A long-simmering legal case revolving around the duty to consult in Ontario’s Mining Act has been resolved, with plaintiff Northern Superior Resources having its action against the province of Ontario in Ontario’s Superior Court of Justice dismissed.
If you’ll recall, Northern Superior Resources is a Sudbury-based junior mineral exploration company that has spent the last couple of decades looking for gold in Ontario and Quebec.
The claims at the heart of the court case — named Rapson Bay, Meston Lake and Thorne Lake — were staked by Northern Superior between 2005 and 2007 in the Red Lake Mining Division located 740 km northwest of Thunder Bay, with an eye to their gold potential.
As the judge lays out in detail in the decision, the initial exploration results were good, but in 2009, with financing in short supply during the global recession, Northern Superior had to bring in a partner with some ready cash. Junior explorer International Nickel Ventures stepped in and agreed to spend $1.5 million on exploration over four years to get a 50% interest in Thorne Lake.
Relations between Northern Superior and the local Sachigo Lake First Nation appear to have started out on a good footing in 2005, with the aboriginal community agreeing to exploration drilling in the nearby Ellard Lake region in return for the company hiring First Nations members, using First Nations suppliers where possible, renting a camp on First Nations land, working around moose-hunting season, and other related benefits.
In 2008, Northern Superior and the First Nation cooperated again on a similar but more detailed agreement for areas that included parts of Ellard Lake, Rapson Bay and Thorne Lake.
It was in 2009 that things got more complicated, as Ontario’s Ministry of Northern Development and Mines (MNDM) began what it called a “transitional approach” to more fulsome consultation with and between First Nations communities and the mining sector. Thereafter, every time Northern Superior staked a claim, the MNDM would send the company a letter advising it to consult the local First Nation involved, and would send the First Nation a similar notification. The government said it did this to encourage engagement between the parties.
Northern Superior continued to have good relations with the Sachigo Lake First Nation, which offered to be the default contact for Northern Superior for all First Nations in the area. In contrast, the Kitchenuhmaykoosib Inninuwug (KI) First Nation — better known for its acrimonious dispute with Platinex Inc. — approached Northern Superior in 2009 and said that it did not want the company staking more claims east of Thorne Lake.
But Northern Superior seemed to take Sachigo Lake’s assurances that KI was on board with an exploration program, and on this basis went ahead with the option agreement with International Nickel.
This option agreement ended in 2011, and Northern Superior rebounded with more aggressive exploration at Meston Lake and Rapson Bay, and established another agreement with Sachigo Lake. Positive drill results at Rapson Bay were announced in January 2012.
But no more work was ever done on the properties, as relations between Northern Superior and Sachigo Lake broke down when the two groups argued over payments of invoices and approvals for various work programs on the ground.
Meanwhile the company needed to spend money on exploration to keep its claims valid, though it could apply for a delay in meeting those obligations due to special circumstances. Northern Superior did so, and was granted an extension.
With no further progress after that, Northern Superior blamed the provincial government for not meeting its own duty to consult in the matter and demanded compensation for its loss by the provincial government. Thus the lawsuit was born.
“To put it simply,” the judge writes in the dismissal, “Northern Superior cannot reasonably expect to be compensated by the Crown, which was never directly involved in its relationship with Sachigo Lake First Nation, and who it contacted only for the purpose of seeking compensation. When, in response to the Crown’s offer to facilitate meetings with Sachigo Lake First Nation or to employ the as-yet unproclaimed amendments to the Mining Act, Northern Superior walked away, it gave up any possibility of succeeding in an action before the court, regardless of the cause of action.”
In other words, it’s up to mining companies to foster good relationships with local First Nations near their mineral projects in Canada. And if they can’t pull that off, don’t bother running to the government for a bailout.