On November 1, 2012, new rules under Ontario’s recently modified Mining Act take effect and could have a significant impact on mineral exploration activities in Ontario. Most of the high level changes to the Mining Act were passed in 2009 and were the culmination of several years of consultation by the Ministry of Northern Development and Mines (“MNDM”) with industry stakeholders, environmental groups, private citizens and Aboriginal communities. One of the most controversial changes for the mining industry was the inclusion of a duty to consult affected Aboriginal communities. The long-awaited details of how the Mining Act modernization, including the duty to consult, would work in practice became more clear on October 3, 2012 when the MNDM released the regulations. The regulations are to be fully implemented by April 1, 2013.

Of the new requirements on the resource industry, the most impactful, particularly for junior players, is the requirement to submit exploration plans or apply for exploration permits, both of which include the duty to consult affected Aboriginal communities, prior to any substantive exploration work commencing. These new requirements are in contrast to the previous system, where no permission was required to undertake explorative programs on mining claims, leases or licences. The stated purpose of requiring earlier stage consultation includes the goal of achieving early stage agreement between the mining company and any affected Aboriginal communities with a view to potentially avoiding such later stage challenges as those faced in the ongoing dispute between Solid Gold Resources Corp. and Wahgoshig First Nation.  However, one unintended result of these new consultation requirements could be to cause significant delay in the MNDM’s process for allowing exploration, creating uncertainties and resulting in cost increases for exploration companies who are otherwise ready to start exploration work to preliminarily assess the viability of claims.

Exploration plans and permits, and the duty to consult with Aboriginal communities

Prior to any work commencing, certain prescribed, lower impact exploration activities require the prospector to send a notice of intent to submit an exploration plan to the MNDM and to all affected surface rights owners. Exploration plans must summarize the proposed exploration activity, where it will take place and the timing of the activity.

The following activities require the submission of an exploration plan (but do not require an exploration permit):

  • geophysical surveys requiring a generator;
  • line cutting where the width of the line is 1.5 metres or less;
  • mechanized drilling to obtain rock or mineral samples where the weight of the drill is 150 kilograms or less;
  • mechanized surface stripping where the total combined surface area stripped is less than 100 square metres within a 200-metre radius; and
  • pitting and trenching of rock where the total volume of rock is between 1-3 cubic metres within a 200-metre radius.

The regulations do not set out any requirements for, or restrictions on, less intensive exploration activities that fall below the thresholds set out above.

For those activities which are more intensive than the thresholds set out above, an exploration permit must be approved by the MNDM.

The MNDM encourages prospectors to consult with potentially affected Aboriginal communities prior to submitting an exploration plan or permit application.  Once a notice of submission of exploration plan is received by the MNDM, it will provide to the prospector a list of potentially affected Aboriginal communities. If any advance consultation is undertaken by the prospector, an Aboriginal consultation report may be required to be included with the exploration plan when submitted. It is hoped that early consultation will lead to dialogue with affected parties and assist juniors to identify and address potential issues, allowing prospectors to make a more informed decision on the contents of their exploration plan or permit application.  It may even allow prospectors to make a more informed decision on the overall viability of the project if significant issues do come to the fore early on.

In any event, following receipt of an exploration plan the MNDM will notify and invite comments from affected Aboriginal communities. Affected Aboriginal communities may provide written comments to the MNDM within a 30 day window following receipt of the exploration plan from the MNDM and, in response to any such comments, the MNDM may require the prospector to undertake further consultations with the Aboriginal communities. If no significant issues are raised by affected Aboriginal communities, the prospector can commence the exploration activities set out in the submitted exploration plan at the end of the 30 day period. If, however, significant issues are raised by Aboriginal communities, the prospector may choose to withdraw the plan while further consultation or dispute resolution procedures takes place, or make adjustments to the submitted exploration plan to address the comments. In addition, the regulations provide the MNDM with the discretion to require a prospector who has submitted an exploration plan to instead go through the more onerous and uncertain exploration permit application process (even though the exploration activities to be undertaken are of the lower impact nature), giving the MNDM more control over when, and if, the submitted exploration activities may commence. The regulations indicate that such discretion could be exercised if significant issues are raised by Aboriginal communities in response to a submitted exploration plan.

The regulations governing applications for exploration permits contain similar notification and consultation requirements as set out above for the exploration plan process. In deciding whether to approve an application for an exploration permit, the MNDM will consider comments from Aboriginal communities and various stakeholders and has the power to order further consultations, to temporarily put a pending application on “hold” (with no specified time limit contained in the regulations) or deny a permit altogether. The MNDM will issue a decision on an application for an exploration permit within 50 days of the date the application is circulated to affected Aboriginal communities. No exploration activities can commence until the permit application has been approved. The regulations provide that the MNDM, in its sole discretion, may refer a dispute related to an application for an exploration permit to a third party for dispute resolution, certain costs relating to which will be borne by the MNDM.

Other key features of the new regulations

  •  At any time, upon application by an Aboriginal community, the MNDM may withdraw from prospecting, staking, sale and lease certain identified sites of Aboriginal cultural significance, such as traditional burial grounds or ceremonial sites less than 25 hectares in area, on land where new mineral exploration is being proposed. The new rule does not apply to land previously staked or leased; however, a restriction on the use of surface rights, pursuant to section 51 of Ontario’s Mining Act, could be imposed on land, already leased or staked, where an Aboriginal community seeks to recognize a site of cultural significance;
  • Required completion by prospectors of a short online education program, called the Mining Act Awareness Program, prior to applying for or renewing a prospector’s licence. By November 1, 2014, all individuals holding a prospector’s licence, including a lifetime licence, will be required to successfully complete the Mining Act Awareness Program;
  • It is now mandatory to undertake Aboriginal consultation prior to submitting a certified closure plan or certified closure plan amendment and, once a closure plan is submitted, pursuant to direction from the Director of Mine Rehabilitation;
  • Expenses associated with Aboriginal consultation and GPS claim data now qualify for assessment credit and cash payments are allowed in lieu of assessment work in certain circumstances; and
  • New early exploration requirements to help minimize the impact on the environment, including requirements to keep roadways clear and removal of all material that was brought onto the land for early exploration activity.

 What will these Mining Act changes mean for exploration companies?

The new rules require early exploration companies to complete significant activities and negotiations before beginning substantive, physical exploration. While it has yet to be seen how onerous some of these requirements will be in practice, one thing is clear: the new rules mean significant time and money will be spent away from actual mineral exploration and, instead, on participating in consultations and preparing notices, reports, plans and permit applications among other compliance requirements. Also, it remains to be seen whether the perceived benefit of having clear processes surrounding the involvement of surface rights owners and Aboriginal communities in early-stage mineral exploration materializes. While part of the intent of the new regulations was to clarify requirements surrounding Aboriginal consultation upfront and thereby to decrease the likelihood of significant related issues arising during the later stages of exploration projects, the regulations create potential uncertainty in the upfront consultation and permitting process, particularly with regards to timing and discretion exercised by the MNDM, and could result in significant delays and costs to exploration projects. Both exploration plans and permits will be mandatory as of April 1, 2013. Exploration plans are effective for a period of two years and exploration permits valid for a period of three years.

Ultimately, the merits of the early consultation requirement can only be realized if the MNDM takes a balanced and practical approach which rewards good faith consultation and removes leverage from those who do otherwise.