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BC Environmental Assessment Office Fees

The Province of British Columbia approved an Order in Council dated April 11, 2014 to establish environmental assessment fees in British Columbia for the review of environmental assessment applications, orders and enforcement fees.

The fee structure became effective on April 14, 2014.

There are three categories of fees: 1. pre-certificate fees; 2. transitional assessment fees; and 3. post-certificate fees.

Pre-certificate Fees

There is an exemption fee of $10,000 payable when a party seeks an exemption from the requirement for an environmental assessment certificate. The first installment for an assessment fee ranges from “simple” at $25,000 to “typical” at $75,000 and the assessment fee for the second installment ranges from $25,000 to $75,000.

Transitional Assessment Fees

Transitional assessment fees range from “simple” at $37,500 to “complex” at $112,500.

Post-certificate Fees

Post certificate fees for an extension range from $2,000 to $10,000 and an amendment fee ranges from $2,000 to $50,000. In addition, there are inspection fees imposed and the timelines for the payment of the fees are as set out in the regulations. There are a number of factors that are used to determine the fees and these are set out in the materials available on the government website at http://www.eao.gov.bc.ca/fees.html.

BC Environmental Assessment Office Fees

Lean times may call for lien measures – What you need to know about miners’ liens in Northern Canada

Given the present economic climate of falling metal prices and depressed equity markets for mining companies, many owners and operators of mines are experiencing cash flow and working capital shortages.  As a result, contractors and others who provide services or materials to mines, whether in the exploration, development, or production phases of such projects, are increasingly looking to miners lien legislation to help them increase their leverage when seeking payment of outstanding accounts.

Miners’ liens are unique legal and potentially powerful tools.  Therefore, those involved in working on or operating a mine, as well as lenders, should have some awareness of the impact of the filing of such liens on mineral tenures and on the interests of any secured creditors.

What is a lien?

In general terms, a lien is a charge against property, including mineral tenures, granted to a person who provides services or materials which improve that property as long as there has been compliance with the rules in the applicable lien legislation.  The property acts as security for the debt owing to the lien claimant.  Therefore strict compliance with the statute is required in order to get the benefits of the lien.

Lien legislation is different in each province and territory.  All Canadian jurisdictions have builders lien legislation that applies generally to improvements and services provided to property, but the northern territories have special miners lien legislation.  Where miners lien legislation exists, it is that legislation and not the builders lien legislation that applies to mining projects.

Miners Lien Acts north of 60 – who can lien for what?

In each of the Yukon, Northwest Territories and Nunavut, the applicable Miners Lien Act provides a statutory framework for claiming a miners lien.  There are currently two different lien legislation regimes: one in the Yukon and another in the Northwest Territories and Nunavut.

In the Yukon, a lien is provided to a contractor or subcontractor who provides services or materials to a mine “preparatory to, in connection with, or for an abandonment operation in connection with” the recovery of a mineral.  The lien is provided on “all the estates or interests in the mine or mineral concerned” as well as on the mineral itself “when severed and recovered from the land while it is in the hands of the owner”.  The lien is also on “the interest of the owner in the fixtures, machinery, tools, appliances and other property in or on the mines or mining claim”.  In addition, a person who rents equipment to an owner, contractor or subcontractor has a lien for the rent while the equipment is being used or reasonably required to be available for the purpose of the mine.

In the Northwest Territories and Nunavut, a person who performs any “work or service on or in respect of” or “places or furnishes any material to be used in the mining or working of a placer or quartz mine or mining claim” has a lien for the price of the work, service or material on “the minerals or ore produced from and the estate or interest of the owner in the mine or mining claim”.

How to claim a lien and time limits

Under the Miners Lien Acts, there are two initial steps required to claim a lien: first, file a claim of lien, and second, start an action.

Firstly, a lien claimant must file a claim of lien in the mining recorder’s office against the applicable mineral tenures within the prescribed time period.  This time period differs between the Yukon and the Northwest Territories/Nunavut.  The applicable time periods are summarized in the chart below.  The claim of lien must be supported by an affidavit which verifies the facts in the claim of lien, and the claim of lien must include:

  1. The name and residence of the claimant, owner of the property and of the person for whom the work, service or material was provided;
  2. A description of the work or service performed or material furnished and the time period within which it was performed or furnished;
  3. The amount claimed as due or to become due;
  4. The description of the property to be charged; and
  5. The date of the expiration of the period of credit agreed to by the lien holder for payment for the work, service or material of the lien holder where credit has been given.

Secondly, a lien claimant must start an action within the prescribed time period in the Supreme Court in the Yukon or the Northwest Territories or in the Nunavut Court of Justice in Nunavut. In addition, the lien claimant must file a certificate from the court in the mining recorder’s office against the liened mineral tenures. Again, this time period differs between the Yukon and the Northwest Territories/Nunavut, and the applicable time periods are summarized in the chart below. The certificate notifies anyone searching at the mining recorder’s office that the mineral tenure is subject to a legal proceeding.

Priority

Assuming there has been compliance with the legislation, a miners lien gives a lien claimant limited priority over mortgage and other encumbrance holders.  This priority can be important if the mineral tenures are subject to secured financing the amount of which is equal to or exceeds the value of the mineral tenures.  In such a scenario, the lien claimant may only be able to recover the amounts which have priority over the secured financing.  Therefore it is important for all the players to understand the scope of the priority.

The following chart summarizes the applicable steps and timelines to claim a miners lien in Yukon and in the Northwest Territories/Nunavut, and the priority granted by such liens.

 

Yukon Northwest Territories and Nunavut
Time for filing a claim of lien Before the expiration of 45 days from the last day on which the work or service or material which is the subject matter of the claim, was performed. Before the expiration of six months from the last day on which the work or service or material, the subject-matter of the claim, was performed or placed or furnished or, where credit has been given, from the time fixed for payment.
Time for commencing an action and filing a certificate. 60 days after deposit of the claim of lien. 90 days after filing of the claim of lien.
Priority A lien takes priority over any mortgages or encumbrances to the extent the lien arises from work, services, or materials provided to the mine for a period of up to 60 days.The purpose of this limitation is to provide certainty to financiers of mines that any miners lien has a limited priority. The commencement of this 60 day period is not expressly stated in the Miner Lien Act. The Yukon Territory Supreme Court has indicated that this period should be calculated from the last day of the provision of work, services or materials, and that accordingly it may be different for each lien claimant. However, this case law is not binding, and therefore this legislation may be interpreted differently by a future court. A lien takes priority over all mortgages and encumbrances registered on or after March 23, 1937, as to 1/2 of the output from the applicable mine or mining claim.This priority typically extends to half of the minerals or ore when recovered from the mine, and, if so ordered by a court, may also extend to half of any net proceeds recovered from the sale of such minerals or ore.

 

Impact of liens

Some of the key impacts of miners’ liens for participants in mining projects are summarized below:

Owners & Operators: Owners and operators should be aware of the impact miners liens can have on their debt covenants and should properly manage relationships with contractors, suppliers and lenders when experiencing cash flow and working capital shortages.

Contractors & Suppliers: Contractors and suppliers should be aware of lien legislation, and take timely action to perfect a lien because failure to comply with the strict requirements in lien legislation can have dire consequences.  Once perfected, a lien can provide leverage to a contractor or supplier in the settlement of outstanding accounts with an owner.

Lenders: Lenders need be aware that a portion of their security may be subordinated to lien claims. Lenders can ensure there are protective covenants in security documents which contemplate the lenders’ recourse in the event a claim of lien is filed.

Lean times may call for lien measures – What you need to know about miners’ liens in Northern Canada

Proposed Amendments to the Yukon Quartz Mining Act and Placer Mining Act

As a result of the Ross River Dena lawsuit against the Yukon Government with respect to consultation on the granting of rights to miners to conduct work without consulting and accommodating First Nations, the Yukon Court of Appeal has given the Yukon Government until December 27, 2013 to amend its legislation specifically with respect to Class 1 activities. Class 1 activities can include construction of lines, corridors, trenching, clearing for helicopter pads and camps, construction of access roads and use of explosives.

There were four areas of concern identified as part of the proposed amendments and they include, environmental protection and monitoring, consultation with First Nations, security for Class 1 exploration and identification of areas for specific operating conditions.

The objectives for the amendments were to ensure the duty to consult First Nations was met, improved information sharing, enhanced environmental protection and management of multiple resources. In the case of Class 2 to 4 exploration programs, notice to the Chief of Mining Land Use (“CMLU”) is required.

The proposed amendments include notification by the operator prior to the commencement of a Class 1 program so that additional conditions may be placed on the program by the CMLU if there was significant environmental risk.

CMLU would have the authority to do the following:

1. propose mitigation procedures on potential environmental socioeconomic or adverse impacts on treaty rights of First Nations;

2. refuse the program;

3. provide security; and

4. issue a certificate of compliance.

Upon receipt of a notice, the Chief of Mining Land Use would first determine if there was any potential adverse environmental impact to be mitigated and advise potentially affected First Nations. There would be a 25 day notice reply period and then if no notice is received the proponent could undertake its program. There would be a provision with respect to avoiding undue hardship in proceeding with programs. In addition, there would be “identified areas” where additional requirements could be imposed.

The deadline for review process is July 31, 2013 for comments.

The discussion paper is available on the Yukon website at www.emr.gov.yk.ca/mining.

Comments:

A principal concern with this legislation will be the capacity of First Nations to have a good understanding of the program and its impact on their traditional territories and what responses are appropriate.

One concern will be that the 25‑day period is unlikely to be met and therefore proponents should be prepared to file their possible exploration programs as early as possible in order to address time delays.

An further concern is that a program can be refused if the environmental or socioeconomic effects cannot be mitigated or that treaty rights are “asserted” if aboriginal rights cannot be eliminated or accommodated. What procedures will be in place to address this problem?

One potential solution in this proposal is to perhaps bring in a definition like that in Section 10 of the Mines Act in British Columbia which requires notice when there is a mechanical disturbance. This would still allow general prospecting geochemical and geophysical exploration to take place.

Proposed Amendments to the Yukon Quartz Mining Act and Placer Mining Act

Consultation document for changes to the Québec mining royalties regime now available

Following the announcement that a forum on mining royalties will be held on March 15th, 2013 in Montréal, the Québec Ministries of Finance and Economy and of Natural Resources have made available, on March 8th, a consultation document entitled “Le régime d’impôt minier du Québec”. This document includes information on the mining sector in Québec and on the operation of the current Québec mining tax regime.

The Québec Mining Association and the Québec Mineral Exploration Association as well as several mining companies, groups and experts will be invited to provide their opinion and suggestions on this question. The consultations will culminate in the forum on mining royalties which will be co-presided by Mr. Jacques Fortin (HEC Montréal) and Mr. Pierre Lasserre (UQAM-CIRANO).

The consultation document is available here (in French only): http://www.finances.gouv.qc.ca/documents/autres/fr/AUTFR_RegimeMinier.pdf

This article was written by Ann Bigué and Dominique Quirk.

Consultation document for changes to the Québec mining royalties regime now available

Quebec tightens rules on financial guarantee requirements for rehabilitation and restoration plans

On February 13, 2013, a notice was published in the Gazette officielle du Québec by the Minister of Natural Resources, Martine Ouellet, announcing amendments to the Regulation respecting mineral substances other than petroleum, natural gas and brine (the “Regulation”). All of these amendments pertain to the rules applicable to financial guarantee requirements for rehabilitation and restoration plans under Section 231 and following of the Quebec Mining Act.

The draft regulation amends the Regulation by increasing from 70% to 100% the financial guarantee required to ensure performance of the work required by the rehabilitation and restoration plan and by broadening the scope of the guarantee from being required only for the rehabilitation and restoration of accumulation areas (for mineral substances, overburden, concentrates and tailings), to being required for the rehabilitation and restoration of the entire mine site.

The payment schedule for the financial guarantee will also be amended for companies who are currently engaging in exploration work as well as for those engaging in mining operations or operating a concentration plant.

In the case of companies engaging in exploration work, under the current Regulation, the total guarantee must be submitted within 15 days after the rehabilitation plan is approved, if the exploration work is expected to last 1 year or less, or the financial guarantee can be submitted in annual payments if the exploration work is expected to last more than 1 year. The amendments now provide that every holder of mining rights who engages in exploration work must provide the financial guarantee to the Minister before the beginning of exploration work.

For operators engaging in mining operations in respect of tailings or mineral substances set out in the regulations, or operating a concentration plant, the current Regulation provides that their annual payments will be made according to rules set forth in a table. However, the amendments to the Regulation provide that the guarantee must now be submitted to the Minister in three payments, the first of which would represent 50% of the total guarantee and would be paid in the 90 days after approval of the rehabilitation plan is received. The subsequent payments of 25% each would be made on the anniversary date of approval.

The draft regulation also reviews certain forms of financial guarantee and requires the filing of a restoration plan for the movement of 1000 m3 or more of unconsolidated deposits.

The new amendments will also apply to operators who are currently engaging in mining operations or operating a concentration plant and whose restoration plan has been approved prior to the draft regulation coming into force. These operators will also have to provide the financial guarantee for the restoration of the mine site in three payments, the first payment being required at the latest one year after the draft regulation comes into force.

The draft regulation is set to come into force on February 28, 2013.

The current Regulation is available here:  http://www2.publicationsduquebec.gouv.qc.ca/documents/lr/M_13_1/M13_1R2_A.htm

The draft regulation is available here:http://www2.publicationsduquebec.gouv.qc.ca/dynamicSearch/telecharge.php?type=1&file=2462.pdf

This article was written by Ann Bigué and Dominique Quirk.

Quebec tightens rules on financial guarantee requirements for rehabilitation and restoration plans

Quebec Government announces Forum on Mining Royalties, March 15th, 2013

Québec Minister of Finance and Economy Nicolas Marceau and Québec Minister of Natural Resources Martine Ouellet announce that a forum on mining royalties will be held on March 15th, 2013 in Montréal, during which the mining industry and groups affected by this issue will be consulted.

This announcement made at the Strategic Forum on natural resources which was held in Montréal on February 8th, 2013, follows the commitments undertaken by the Parti Québécois during the last election campaign to raise mining royalties. The forum will enable the parties to agree on the “best way to get there”, said Minister Marceau.

In his speech announcing the forum on mining royalties, Minister Marceau indicated that the following principles are guiding the Québec Government: royalties must be increased, the extracted mineral must generate royalties in all cases, the most profitable projects must generate more royalties and transformation in Québec must be encouraged. He also indicated that the challenge is to find the balance between maximizing royalties, maximizing investments and maximizing employment in the mining sector.

A consultation document will be made available by March 1st and will be available on the Ministry websites. The document will include information on the mining sector, on the operation of the current Québec mining tax regime and on the total amount of royalties collected from mining companies in Québec.

The Québec Mining Association and the Québec Mineral Exploration Association as well as several mining companies, groups and experts will be invited to provide their opinion and suggestions on this question. These consultations will culminate in the forum on mining royalties which will be co-presided by Mr. Jacques Fortin (HEC Montréal) and Mr. Pierre Lasserre (UQAM-CIRANO).

Minister Marceau also indicated that the Québec Government will be able to announce the details of the new royalty regime in early spring.

The press release is available in French only: http://www.finances.gouv.qc.ca/documents/Communiques/fr/COMFR_20130208.pdf

Minister Marceau’s speech from the Strategic Forum on natural resources is available in French only: http://www.finances.gouv.qc.ca/documents/Communiques/fr/COMFR_Allocution20130208.pdf

This article was written by Ann Bigué and Dominique Quirk

Quebec Government announces Forum on Mining Royalties, March 15th, 2013

TMX Group Consultation Paper on Emerging Market Issuers

On December 17, 2012 the Toronto Stock Exchange (“TSX”) and TSX Venture Exchange (“TSXV” and together with the TSX the “Exchanges”) published a consultation paper on their respective listing requirements applicable to issuers with a significant connection to an emerging market jurisdiction (the “Paper”). The Paper follows the recent guide published by the Ontario Securities Commission: Staff Notice 51-720 – Issuer Guide for Companies Operating in Emerging Markets in which similar issues were identified and discussed. The principal purposes of the Paper are to: (a) present the potential risks associated with listing emerging market issuers (“EMIs”) that have been identified by the Exchanges; (b) provide preliminary guidance to issuers and their advisors with respect to listing considerations applicable to EMIs; and (c) solicit comments from market participants on matters related to listing EMIs, including possible new guidance or requirements that the Exchanges may implement.

READ FULL ARTICLE

TMX Group Consultation Paper on Emerging Market Issuers

Updates to the ISS and Glass Lewis 2013 Proxy Voting Guidelines affecting TSX and TSX-V Companies

Both Institutional Shareholder Services Inc. (“ISS”) and Glass Lewis & Co. (“GL”) released updates in November 2012 to their proxy voting recommendation guidelines for the 2013 shareholder meeting season. Below is a summary of the changes relevant to TSX and TSX-V listed companies.

Read full article here.

Updates to the ISS and Glass Lewis 2013 Proxy Voting Guidelines affecting TSX and TSX-V Companies

CSA Seeks Comments On Model Rules Related To Derivatives

On December 6, 2012, the Canadian Securities Administrators (“CSA”) published CSA Staff Consultation Paper 91-301, requesting comments regarding the following Model Provincial Rules: Derivatives: Product Determination (the “Scope Rule”) and Trade Repositories and Derivatives Data Reporting (the “TR Rule” and collectively, the “Model Rules”). The Model Rules are intended to implement the G-20 commitments regarding the regulation of trading derivatives in Canada. In Ontario, the Model Rules will apply only to derivatives that are traded over-the-counter.

In general, the intention of the Model Rules is to impose specific regulatory requirements tailored to address the unique characteristics of derivative products and to bring Canada’s regulation of derivatives in line with international standards. More specifically, the Model Rules look to regulate how derivatives are marketed and traded, the sophistication of the counterparties, existing regulation in other areas (such as the regulation of financial institutions) and the risks they present to the derivatives and financial markets.

The Scope Rule intends to answer which contracts or instruments are to be regulated as “derivatives” and which are to be regulated as “securities” as the current definitions of both in securities legislation are expansive and sometimes overlapping. The TR Rule focuses on the operation and ongoing regulation of designated or recognized trade repositories and the reporting of derivative transaction dates by market participants. In the current draft, there exists an exemption for reporting requirements by small market participants for derivatives transactions in the physical commodity market that have a less than $500,000 aggregate notional value. The intention of the TR Rule, generally, is to improve transparency and the proposed rule will impact the regulation of both trade repositories and derivatives market participants.

The current draft of the Model Rules is based on existing provisions of Ontario securities law. Once the Model Rules have been updated to reflect the commentary, each jurisdiction will publish its own rules, explanatory guidelines and appendices.

Comments on the Model Rules are being accepted until February 4, 2013.

CSA Seeks Comments On Model Rules Related To Derivatives

CO 2 Emissions – Will Alberta Meet the Test for Equivalency?

As part of its goal of regulating carbon dioxide (CO2) emissions on a sector-by-sector basis, the Federal Government published the draft Reduction of Carbon Dioxide Emissions from Coal-fired Generation of Electricity Regulations (the Regulations) on August 27, 2011, pursuant to the Canadian Environmental Protection Act, 1999 (CEPA).

On September 5, 2012, Environment Canada announced that the Regulations have now been finalized, the official version of which will be published in an upcoming edition of the Canada Gazette. The Federal Government’s authority to enact the Regulations arises pursuant to section 93(4) of CEPA, under which the Governor in Council is granted the power to regulate any toxic substances specified in Schedule 1 of CEPA, which has included CO2 since 2005.

To read the full article, please click here.

CO 2 Emissions – Will Alberta Meet the Test for Equivalency?

Proposed Amendments to the TSX Company Manual – Majority Voting

Introduction
Pursuant to recent amendments to the TSX Company Manual (the “Manual”), which will become effective on December 31, 2012, issuers listed on the Toronto Stock Exchange (the “TSX”) will be required to disclose whether they have adopted a “majority voting” policy in respect of director elections.

The TSX is currently seeking comments on a proposal for further amendments to the Manual, which would require TSX-listed issuers to elect directors by way of “majority voting” at uncontested meetings.

Majority Voting
Under Canadian corporate law, in the context of the election of directors, shareholders who vote by proxy have only two options: vote “for” or abstain from voting for each director nominee or slate of directors. Given that votes abstained do not count and that, in practice, most shareholders of Canadian public companies vote by proxy, a director nominee or slate of directors will generally need only one “for” vote to be elected. According to the Canadian Coalition for Good Governance (the “CCGG”), this system is not in the best interests of shareholders “as it does not permit [them] to vote against an underperforming director and allows an entrenched board to continue to be in charge of the company, even if they are opposed by a majority of the owners of the company”.

Under the proposed majority voting policy, votes abstained will be considered “against” votes and will be counted as part of the total votes cast. Consequently, a director who receives a majority of votes abstained is considered not to have received the support of the shareholders and would be required to tender his or her resignation. The CCGG notes that 61% of listed issuers on the S&P/TSX Composite Index have a majority voting policy.

Amendments
The main passage of the proposed amendments reads as follows:

“Listed issuers must have majority voting for the election of directors at uncontested [shareholder] meetings. In satisfaction of this requirement, a listed issuer may adopt a majority voting policy that requires a director that receives a majority of the total votes cast withheld from him or her to immediately tender his or her resignation to the board of directors, to be effective on acceptance by the board. The policy must also provide that the board shall consider the resignation and disclose by news release the board’s decision whether to accept that resignation and the reasons for its decision no later than 90 days after the date of the resignation.”

It should be noted that in order to avoid conflict with applicable corporate or securities law requirements, issuers will be able to adopt a non-binding majority voting policy (also called a “holdover rule”) in satisfaction of the amendments. Under such a policy, directors who receive a majority of votes abstained are still elected but resign at a later date so as to provide the board of directors with time to reconstitute and reorganize itself.

Rationale
The TSX asserts that the amendments will improve corporate governance standards by increasing the accountability of directors, enhancing dialogue between issuers, shareholders and stakeholders as well as improving transparency. Glass, Lewis & Co. and Institutional Shareholder Services, two important proxy advisory firms operating in Canada, have indicated that they generally support proposals calling for majority voting.

There are also negative aspects to majority voting. For example, more time and money may be spent on director elections through telephone solicitation, second mailings of proxy materials, etc. There is also a risk of “failed” elections (where one or more directors are not seated on the board), which can, however, be mitigated by a non-binding majority voting policy.

Comment Period
Please note that the comment period in respect of these amendments ends on November 5, 2012.

If you are interested in submitting comments, please feel free to contact a member of our National Securities | Corporate Finance Group or address them directly to the TSX following the instructions.

Proposed Amendments to the TSX Company Manual – Majority Voting

Amendments to the TSX Company Manual and Amendments to the TSX Rule Book

Ara Basmadjian, articling student, assisted in the preparation of this article.

On October 11, 2012, the Toronto Stock Exchange (“TSX”) issued a request for comments on proposed amendments (the “Amendments”) to the TSX Company Manual (the “Company Manual”) and the TSX Rule Book (the “TSX Rules”). The Amendments provide clarification to the process of appeal with respect to listing-related decisions. Furthermore, the Amendments offer consistency between the appeal rules under the Company Manual and those under the TSX Rules.

The Amendments, which will become effective upon approval by the Ontario Securities Commission (“OSC”), include the following:

(1) changes to the composition of the appeal panel. An appeal will be heard by at least one and up to three senior TSX executives;

(2) codification of the common practice of submitting written requests for appeals and written submissions;

(3) clarification of the decision making responsibilities that are delegated to listing managers;

(4) clarification of the timeline to appeal delisting decisions; and

(5) revision and clarification of the rules relating to the suspension and termination of participating organizations.

The TSX will publish the Amendments for a 30-day comment period. Written comments are accepted until November 12, 2012.

Amendments to the TSX Company Manual and Amendments to the TSX Rule Book

Canadian Securities Regulators Proceed with Regulatory Framework to Manage Electronic Trading Risks

The Canadian Securities Administrators (“CSA”) recently announced that following consultations with marketplaces, marketplace participants and service vendors, it is proceeding with the implementation of National Instrument 23-103 Electronic Trading and Direct Electronic Access to Market Places (the “Proposed Rule” or “NI 23-103”). The Proposed Rule establishes a regulatory framework for the oversight and management of potential risks associated with electronic trading in Canadian Market places, which, the CSA notes, is consistent with international approaches to regulating electronic trading.

NI 23-103 is designed to address the risks introduced by the speed and automation of electronic trading, and ensure that marketplaces and their participants are actively monitoring and addressing these risks. It will require, among other things, that participants in electronic trading implement and maintain certain controls, policies and procedures.

Subject to ministerial approval the policy will come into effect on March 1, 2013. Further information regarding the Proposed Rule can be found here on the OSC website.

Canadian Securities Regulators Proceed with Regulatory Framework to Manage Electronic Trading Risks

OSC Expands Scope of Exempt Market Review

On June 7, 2012, the Ontario Securities Commission (the “OSC”) announced that it is broadening the scope of its exempt market review as a result of stakeholder feedback. The expanded review will consider whether the OSC should introduce new prospectus exemptions that may assist capital raising for business enterprises while protecting investors.

As discussed in a previous post, on November 10, 2011, the Canadian Securities Administrators published specific consultation questions with respect to its review of the $150,000 minimum amount and the accredited investor prospectus exemptions contained in National Instrument 45-106 – Prospectus and Registration Exemptions. As part of this consultation process, the OSC met with over 300 individuals and several interested stakeholder groups. Some stakeholders suggested that the OSC should consider prospectus exemptions based on a number of factors, such as the financial resources of a purchaser relative to the size of the investment and the availability of disclosure regarding the investment.

In addition to the introduction of new prospectus exemptions, the OSC will continue to assess whether the minimum amount and accredited investor prospectus exemptions are appropriate. The OSC will publish a second consultation note and seek further public feedback to determine whether new prospectus exemptions should be adopted, and if so, under what circumstances.

For more details, please see OSC Staff Notice 45-707.

OSC Expands Scope of Exempt Market Review

Canada’s New Environmental Assessment and Aboriginal Consultation Regime: What Miners Need to Know

 This article was prepared by David Hunter, Nalin Sahni and George McKibbon (McKibbon Wakefield Inc.)

The federal government has proposed a complete overhaul of federal environmental assessment in Canada as part of the federal budget. The repeal and re-enactment of the Canadian Environmental Assessment Act (“CEAA”) and amendments to other federal environmental legislation amounts to the most significant change in federal environmental assessment (“EA”) since the legislation was first created decades ago.

These amendments are clearly aimed at increasing investment in extractive industries by encouraging certainty, reducing regulatory duplication and shortening delays. The implications of these changes are vast and their full impact on the mining industry is not known. This is especially true in Ontario where miners will also have to deal with significant changes in aboriginal consultation under the Mining Act and the Far North Act as well as a new provincial Mining Class Environmental Assessment regime.

This is the second article in our series on the proposed changes to the federal environmental assessment regime and what that means for mining in Ontario. In our first article we provided a general overview of the changes. In this article we will discuss changes related to Aboriginal consultation. Future articles will deal with subjects including public participation, broad changes to the Fisheries Act, and harmonization with provincial environmental assessment processes.

While the proposed amendments to CEAA point to a reduced role for the federal government in assessing the environmental impacts from mines, the same cannot be said for Aboriginal consultation. The new CEAA strongly promotes Aboriginal involvement in the environmental assessment process through increased communication and co-operation and requires that environmental assessments address a range of effects on Aboriginal peoples.

Assessing Impacts on Aboriginal Peoples
CEAA continues to promote communication and cooperation with Aboriginal peoples as one of the enumerated purposes of environmental assessments. However, this purpose is given new force by an expanded list of environmental effects on Aboriginal peoples that must be taken into account.

The current CEAA requires the consideration of the impact of any change on “the current use of lands and resources for traditional purposes by Aboriginal Peoples.”¹  The proposed amendments to CEAA maintain this obligation but s. 5.1 also requires the consideration any effect in Canada on Aboriginal peoples’:

• health and socio-economic conditions;
• physical and cultural heritage; and
• structures of historical, archaeological, paleontological or architectural significance.

While each of these environmental effects is included in the current version of CEAA, assessment of their impact on Aboriginal peoples was not as explicitly required as under the proposed amendments. Community and Aboriginal traditional knowledge can also be taken into account in assessing environmental impacts. Unlike other classes of environmental effects, impacts on Aboriginal peoples are not limited to federal government land or jurisdiction. These broadly defined categories appear to apply to environmental effects throughout Canada and their precise definition will likely be the subject of litigation.

Interaction with Ontario Statutes
While these environmental effects on Aboriginal peoples must now be taken into account, a bigger question is how these requirements will interact with the new Ontario Aboriginal consultation regime. The Ministry of Northern Development and Mines is in the process of finalizing new regulations under the Mining Act that would require Aboriginal consultation for mining exploration and prospecting. The Far North Act also prohibits mining development in Ontario’s far north until community-based land use plans are developed. The content of many of these land use plans and whether they would satisfy some or all of the environmental assessment and Aboriginal consultation requirements under the new CEAA remains an open question.

Coordination between the federal and provincial governments is essential for the development of Mining in Ontario. At a minimum, this coordination (or harmonization) should include: the sharing and acceptance of information between federal and provincial authorities; allowing federal and provincial regulatory processes to run concurrently; and timely review by governments at both levels. The FMC Mining Group will prepare commentary entirely devoted to how the proposed amendments to CEAA interact with the new requirements in Ontario.

¹  Canadian Environmental Assessment Act, S.C. 1992, c.37 at s.2(1).

Canada’s New Environmental Assessment and Aboriginal Consultation Regime: What Miners Need to Know

Changes to the Mineral Tenure Act Regulation

On July 1, 2012, changes to the Mineral Tenure Act Regulation will come into effect in British Columbia.

The good news is that many of the current registration fees will be eliminated including fees for registration of exploration and development work, registration of payment of cash in lieu of work, registration of portable assessment credits, amalgamations, reduction of cell claims and transfer of ownership.

The number of cells per claim that can be selected will be increased from 25 to 100 per acquisition. The fees, however, will increase for registration of mineral claims from $.0.40 per hectare to $1.75 and from $2.00 per hectare to $5.00 per hectare for placer claims.

In addition, the new assessment requirements will increase from the present $4.00 per hectare in each of the first three years and $8.00 per hectare thereafter to $5.00 per hectare for years one and two, $10.00 per hectare for years three and four, $15.00 per hectare for years five and six and $28.00 per hectare for each subsequent year.

The assessment work for placer claims will increase from $10.00 per hectare to $20.00 per hectare per year.

The result is that new assessment work being filed on claims will create, in effect, new anniversary dates such that new assessment filings will commence with the new process starting with the first year in which the new assessment would apply. As an example, if a claim is good until 2015 and new assessment work is filed in 2012, the assessment work for 2016 and 2017 would be $5.00 per hectare commencing in 2016.

Payments by cash in lieu will double for each of the time periods and the new minimum time frame for filing cash in lieu will be six months rather than the current one day.

Mineral lease rentals will also increase from $10.00 per hectare to $20.00 per hectare and placer lease rentals will increase from $5.00 per hectare to $20.00 per hectare.

It will also be possible to subdivide claims consisting in two or more cells. Any assessment work on such claims would be divided among the number of cells.

Changes to the Mineral Tenure Act Regulation

IIROC requests comments on marketplace thresholds

On May 10, 2012, the Investment Industry Regulatory Organization of Canada (IIROC) released a request for comments on approaches to the establishment and operation of price and volume thresholds or volatility controls by each marketplace in Canada. IIROC has proposed the following two guiding principles: (i) that marketplace thresholds should operate to generally preclude the execution of orders at prices that would otherwise, on execution, require regulatory intervention by IIROC on the triggering of a single-stock circuit breaker or the application of IIROC’s policies and procedures for the variation and cancellation of trades; and (ii) that the volatility control mechanism used by a marketplace should have the least amount of impact on the market-wide operation of the price discovery and access to tradable liquidity.

The release is the first step in the public consultation process which may lead to IIROC making a formal proposal on the establishment of price and volume thresholds to be adopted by marketplaces. While the release discusses existing marketplace controls, IIROC specifically issued guidance or request for comments with respect to single-stock circuit breakers, regulatory intervention for the cancellation or variation of trades and market-wide circuit breakers. IIROC notes, however, that currently none of these mechanisms are triggered by the volume of an order, but instead are based on price impact.

Comments are being accepted until August 8, 2012.

IIROC requests comments on marketplace thresholds

Canada’s New Environmental Assessment Regime: What Miners Need to Know

This article was written by David Hunter, Nalin Sahni and George McKibbon (McKibbon Wakefield Inc.).

As part of the federal budget, the government has proposed a complete overhaul of federal environmental assessment in Canada. The repeal and re-enactment of the Canadian Environmental Assessment Act (“CEAA”) and amendments to other federal environmental legislation amounts to the most significant change in federal environmental assessment (“EA”) since the legislation was first created decades ago.

These amendments are clearly aimed increasing investment in extractive industries by encouraging certainty, reducing regulatory duplication and shortening delays. The implications of these changes are vast and their full impact on the mining industry, particularly in Ontario, will not be known for years to come.

Over the next few weeks, the FMC Mining Group will analyze and comment on the proposed amendments and their impact on environmental assessments related to mining in Ontario. These commentaries will of course take into consideration the recent changes to Ontario’s Mining Act, Far North Act and Aboriginal consultation requirements.

Though complex, the amendments will have three major impacts:

  1. Federal EAs will be more limited in scope and will apply to fewer projects.
  2. More discretion for the Minister of the Environment and Cabinet in the EA process.
  3. Huge transfer of EA responsibilities to the provinces.

In this first article, we provide a general overview of the proposed amendments relevant to miners. Future articles, will discuss particular subjects in detail including public participation, Aboriginal consultation, broad changes to the Fisheries Act, and harmonization with provincial environmental assessment processes.

Projects Requiring an Environmental Assessment

The former list of federal actions that trigger a formal environmental assessment (usually a permit) has been eliminated. EAs are only required if the project is designated by regulation. This change should make it much clearer which projects require an environmental assessment. However, this may also be a basis of future risk since any subsequent government could amend the list of projects requiring an EA without seeking Parliamentary approval.

Activities that are “incidental” to designated projects (possibly road access, transmission lines, air strips, etc.) must also be covered by the EA. Since what is “incidental” to a project is not defined by CEAA, this may become the subject of much debate in the future.

Who Conducts the Environmental Assessment?

If mining projects are included in the list of projects designated as requiring a federal EA, conducting the EA will be the responsibility of the Canadian Environmental Assessment Agency or a review panel established by the Minister of the Environment (the “Minister”). The exception here would be uranium mining projects. The Canadian Nuclear Safety Commission will continue to have lead responsibility for environmental assessment of uranium mines.

Types of Environmental Assessments and Timelines

The CEAA amendments will eliminate the concept of comprehensive study reports. There will now be only two levels of federal environmental assessment – “standard EA’s” (similar to current screening level studies) and EA’s performed by review panels. Standard EAs must be completed within 365 days, and review panels must complete their assessment within 24 months of receiving a complete environmental impact report from the proponent. Note that these times lines are not fixed but can be extended up to 3 months at the discretion of the Minister or indefinitely by Cabinet.

Public participation in a review panel hearing will be limited to those “directly affected” or who have relevant expertise. Non-governmental organizations seeking to intervene in EAs may find it difficult to obtain standing to participate in review panel proceedings. This could substantially shorten EA timelines.

Harmonization with Provincial Environmental Assessments

The new CEAA is trying to move towards a “one project, one review” system. The federal EA process for standard EAs can be replaced by a provincial EA if the Minister is of the opinion that the provincial environmental assessment act would be an “appropriate substitute” and the province requests the substitution. Panel reviews cannot be substituted by a provincial process but the new CEAA continues to allow for a joint federal-provincial panel review.

The provincial EA process does not have to match the rigor of the federal assessment though, at a minimum, the same factors must be considered. The Minister can also approve the substitution of a provincial EA after a provincial EA has been completed. It would appear that all current federal-provincial harmonization agreements will have to be rewritten from scratch. Given that these agreements have typically taken years to negotiate, achieving a true a “one project, one review” system may take a considerable period of time. Eventually, however, these changes could remove unnecessary duplication in EAs.

Scope of Environmental Assessments

The purpose of CEAA has been significantly altered. Formerly, the purpose was to ensure that projects did not have significant adverse environmental effects that could not be justified. This purpose has been reduced such that projects should not have significant adverse environmental effects only upon the components of the environment within federal jurisdiction. This could generate debate and uncertainty in the process as to the types of effects covered by federal EAs.

Further, only enumerated environmental effects need to be taken into account. Cabinet alone can add or remove a component of the natural environmental that must be assessed. Coupled with the changes to the Fisheries Act to focus on the protection of commercial, recreational and Aboriginal fisheries, this means that many mining projects may no longer require federal EAs and may be primarily governed by provincial EA processes. The definition of what constitutes a commercial, recreation or Aboriginal fishery should also be expected to be the subject of future debate.

While the scope and purpose of federal assessments has generally been narrowed, the assessment of environmental effects on Aboriginal peoples has been given increased focus. These amendments may be especially significant when combined with the proposed amendments to Ontario’s Mining Act regulations and the new requirements under the Far North Act. FMC will prepare a commentary devoted entirely to this subject.

Canada’s New Environmental Assessment Regime: What Miners Need to Know

Modernizing the Regulatory System for Project Reviews

Since 2006, the Government has been working to streamline the review process for major economic projects so that projects proceed in a timely fashion while protecting the environment. For example, in 2010 the Government amended the Canadian Environmental Assessment Act to allow assessments to start sooner and reduce duplication, and created participant funding programs to ensure meaningful public engagement in the review process.

These steps have made a difference, but more needs to be done. Currently, companies undertaking major economic projects must navigate a complex maze of regulatory requirements and processes. Approval processes can be long and unpredictable. Delays and red tape often plague projects with few environmental risks. Under the current system, thousands of smaller projects with little or no risk to the environment are caught up in the federal environmental review process. The types of small projects that can be needlessly subjected to lengthy reviews include construction of a new pumping house for the expansion of a maple syrup plant, and the replacement of an existing culvert under a causeway. By forcing these thousands of low-risk projects to go through the review process, the current system draws resources away from projects that have the greatest impact on the environment. This approach is not economically sound or environmentally beneficial.

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Modernizing the Regulatory System for Project Reviews

TSX Venture Exchange adopts policy amendments

Effective February 29, 2012, the TSX Venture Exchange (“TSXV”) has amended Policies 1.1 and 3.2 for the purposes of addressing certain inconsistencies with applicable securities laws and enhancing the clarity of existing policy requirements.

Of particular interest are the changes to the definition of “Exchange Hold Period” to more properly reflect the circumstances in which a TSXV hold period and the corresponding TSXV legend are applicable to a security. The amendments to Policy 3.2 also clarify that if the securities are issued into a direct registration or book-entry system (such as CDS) or the purchaser of the securities does not otherwise receive a physical certificate representing the securities, the Issuer must ensure that the purchaser receives a written notice containing the applicable TSXV legend. The amendments also clarify the applicable “Exchange Hold Period” in respect of securities which are convertible, exercisable or exchangeable into shares listed on the TSXV.

TSX Venture Exchange adopts policy amendments