Wednesday 19th December 2018

Resource Clips


Posts tagged ‘gold’

Mixed messages

December 14th, 2018

Perspectives differ on 2018 small cap performance

by Greg Klein

Perspectives differ on 2018 small cap performance

Not everyone agrees, but some sources represent 2018 as a comeback year for mining and exploration.
(Photo: PwC Junior Mine 2018)

 

It was the best of times, the worst of times or some middling but still promising times—you’d have the dickens of a time trying to reconcile these conflicting viewpoints. Such was the state of junior miners this past year, when varying fortunes eluded generalization. Just how the sector performed depended on who did the talking.

Outright despair came from Peter Clausi last October, as the CEO of GTA Resources and Mining TSXV:GTA discussed the company’s proposal to sell its assets amid a change of business:

A look at some different perspectives on 2018 small cap performance

In this difficult Canadian mining environment, it was almost impossible for the board not to come to this decision. The lackluster commodity markets, the depressed public market for junior explorers and the severe challenge of raising further capital all contributed to this decision. We believe GTA’s shareholders will be better served in a growth industry other than junior exploration.

Not every CEO would turn a press release into such a cri de coeur, but stats show GTA’s hardly alone. Evaluating 378 mining and other companies with market caps ranging from $4 million to $588 million, the S&P/TSX Venture Composite Index shows a nearly 35% drop in valuations since the relatively heady days of last January.

Yet an entirely different perspective came from PricewaterhouseCoopers in December, with the 2018 edition of its annual Junior Mine report. Unlike the S&P/TSXV Composite, this data focuses only on miners and comes from 12 months ending June 30. Furthermore it examines the Venture’s top 100 miners by market cap, a selection that could tilt results in favour of success.

And a degree of success PwC found, with the aggregate valuation growing to $12.9 billion, a 6% increase over the previous year, the third consecutive annual increase and the best performance “since the heydays of 2011.”

Not just the top 100, but Venture miners and explorers overall increased their total market caps by 5% to $21.1 billion, PwC reported.

Even so they were outperformed by cannabis, fintech and cryptocurrencies. “As a result, mining companies’ share of the TSXV’s total value declined to 43.8%, down from 47.4% a year earlier. Nevertheless, mining remains by far the dominant sector on the exchange, with life sciences (13%), finance (11%) and technology (9%) representing the next-largest industries by valuation.”

Investors favoured top 100 companies moving from development into production, while royalty streaming and the energy metals lithium, cobalt and nickel took on greater prominence at gold’s expense.

Financing for Venture miners overall rose 6.5% to $2.7 billion, almost $2.2 billion of that from equities that mostly went to explorers and development-stage companies, PwC stated. Companies in the production stage increasingly turned to debt financing, which rose 65.9% over the previous 12-month period.

Fifty-one of the top 100 raised more than $10 million apiece, while 10 companies each raked in over $50 million.

Apart from market caps and financings, spending provides another guide to the sector’s health. Some upbeat numbers came in October from Natural Resources Canada, following a survey of companies’ 2018 commitments for Canadian projects. If all went to plan, exploration expenditures for the year came to $2.36 billion, an 8% increase over 2017 and the highest amount since 2012. Juniors, struggling or not, accounted for over 45% of the total commitments.

With coffers at their fullest in seven years, equity and debt financings on the rise and commodity prices relatively stable, the industry has entered a long-awaited period of opportunity.—The PwC Junior Mine 2018 report

The exploration category included engineering, economic, feasibility and environmental studies, as well as general expenses. All that’s part of the much larger category of total Canadian mineral resource development investments, which totalled $11.86 billion this year, compared with $10.61 billion in 2017, NRCan found.

In fact Canada leads an encouraging global trend among juniors, according to S&P Global Market Intelligence. Using different methodology, the group found budgets for nonferrous exploration leaping by 19% worldwide this year to hit $10.1 billion. Juniors showed the highest budget jump at 35%, their first increase since 2012.

Canadian companies lead the world in nonferrous exploration, boasting a 31% budget increase this year, leaving Australia and the U.S. in second and third place, S&P added.

Of course all that can sound like smiley-faced consolation to companies struggling with jurisdictional difficulties, commodity performance, investor negativity or other challenges. But in an industry not always shy about basking in reflected glory, the continuing success of some companies must offer reassurance to the sector as a whole.

Ximen Mining announces progress as GGX Gold wraps up fall drilling on B.C. option

December 11th, 2018

by Greg Klein | December 11, 2018

Ximen Mining announces progress as GGX Gold wraps up fall drilling on B.C. option

Core shows a gold-bearing quartz vein from previously released hole COD18-45.
(Photo: GGX Gold)

 

While the company’s focus remains the Brett project, Ximen Mining TSXV:XIM sees continued encouragement from another southern British Columbia gold property. On December 11 the company updated progress on Gold Drop, under option to GGX Gold TSXV:GGX and located in the historic Greenwood mining camp about 500 kilometres east of Vancouver. Assays are now pending for an 11-hole autumn campaign conducted by GGX.

Taking place within 25 metres of two holes sunk earlier this year, the program targeted the southern extension of the property’s COD vein. Assays for the two holes released in August showed:

COD18-45

  • 50.15 g/t gold and 375 g/t silver over 2.05 metres, starting at 27.85 metres in downhole depth
  • (including 1.34 g/t gold, 13.35 g/t silver and 9.31 g/t tellurium over 0.43 metres)
  • (and including 28.1 g/t gold, 134 g/t silver and 85.5 g/t tellurium over 0.83 metres)
  • (and including 167.5 g/t gold, 1,370 g/t silver and >500 g/t tellurium over 0.46 metres)
  • (and including 5.69 g/t gold, 65.5 g/t silver and 58.2 g/t tellurium over 0.33 metres)
Ximen Mining announces progress as GGX Gold wraps up fall drilling on B.C. option

COD18-46 showed further indication of the
gold-bearing quartz vein. (Photo: GGX Gold)

COD18-46

  • 54.9 g/t gold and 379 g/t silver over 1.47 metres, starting at 29.57 metres
  • (including 5.57 g/t gold, 22.2 g/t silver and 16.85 g/t tellurium over 0.29 metres)
  • (and including 34.8 g/t gold, 239 g/t silver and 191 g/t tellurium over 0.3 metres)
  • (and including 223 g/t gold, 1,535 g/t silver and >500 g/t tellurium over 0.3 metres)
  • (and including 11.4 g/t gold, 127 g/t silver and 95.1 g/t tellurium over 0.14 metres)

True widths were unavailable.

Results announced in November from the as-yet undrilled COD North area included a grab sample grading 15.45 g/t gold, 159 g/t silver and 114.5 g/t tellurium. A chip sample showed 21.7 g/t gold, 216 g/t silver and 149 g/t tellurium over 0.4 metres. COD North has been permitted for a maiden drill program.

Ximen has received two of four annual payments on the option signed in 2016, which totals $400,000 cash, $600,000 in shares, another million shares and $1 million in spending over four years. Ximen retains a 2.5% NSR. Should GGX complete the 100% option, Ximen could form a JV by paying GGX 30% of its work expenses to that date.

In southern B.C.’s Okanagan region, Ximen has underground drilling and remedial work planned for the company’s flagship Brett project next spring. Last month the company stated that a gold recovery batch test supported an historic report of 4 g/t to 5 g/t gold from material stockpiled when a mine portal was built during the 1990s. The company plans additional metallurgical tests on the stockpiled material.

In southwestern B.C., Ximen holds the Treasure Mountain project proximal to Nicola Mining’s (TSXV:NIM) Treasure Mountain silver deposit, the site of short-lived underground mining operations in 2008 and 2013.

Earlier this month Ximen offered a private placement of $540,000.

Zimtu Capital pursues B.C. copper-cobalt with new company

December 10th, 2018

by Greg Klein | December 10, 2018

As recent sampling brings new interest to an historic property south of the Yukon border, Zimtu Capital TSXV:ZC has created Core Assets Corp to take the Blue copper-cobalt project further.

Zimtu Capital pursues B.C. copper-cobalt with new company

All areas sampled during the autumn program
returned very promising assays, Zimtu reported.

An autumn field program found rock samples up to 1.56 g/t gold, 43.3 g/t silver and 8.46% copper from the French Adit area of the 1,130-hectare property, as well as up to 1.57 g/t gold, 46.5 g/t silver and 1.86% copper from the North Adit area. The adits date to previous exploration. The property has never been mined.

Referring to a 1950s academic study, Zimtu stated that “sampling the north end of the property using an undescribed sampling method reported grades of 0.6% cobalt over 3 feet. Copper was found at 3.5% and silver at 1 ounce/tonne. Some samples were described to have an erythrite coating on the surface and have cobaltite scattered throughout the magnetite.”

A 1973 drill hole sunk about 15 metres south of the French Adit brought historic, non-43-101 results of 0.27% copper over 175 metres, including 1.2% copper over 27 metres. The assays didn’t test for cobalt.

Next plans include geophysics and drilling on the winter-accessible property, says Core Assets director Scott Rose. The Blue project can be reached by snowmobile, by boat in summer, or by an 11-minute helicopter ride from the town of Atlin, connected by highway to Whitehorse, Yukon.

Blue will cost the privately held Core $100,000 and three million shares payable to Zimtu over two years. Zimtu retains a 2% NSR, half of which may be bought back for $1 million.

In addition to Rose, Core’s experienced board will consist of MGX Minerals CSE:XMG president/CEO Jared Lazerson and geologist Nicholas Rodway, with Zimtu president Dave Hodge also holding the president’s position at Core.

Goldcorp credits artificial intelligence with forecasting first-hole results

November 27th, 2018

by Greg Klein | November 27, 2018

Assays are pending but IBM’s Watson AI technology has already helped human geologists choose drill locations “with the first target yielding the predicted mineralization at the expected depth,” Goldcorp TSX:G announced. Drilling continues at other AI-suggested spots on the northwestern Ontario Red Lake project.

Goldcorp credits AI with forecasting first-hole results

Goldcorp hopes a joint AI/human program
will extend Red Lake’s mine life. (Photo: Goldcorp)

Having collaborated with IBM since 2017, the miner said Watson scrutinized previous info using spatial analytics, machine learning and predictive models “to develop geological extrapolations in a fraction of the time and cost of traditional methods.” The project’s data bank goes back 80 years.

“This is the first time this solution has been ever used, which makes this project all the more significant,” stated IBM Canada partner Mark Fawcett.

Earlier this month Goldcorp’s use of AI won an Ingenious Award from the Information Technology Association of Canada in recognition of “excellence and innovation in the use of information and communications technology.” At the time Goldcorp noted that geologists “could spend up to 80% of their analytical time searching for and preparing data, and only 20% interpreting and analyzing the data. Watson’s big advantage over conventional computer systems is its ability to ingest and process massive amounts of data faster and more accurately than conventional systems.”

Having given up 29 million gold ounces since 1949, Red Lake currently hosts proven and probable reserves totalling 2.17 million ounces. Two underground operations on the complex are expected to produce 235,000 ounces this year. But the company emphasized Watson’s potential for finding new areas of mineralization on the 42,000-hectare property.

Along with other sponsors, Goldcorp presents the third annual #DisruptMining award on March 3 at PDAC. The winning proposal brings its technological innovator a US$1-million investment or contract. Last year’s winner was Acoustic Zoom, a geophysics company specializing in innovative seismic work. Two companies shared the previous year’s prize, with Cementation Canada getting the $650,000 portion for a process of transporting ore to surface using a pump-driven pipeline loop. KORE Geosystems won the remainder for its proposal to apply AI to geoscientific data.

#DisruptMining was preceded by the Online Gold Rush Challenge hosted by Integra Gold (since taken over by Eldorado Gold TSX:ELD) at PDAC in 2016. SGS Geostat won $500,000 for its innovative analysis of 75 years of data from Integra’s Sigma/Lamaque project in Quebec’s Abitibi region.

Goldcorp president/CEO David Garofalo has told PDAC, “In the future, every mining company will be a technology company.”

Minerals and metals become “personalities” in Canadian mining campaign

November 21st, 2018

by Greg Klein | November 21, 2018

 

It’s all part of a plan to increase public awareness, foster innovation, encourage participation and secure Canada as a global mining leader. They’re serious goals but one of the strategies to achieve them sounds like fun—Natural Resources Canada intends to promote mining knowledge with an entertaining look at one metal or mineral each week. Gold was first, nickel’s about to come and others will follow on Twitter @NRCan and on the Canadian Minerals and Metals Plan website.

The site presents videos, podcasts, infographics, articles and charts about specific mining products, their uses, markets and prices, most of it intended for a general audience. Visitors learn more about how much our lives rely on mining products, how they support our economy, about exploration and mining practices, and about community and native involvement.

The plan came into being last year after mining ministers across the country called for a program to solidify Canada’s place in the mining world. Considering the views of industry, natives and the public, the plan “will include a series of specific and co-ordinated actions that can be pursued by federal, provincial and territorial governments to reach stated goals.” The agenda calls for a formal plan to be released next year.

See the Canadian Minerals and Metals Plan website.

 

Drill-ready money

November 19th, 2018

Canada’s hitting a six-year high in exploration spending

by Greg Klein

Canada’s hitting a six-year high in exploration spending

Osisko Mining’s (TSX:OSK) Windfall project offers one reason why
Quebec leads Canada and gold leads metals for exploration spending.
(Photo: Osisko Mining)

 

Blockchain might offer intrigue and cannabis promises a buzz, but mineral exploration still attracts growing interest. A healthy upswing this year will bring Canadian projects a nearly 8% spending increase to $2.36 billion, the industry’s highest amount since 2012. According to recently released data, that’s part of an international trend that puts Canada at the top of a worldwide resurgence.

The $2.36 billion allotted for Canadian exploration and deposit appraisal forms just a small part of the year’s total mineral resource development investments, which see $11.86 billion committed to this country, up from $10.61 billion in 2017.

Those numbers come from Natural Resources Canada, which surveyed companies between April and September on their spending intentions within the country for 2018. The $2.36-billion figure includes engineering, economic and feasibility studies, along with environmental work and general expenses.

Canada’s hitting a six-year high in exploration spending

Trial extraction for Pure Gold Mining’s (TSXV:PGM)
Madsen feasibility studies encourages interest in
Ontario’s Red Lake region. (Photo: Pure Gold Mining)

Of that number, Quebec edges out Ontario for first place with $623.1 million in spending this year, 26.4% of Canada’s total. Ontario’s share comes to $567.5 million or 24%. Last year’s totals came to $573.9 million for Quebec and $539.7 million for its western neighbour. Prior to that, however, Ontario held a comfortable lead year after year.

Third-place British Columbia gets $335.5 million or 14.2% of Canada’s total this year, an increase from $302.6 million in 2017.

On a per-capita basis, Yukon’s enjoying an exceptional year with an expected $249.4 million or 10.6% of Canada’s total. That’s the territory’s second substantial increase in a row, following $168.7 million the previous year.

Saskatchewan dips this year to $187.2 million (7.9%) from $191.2 million in 2017. But the Fraser Institute’s last survey of mining jurisdictions placed the province first in Canada and second worldwide.

Nunavut drops too, for the third consecutive time, to $143.9 million (6.1%), compared with $177 million in 2017. The Northwest Territories’ forecast declines to $86.2 million (3.7%) this year after $91.2 million last year.

Canada’s hitting a six-year high in exploration spending

Among companies leading Yukon’s exceptional performance
is White Gold TSXV:WGO, with substantial backing from
Agnico Eagle Mines TSX:AEM and Kinross Gold TSX:K.
(Photo: White Gold)

Especially troubling when contrasted with Yukon’s performance, data for the other territories prompted NWT & Nunavut Chamber of Mines president Gary Vivian to call on federal, territorial and native governments and boards to help the industry “by creating certainty around land access, by reducing unnecessary complexity and by addressing the higher costs they face working in the North. Sustaining and growing future mining benefits depend on it.”

The pursuit of precious metals accounts for $1.5 billion in spending, nearly 64% of Canadian exploration. Ontario gets almost 31% of the precious metals attention, with 27% going to Quebec.

Base metals, mostly in Quebec, B.C. and Ontario, get 15.5% of the year’s total. Uranium gets 5%, almost entirely in Saskatchewan. Diamonds get nearly 4%, most of it going to the NWT and Saskatchewan. But nearly 11% of this year’s total goes to a category vaguely attributed to other metals, along with coal and additional non-metals.

Getting back to this year’s exploration total ($2.36 billion, remember?), senior companies commit themselves to nearly 55%, compared with nearly 51% last year. But the juniors’ share remains proportionately much larger than the pre-2017 years.

Additional encouragement—and on an international level—comes from S&P Global Market Intelligence. Using different methodology to produce different results, the Metals and Mining Research team found worldwide budgets for nonferrous exploration jumping 19% this year to $10.1 billion.

Juniors have been reaping the biggest budget gains at 35%. Over 1,651 functional exploration companies represent an 8% improvement over last year and the first such increase since 2012. But that’s “still about 900 companies less than in 2012, representing a one-third culling of active explorers over the past five years.”

The most dramatic spending increase hit cobalt and lithium, this year undergoing an 82% leap in exploration spending. That’s part of a 500% climb since 2015, SPGMI says.

Canada’s hitting a six-year high in exploration spending

Nemaska Lithium’s Whabouchi project in Quebec
contributes to the enthusiasm for energy metals.
(Photo: Nemaska Lithium)

Even so, precious and base metals retained their prominence as gold continues “to benefit the most from the industry recovery.” The global strive for yellow metal will claim $4.86 billion this year, up from $4.05 billion in 2017. Base metals spending will grow by $600 million to $3.04 billion. “Copper remained by far the most attractive of the base metals, although zinc allocations have increased the most, rising 37% in 2018, the report states. “Budgets are up for all targets except uranium.”

SPGMI finds Canada keeping its global top spot for nonferrous exploration with a 31% year-on-year budget increase. Second-place Australia achieved a 23% rise. The U.S. total places third, although with a 34% increase over the country’s 2017 performance.

In each of the top three countries, over 55% of the budgets focused on gold.

“Improved metals prices and margins since 2016 have encouraged producers to expand their organic efforts the past two years,” commented SPGMI’s Mark Ferguson. “Over the same period, equity market support for the junior explorers has improved, leading to an uptick in the number and size of completed financings. This allowed the group to increase exploration budgets by 35% in 2018.”

Visual Capitalist: How much copper is in an electric vehicle?

November 13th, 2018

by Nicholas LePan | posted with permission of Visual Capitalist | November 13, 2018

Visual Capitalist How much copper is in an electric vehicle?

 

Copper’s special relationship with electricity has been apparent since ship designers first regularly began installing copper to protect the masts of wooden ships from lightning in the early 19th century.

Today, of course, you might be more used to seeing copper’s electrical applications through the use of power lines, telephone wires and wiring in practically every major home appliance you own.

Millions of tons get used for these applications every year, but it is still early days for copper’s use in electrification. That’s because copper will continue to be a critical component of the green energy revolution, thanks to the rising adoption of battery-powered vehicles.

Why copper?

This visualization comes to us from Canadian Platinum TSXV:CPC and it focuses on showing how much copper is in an electric vehicle, along with the properties that make it the ideal choice for an EV-powered future.

Here is why copper is a crucial component to vehicle manufacturers:

Cost:
Copper costs roughly $0.20 per ounce, compared with silver ($15 an ounce) and gold ($1,200 an ounce), making it by far the cheapest option for electrical wire.

Conductivity:
Copper is nearly as conductive as silver—the most conductive metal—but comes at a fraction of the cost.

Ductility:
Copper can easily be shaped into wire, which is important for most electrical applications.

It’s also important to note that temperature does not affect copper’s conductivity, which makes the metal ideal for automobiles in all climates.

Copper in gas versus electric vehicles

The UBS Evidence Lab tore apart a traditional gas-powered vehicle as well as an EV to compare the different quantities of raw materials used.

What they found was crucial: There is 80% more copper in a Chevrolet Bolt, in comparison with a similar-sized Volkswagen Golf.

The major reason for this is that at the heart of every EV is an electric motor, which is built with copper, steel and permanent magnets (rare earths). Electric motors tend to be much simpler than gas-powered engines, which have hundreds of moving parts.

Incredibly, in an electric motor, there can be more than a mile of copper wiring inside the stator.

The more electric, the more copper

According to Copper.org, along the scale from gas-powered cars to fully electrical vehicles, copper use increases dramatically.

Conventional gas-powered cars contain 18 to 49 pounds of copper while a battery-powered EV contains 183 pounds. Meanwhile, for a fully electrical bus, a whopping 814 pounds of copper is needed.

With the rapidly increasing adoption of electric vehicles, copper will be an essential material for the coming electrification of all forms of ground transport.

Copper is at the heart of the electric vehicle and the world will need more. By 2027, copper demand stemming from EVs is expected to increase by 1.7 million tonnes, which is a number just shy of China’s entire copper production in 2017.

Posted with permission of Visual Capitalist.

Can fake diamonds prop up this bra’s padded price?

November 12th, 2018

by Greg Klein | November 12, 2018

They’re not real. So will all that hype about the diamond-studded Victoria’s Secret Fantasy Bra simply result in a big flop? The question arises after an expert’s appraisal determined the garment’s price has no foundation.

The lingerie purveyor’s been promoting its fantasy bra by emphasizing a $1-million price tag supposedly justified by over 2,100 diamonds totalling 71 carats strung together with silver. But the stones are Swarovski Created Diamonds, a prominent name in the lab-grown diamond world but lab-grown diamonds nonetheless. That has at least one gemologist challenging Victoria Secret’s price.

Can fake diamonds prop up this bra’s padded price?

Prior to its runway debut, model Elsa Hosk
shows the $1-million bra on the Today Show.

“The overvaluation of the bra is very clear because of what we know about the price of synthetic diamonds,” Grant Mobley told Page Six Style. “Currently selling for $800 per carat, the reported 71 carats included in the bra would only be worth $56,800. When you add the price of the stones to the cost of workmanship and the price of the metal, the total value would still be far below six figures.”

Bolstering the case for genuine gems, he added: “Only natural diamonds from the earth would put the value of the bra into the millions of dollars, as in past shows.”

Page Six had previously noted that Victoria’s Secret priced its 2017 fantasy bra, Champagne Nights, at $2 million. That one enhanced its contents with 600 carats of genuine diamonds, along with yellow sapphires and blue topaz set in 18-karat gold.

Even more pricey apparel comes to consumers from Passion Jewellers Dubai. Costing $17 million, a pair of high heels made of leather, silk, gold and 236 diamonds that include two 15-carat flawless D stones constitute “the world’s most expensive shoes,” Barron’s reports.

Now on display in EU size 36 at Dubai’s not-terribly-frugal Burj Al Arab Hotel, the Passion Diamond Shoes will also be available in custom sizes.

The previous record for fantasy footwear was $15.1 million, paid a year ago for a custom-designed pair fashioned from diamonds, gold-painted leather and 18-karat gold thread, Barron’s added.

Read more about lab-grown diamonds.

All you need to know about gold: The WGC version comes online

November 8th, 2018

by Greg Klein | November 8, 2018

Yellow metal’s allure might have its irrational side but the people who produce the stuff evidently want well-informed consumers. To that end, the World Gold Council has unveiled Goldhub, a new website promising “the definitive source of data and insight needed to make informed decisions on investing in gold.”

The WGC credits the site with reliable information and expert analysis from transparent sources. Among the features are charts, reports, forecasts and interactive tools. Key categories include data, research, the portfolio simulator and gold as an asset class.

The WGC says its staff follow a comprehensive process to ensure the most accurate info possible. Outsourced data undergoes a vetting procedure. The site presents a note explaining the methodology behind each data series.

Representing 24 gold mining companies, the WGC calls itself the industry’s market development organization, with a mandate “to stimulate and sustain demand for gold, provide industry leadership and be the global authority on the gold market.”

Somewhat different precious metals perspectives can be gleaned from the Gold Anti-Trust Action Committee.

Active participants

November 7th, 2018

A new study finds greater native involvement in resource projects

by Greg Klein

A new study finds greater native involvement in resource projects

Representatives of Nemaska Lithium and Nemaska Cree negotiate the Chinuchi Agreement in 2014.
(Photo: Nemaska Lithium)

 

Trans Mountain—it’s likely been Canada’s biggest and most discouraging resource story this year. The subject of well-publicized protests, the proposed $9.3-billion pipeline extension met federal court rejection on the grounds of inadequate native consultation. But any impression of uniform aboriginal opposition to that project in particular or resource projects in general would be false, a new report emphasizes. In fact native involvement increasingly advances from reaping benefits to taking active part, with corresponding advantages to individuals and communities.

That’s the case for the oil and gas sector, forestry, hydro-electricity and fisheries, with mining one of the prominent examples provided by the Montreal Economic Institute in The First Entrepreneurs – Natural Resource Development and First Nations. “While some First Nations oppose mining and forestry or the building of energy infrastructure, others favour such development and wish to take advantage of the resulting wealth and jobs,” state authors Germain Belzile and Alexandre Moreau. “This cleavage is no different from what is found in non-indigenous cities and villages in Canada, where there is no vision for the future that everyone agrees upon.”

A new study finds greater native involvement in resource projects

Visitors tour a cultural site at the Éléonore mine.
(Photo: Goldcorp)

Mining provides a case in point, and the reason’s not hard to understand. “In 2016, First Nations members working in the mining sector declared a median income twice as high as that of workers in their communities overall, and nearly twice as high as that of non-indigenous people as a whole.”

“Between 2000 and 2017, 455 agreements were signed in this sector, guaranteeing benefits in addition to those stemming from extraction royalties due to rights held by First Nations on their territories.” Those agreements often include native priority in hiring and subcontracting, which helps explain why “6% of indigenous people work in the mining sector, compared to only 4% in other industries.”

Of course the proportion rises dramatically in communities close to mines. MEI notes that Wemindji Cree make up about 25% of Goldcorp’s (TSX:G) Éléonore staff in Quebec’s James Bay region. The native total comes to 225 workers out of a community of 1,600 people. Their collaboration agreement also makes provisions for education, training and business opportunities.

At another Quebec James Bay project, Nemaska Lithium TSX:NMX expects to begin producing concentrate in H2 of next year. Collaboration with the Nemaska Cree began in 2009 and brought about the 2014 Chinuchi Agreement covering training, employment and revenue sharing, among other benefits. The community holds 3.6% of Nemaska stock.

Even stalled projects can benefit communities. Uranium’s price slump forced Cameco TSX:CCO to put its majority-held Millennium project in northern Saskatchewan on hold in 2014. But the 1,600-member English River First Nation still gained $50 million from the project in 2014 and $58 million in 2015.

Or, to take an example not mentioned in the report, natives can also profit from an operating mine that fails to make a profit. In Nunavut, a benefit agreement with Baffinland Iron Mines’ Mary River operation gave the Qikiqtani Inuit Association $11.65 million this year, as well as the better part of $3.7 million that the QIA reaped in leases and fees. In production since 2014, Mary River remains in the red.

Of course some natives still oppose some projects. Last month Star Diamond TSX:DIAM received provincial environmental approval for its Star-Orion South project in southern Saskatchewan’s Fort à la Corne district. That decision followed federal approval in 2014.

Star says the mine would cost $1.41 billion to build and would pay $802 million in royalties as well as $865 million in provincial income tax over a 20-year lifespan. The mine would employ an average 669 people annually for a five-year construction period and 730 people during operation. But continued opposition from the James Smith Cree Nation calls into question whether environmental approval will suffice to allow development.

Similar circumstances played out in reverse for Mary River. Last summer the Nunavut Impact Review Board recommended Ottawa reject Baffinland’s proposed production increase. But support from the QIA and territorial Premier Joe Savikataaq convinced the feds to approve the company’s request. So the veto, if it exists, can work both ways.

James Smith opposition stems largely from Saskatchewan’s lack of revenue-sharing programs, a basic component of benefit agreements in other jurisdictions. “As a government it’s our position that we will not and do not consider resource revenue sharing as a part of any proposal going forward,” enviro minister Dustin Duncan told the Prince Albert newspaper paNOW. He said the province uses mining revenue “to fund programs for the benefit of all Saskatchewan residents and not just one particular group or region.”

The MEI report quotes an estimated $321 million in 2015-to-2016 revenues from natural resources overall for First Nations, a category that doesn’t include Inuit or Metis, and a dollar figure that doesn’t include employment or business income and other benefits.

While Trans Mountain stands out as an especially discouraging process, MEI points out that proponent Kinder Morgan signed benefit agreements with 43 First Nations totalling $400 million. After Ottawa bought the company, “several First Nations showed interest in a potential takeover. For some of them, the possibility of equity stakes was indeed the missing element in the Kinder Morgan offer.”

That might take negotiations well past the stage of benefits and further into active participation. As JP Gladu of the Canadian Council for Aboriginal Business told MEI, “The next big business trend that we are going to see, and that is happening already, is not only that aboriginal businesses are going to be stronger components of the corporate supply chain, but we are also going to see them as stronger proponents of equity positions and actual partners within resource projects.”

 

A new study finds greater native involvement in resource projects

The category of First Nations excludes Inuit and Metis.
(Chart: Montreal Economic Institute. Sources: Statistics Canada,
2016 Census, 98-400-X2016359, March 28, 2018)