environmental Issues, M&A
Kimberly HowardSelina Lee-AndersenGordon Nettleton

On November 22, 2015, Alberta released its long-awaited Climate Leadership Plan (Climate Plan).  Contemporaneously with the Climate Plan, the Government released the Climate Change Advisory Panel’s (Climate Panel) Report to the Minister, Climate Leadership. As background, previous blogs on the Climate Panel’s mandate and the Climate Leadership Discussion Document can be found here and here.

Continue Reading

BC Environmental Appeal Board Revokes Horn River Basin Water License

Posted in Aboriginal and Environmental Issues
Stephanie AxmannKimberly HowardSelina Lee-Andersen

Readers of this blog may be interested in our article regarding the recent decision of the British Columbia Environmental Appeal Board (Board) in Chief Gale and the Fort Nelson First Nation v. Assistant Regional Water Manager & Nexen Inc et al (Decision No. 2012-WAT-013(c)), in which the Board revoked a water licence issued to Nexen Inc. for the purpose of pumping water from Tsea Lake in BC’s Horn River Basin for storage and use in oilfield injection.

The Board’s decision is noteworthy for its discussion of:

  • the Board’s role in reviewing regulatory approvals and decisions;
  • the purpose of the Water Act;
  • the technical evidence required for a Water Act licence and the deficiencies in the evidence provided by Nexen in support of the Licence; and
  • procedural aspects of the Crown’s duty to consult in the context of treaty rights.

Part 1 and Part 2 of our article are available on McCarthy Tétrault’s Canadian Energy Perspectives blog.

SCC Decision Highlights Increased Litigation Risk for Canadian Companies for Misdeeds of their Foreign Affiliates

Posted in M&A
Neil FinkelsteinBrandon KainShea SmallMarc-Andre RussellDharshini Sinnadurai

The following post on our Canadian Appeals Monitor blog may be of interest to readers of this blog: Chevron Corp v. Yaiguaje: SCC Decision Highlights Increased Litigation Risk for Canadian Companies for Misdeeds of their Foreign Affiliates.






Canada Brings into Force Payment Disclosure Regime: The Extractive Sector Transparency Measures Act

Posted in Mining
John BoscariolRobert Glasgow

Canada’s new regime for the mandatory reporting of payments to government, the Extractive Sector Transparency Measures Act (ESTMA), came into force on June 1, 2015.

Companies must begin reporting under the ESTMA in their first full financial year after June 1, 2015. The ESTMA contains broad reporting obligations with respect to payments to governments and state-owned entities, including employees and public office holders, made by oil, gas and mining companies. It is intended to supplement anti-corruption measures enshrined in the Corruption of Foreign Public Officials Act (CFPOA) and the Criminal Code. The Canadian government has also noted that the purpose of these new standards is to improve transparency within the industry and to achieve alignment with similar measures set out in the EU Transparency Directive and the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act.

Companies in the extractive sectors should be reviewing this legislation closely in light of the significant penalties for non-compliance by firms and their directors, officers and agents and its broader impact on compliance and enforcement under the CFPOA, the US Foreign Corrupt Practices Act and other anti-corruption regimes.

Who Must Report?

The new reporting obligations apply broadly to include not only entities listed on a Canadian stock exchange but also certain private companies. Section 8 of the ESTMA sets out the organizations that are caught by the new obligations:

(a) an entity that is listed on a stock exchange in Canada;

(b) an entity that has a place of business in Canada, does business in Canada or has assets in Canada and that, based on consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent financial years:

(i) it has at least $20 million in assets,
(ii) it has generated at least $40 million in revenue,
(iii) it employs an average of at least 250 employees; and

(c) any other prescribed entity.

The ESTMA provides an explicit and exhaustive definition of “entity”. Under the ESTMA, an “entity” is defined to mean a corporation or a trust, partnership or other unincorporated organization

(a) that is engaged in the commercial development of oil, gas or minerals in Canada or elsewhere; or

(b) that controls a corporation or a trust, partnership or other unincorporated organization that is engaged in the commercial development of oil, gas or minerals in Canada or elsewhere.

Any company that is either Canadian or maintains operations or assets in Canada will be subject to these requirements, even with respect to its non-Canadian operations.

“Commercial development of oil, gas, or minerals” is also exhaustively defined under the ESTMA. The ESTMA defines “commercial development of oil, gas or minerals” to mean the exploration and extraction of oil, gas or minerals and the acquisition or holding of a permit, lease or other authorization to carry out any such activities. In addition, the definition explicitly contemplates the prescription of other activities in relation to oil, gas or mineral extraction. For this reason it will be important to closely monitor any regulations made pursuant to the ESTMA.

It is also important to note that, for the purposes of the ESTMA (including part (b) of the definition of “entity”), control can be established directly or indirectly, in any manner. One detail that should be carefully considered is the scope of “indirect control,” and the potential for non-traditional extractive entities (such as institutional financial investors) to be caught within the scope of the ESTMA. The definition of “control” is also subject to future regulations, so this should be closely monitored.

These broad criteria are roughly analogous to those applied in the similar U.S. and EU regimes, with the exception of their application to private companies, and are also identical to those which the government set out for comment in April 2014.

What Must Be Reported?

Under the ESTMA, all “payments” made to “payees” must be reported annually so long as the aggregate of all payments in a particular category of payment to a particular payee exceeds a de minimis threshold of $100,000 per financial year. The ESTMA also mandates that payments made to an employee or public office holder of a payee, including a state-owned entity, are deemed to be made to the payee and therefore such payments must be reported under the regime.

The specific “categories” of payments include taxes, royalties, fees, bonuses, dividends and infrastructure improvement payments. The term “payee” is expansive and includes any government (either in Canada or in a foreign state), any body of two or more governments, or other similar bodies conducting the functions of a government. State-owned enterprises are considered payees for the purpose of determining reporting obligations.

Notably, the ESTMA does not apply to payments made to Aboriginal governments in Canada for the first two years during which the legislation is in force. Aboriginal governments are intended to be within the scope of “payee” under the ESTMA, and will be included after this two year period.

Reports under the ESTMA are due within 150 days of the end of the financial year and must be accompanied by an attestation by a director or officer of the entity. If the entity retains an independent auditor, the auditor may certify that the report is true, accurate and complete in place of the attestation.

The form of the report is to be prescribed by the Minister in writing, and can be prescribed on a project-by-project basis. However, the aggregate thresholds will not be segregated by project. These requirements, and the reports themselves, will be public unless the regulations provide otherwise.

Penalties: Exposure for Companies, Directors and Officers

A compliance failure is punishable upon summary conviction with a fine of up to $250,000. This fine applies to any entity that fails to comply with the reporting requirements or orders issued by the Minister. The fine also applies to every person or entity that structures any payments or any other financial obligations or gifts with the intention of avoiding the requirements to report those payments. Notably, under the ESTMA, each day that passes prior to a non-compliant report being corrected forms a new offence. Therefore, a payment that goes unreported for a year could result in over $9 million in total liability.

The ESTMA also applies to all officers, directors and agents of the offending entity who directed, authorized, assented to, acquiesced in or participated in the commission of the violation. Companies may consider retaining independent auditors to verify their financial reports as this could help minimize the possibility for any personal liability.

Due Diligence Defence

The ESTMA includes a broad due diligence defence against liability. Paragraph 26(b) creates a defence to liability if the person or entity can establish that it “exercised due diligence to prevent” the commission of the offence. This provides a strong incentive for companies to adopt rigorous compliance regimes with the input of external counsel and the oversight of independent auditors.

While the ESTMA provides for a due diligence defence, it makes no provision for any exemptions or exceptions where, many thought, one would be absolutely necessary: in regard to actions required by local law or contract. The reporting regimes of both the United States and the European Union also have no such exception. This represents further evidence that the ESTMA is another attempt to harmonize Canadian anti-corruption legislation with that of our close trading partners. This may create serious conflicts for many companies, particularly multinational entities, where conflict exists between reporting obligations under Canadian law and confidentiality or privacy obligations in a foreign jurisdiction.

Next Steps

Natural Resources Canada is currently working on implementation tools for the ESTMA, including guidelines for the industry and a reporting template. These are expected to be released sometime this summer, with a public consultation in the near future. When released, they will be available in the Canada Gazette Part I and through the Treasury Board Secretariat Open Government portal.

BC Premier’s 2015/16 Mandate Letters Highlight Policy Priorities on Tailings Pond Management, Climate Change, Oil Spill Safety and LNG

Posted in Mining
Selina Lee-Andersen

On June 12, 2015, British Columbia (BC) Premier Christy Clark issued updated mandate letters to her provincial cabinet ministers. The annual mandate letters provide the government’s annual direction to the various provincial ministries and confirms each ministry’s priorities for the year. Continue Reading

New and Proposed Amendments to the Québec Mining Act and related Regulations

Posted in Mining
Dominique Amyot-BilodeauPierre Langlois

On May 6, 2015, the Government of Québec confirmed the coming into force of certain provisions of the An Act to amend the Mining Act (2013, chapter 32). It also gave notice of its intent to amend the underlying Regulation respecting mineral substances other than petroleum, natural gas and brine in order to give effect to certain provisions of the Act to amend the Mining Act (2013, chapter 32), which was adopted by the National Assembly in December 2013. Continue Reading

CSA Provides Guidance on Investor Presentations and Website Disclosure for Mining Issuers

Posted in Corporate Governance and Continuous Disclosure, Mining
Ryan HornbySteven MolnarZachary Masoud

While investor presentations and other forms of investor relations materials provided on company websites are an effective tool for communication, mining issuers should remain alert that such materials are captured by the definition of “written disclosure” and the associated disclosure rules in National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). A review of such investor presentations and other website disclosure was the subject of the recent Canadian Securities Administrators (“CSA”) Staff Notice 43-309 – Review of Website Investor Presentations by Mining Issuers (the “Staff Notice”) issued on April 9, 2015.

Overall, the CSA found that there is substantial room for improvement for mining issuers to comply with disclosure requirements. Of the 130 investor presentations reviewed, only 18% were found to be substantially compliant with NI 43-101, while 57% had issues of minor non-compliance and 25% suffered from major non-compliance concerns. The CSA sent letters to 49 mining issuers requiring them to take remedial action, including providing undertakings regarding future compliance, issuing a corrective news release and, in the most severe cases, filing or refiling a technical report.

Key Findings

The Staff Notice highlights the need for mining issuers to improve their disclosure in order to effectively comply with the requirements of NI 43-101. The most significant areas of non-compliance identified by the CSA review include:

  • Naming the qualified person (QP): Of the 130 investor presentations reviewed, only 54 provided the QP’s name and relationship to the issuer. The Staff Notice states that the foundation of NI 43-101 is that scientific and technical information must be prepared or approved by a QP and that compliant disclosure must state the name of the QP and their relationship to the issuer. The CSA noted that overall compliance was significantly higher among presentations that were reviewed by a QP.
  • Preliminary economic assessments (PEA): The Staff Notice advises issuers to ensure that disclosure of the results of a PEA provides appropriate cautionary statements for the public to understand the limitations of the results of the PEA and to highlight the viability of mineral reserves vis-à-vis mineral resources.
  • Inclusion or exclusion of mineral reserves in mineral resources: The Staff Notice states that when reporting both mineral resources and mineral reserves, a clear statement as to whether the mineral resources include or exclude mineral reserves is required.
  • Exploration targets: The Staff Notice states that both the potential quantity and grade of an exploration target must be expressed as ranges. In addition, accompanying statements outlining the target limitations must be provided.
  • Historical estimates: The Staff Notice states that disclosure of historical estimates must include reference to the source, date, reliability and key assumptions of such estimates, and must be accompanied by the required cautionary statements.
  • Overly promotional terms and potentially misleading information: The Staff Notice cautions against the use of statements that are overly promotional or misleading, which could potentially result in a misrepresentation under securities legislation. Terms such as “world class”, “spectacular and exceptional results”, “production ready”, “ore” in relation to mineral resources, and “management estimates” are specifically identified as examples of statements that could be misleading, particularly when used by exploration stage or mineral resource stage issuers.

Other notable areas mentioned for additional improvement include: (i) reporting only pre-tax financial results or providing no information about the applicable tax rate in PEAs or other economic reports; (ii) a lack of disclosure regarding assumed metal prices used for determining mineral resource estimates; and (iii) disclosure of drilling results that failed to include information on the true width of mineralized zones or failed to provide results of significantly higher grade intervals enclosed in a lower grade intersection, which were cited by the CSA as being particularly important for early stage projects.

The Staff Notice also reminds issuers that first time written disclosure of mineral resources, mineral reserves or the results of a PEA (or a change to any of these that constitutes a material change for the issuer) triggers an obligation to file a supporting technical report. The CSA cautions that they have significant concerns about PEA disclosure on mining issuers’ websites, including in investor presentations, fact sheets, and posted or linked third party reports, that is not supported by an existing technical report.


The Staff Notice should be used as a “self-assessment tool” and provides mining issuers with practical information to strengthen their compliance and improve the quality of their disclosure to investors. The Staff Notice recommends that the QP responsible for particular technical information review all investor presentations and other website disclosure prior to the posting of such materials.

The CSA has indicated that they will continue to review mining issuers’ website disclosure as part of their overall continuous disclosure review program. Issuers identified as having material disclosure deficiencies will be required to correct the deficiencies and may be subject to further sanctions depending on the severity of the non-compliance and the issuer’s response. The Staff Notice further cautions that if non-compliant disclosure is discovered in the context of a prospectus offering, the offering will likely be delayed while the deficient disclosure is corrected.