The impact of recent mining act amendments on mining tenures in Ontario 

publication 

February 2013

Real Estate Bulletin

introduction

In 2009, Ontario introduced Bill 173 to amend the Mining Act.1 These amendments are being phased in with the goal of having them all in force by the end of 2014. On November 1, 2012, a large number of these changes went into effect. These changes include new protections for surface rights owners and Aboriginal lands, as well as more stringent duty to consult requirements. In addition, a large portion of land has been withdrawn from mining use or has had its ability to be used in mining operations severely restricted. The following is a summary of some of the more significant amendments to the Mining Act and their impact on prospectors and mining companies in Ontario.

prospecting

prospector's license

In order to prospect for minerals or stake, record, or acquire any unpatented mining claims in Ontario, a person requires a prospector's licence. To acquire a licence, an applicant must be a natural person over 18 years of age and must pay the stipulated fee. As of November 1, 2012, all persons applying for a new license or a renewal must complete the Mining Act Awareness Program ("MAAP") within 60 days of applying. Additionally, current licensees have until November 1, 2014 to complete the program. MAAP educates prospectors on the recent changes to the Mining Act and its regulations.

lands unavailable for prospecting

Some lands are not open for prospecting without the consent of the Ministry of Northern Development, Mines and Forestry ("MNDM"). New provisions to be proclaimed into force on April 1, 2013 will increase the amount of land in this category. Primarily, these new exclusions relate to residential and cottage lots, airport lands and public utilities.

The Mining Act also prohibits some land from staking completely. These unconditional exclusions include: (1) lands where the mineral rights have been disposed of already; (2) lands that are part of Indian Reserves; and (3) lands that are subject to an application made in good faith where the applicant may acquire the mineral rights of the lands that are subject to the application. In addition, provisions from the 2009 amendments, which will be proclaimed into force on April 1, 2013, will prohibit staking claims in Ontario's Far North (the northern 42% of the province) where a community-based land use plan designates the land for a use that is inconsistent with staking. An additional provision from the 2009 amendments that is not yet in force will prohibit any new mining operations from occurring in the Far North unless a community-based land use plan is in effect.

In 2010, Ontario passed comprehensive legislation dealing with permitted activities in the Far North in the Far North Act, 2010.2 This act details the requirements for establishing community-based land use plans with First Nations and should be consulted by any party wishing to engage in mining activities in Ontario's Far North.

lands withdrawn from prospecting

The Mining Act provides that MNDM may withdraw from prospecting, staking, selling or leasing, or any combination of them, any lands, mining rights, or surface rights that are the property of the Crown. The 2009 amendments went further and automatically withdrew from prospecting, lands in Southern Ontario where there is a surface rights' holder and the Crown owns the mineral rights. There is an exception allowing pre-existing mining rights held at the time the provision took force to remain in effect. Surface rights' owners in Southern Ontario who want their lands to be open to staking may apply to the Crown to re-open their lands for mining activities. In Northern Ontario, surface rights' owners can apply to MNDM to have the Crown withdraw their lands from mining activities.

staking claims

A licensee can stake a mining claim on any land open for prospecting for the sole purpose of mineral exploration activity. Before the 2009 amendments, the only method of staking a claim was through ground staking. However, certain areas of Ontario now require prospectors to stake claims through a paper-based map staking system. Under this process, claims are staked by referencing their location on a survey. Additionally, as of November 1, 2012, prospectors are required to provide Global Positioning System ("GPS") data for all ground staked mine claims that are unsurveyed. MNDM intends on updating to a "fully electronic, on-line map staking" system, and obtaining GPS coordinates for claims will assist it in this endeavour.

assessment work requirement

In order to maintain a mining claim, yearly work requirements must be met. The Assessment Work regulation lists what qualifies as assessment work.3 This includes conducting geophysical, geochemical, and geological surveys, physical work such as overburden stripping and bedrock trenching, exploratory drilling and MNDM-approved rehabilitation work. As of November 1, 2012, Aboriginal consultation expenses and a prescribed credit for the submission of GPS georeferencing data can also be used towards assessment work credits.

For every year except the first year, $400 of acceptable work must be completed per claim unit to maintain a claim. Excess work from one year can be carried forward and applied to work in future years. Claim holders must file yearly reports of the assessment work that they completed. Failure to perform the requisite work or to file the forms will result in a claim being forfeited and the lands being reopened for staking.

As of November 1, 2012, claim holders in Ontario can pay a fee in lieu of actually fulfilling the assessment work requirements, subject to certain restrictions. Payments cannot be used for the first unit of required assessment work and they cannot be used in consecutive years. Moreover, these payments cannot be carried forward to future years or credited towards the assessment requirements for obtaining a mining lease.

surface rights

Surface rights refer to any right in land that is not a mining right. The Mining Act sets out requirements for how owners of mining rights are to interact with the owners of surface rights. Where the surface rights are privately owned, the 2009 amendments require a prospector to notify the surface rights holder of the confirmation of staking. The prospector and surface rights holder must agree to appropriate compensation to be paid to the surface rights holder for the use of the land.

The 2009 amendments will also require prospectors to submit an exploration plan or exploration permit application to MNDM before engaging in assessment work and to notify surface rights holders of the application. As of November 1, 2012, prospectors can voluntarily submit these applications, but they are not required to do so. However, on April 1, 2013, prospectors who do not have the appropriate exploration plan or permit approved will not be permitted to conduct assessment work. Low impact activities require exploration plans whereas moderate impact activities require exploration permits. In both cases, MNDM will forward the application to any applicable Aboriginal communities that may be affected by the activities. The surface rights holder and the Aboriginal communities will have a chance to provide comments and MNDM can then choose to accept the plan or permit as is, impose terms and conditions on the application, or reject the application.

mining tenures

mining lease

There are multiple mining tenures available that permit mineral development and production. The most prominent choice of tenure in Ontario is the mining lease. A mining lease gives the lessee the right to locate and extract minerals from the land.

A claim holder can apply to MNDM to convert a mining claim into a mining lease once the first unit of assessment work has been completed. Under a 2009 amendment that will be proclaimed into force on April 1, 2013, this requirement will be adjusted to require the fifth unit of assessment work to have been completed before applying to convert to a lease. Additionally, the claim holder must submit any required agreements of surface rights compensation, a plan of survey and the stipulated fee. The claim holder has the exclusive right to make this application and is entitled to have its claim converted to a mining lease.

The lease has a prescribed rental rate and a term of 21 years. The lease may be renewed as a right if the lease-holder can demonstrate continuous production of minerals for at least one year since the issuance or if the lease-holder can show that it has taken a reasonable effort to bring the property into production.

A mining lease is subject to a number of restrictions and reservations. The lease cannot be transferred or mortgaged without the prior written consent of MNDM. Additionally, a lease contains reservations for public interest matters such as roads, waterways and pipelines.

mining patent

Another type of tenure is a mining patent issued by the Crown. With a patent, the holder obtains a freehold interest in the minerals themselves. Historically, mining patents were frequently granted, but more recently, MNDM has moved towards mining leases. MNDM still retains the power to issue mining patents, but only in special circumstances. Prospectors often prefer mining leases as there is less likelihood for environmental liability. If a patent is desired, prospectors can also apply to the Ministry of Natural Resources ("MNR") for this type of tenure.

license of occupation

Mining licenses of occupation are a type of mining tenure that allows for the mining of minerals located under beds of water. The majority of these licenses were issued prior to the amending of the Mining Act in 1964 when the act was updated to make these licenses essentially unnecessary. Nevertheless, MNDM still retains the ability to issue mining licences of occupation for mining lands or mining rights on any terms deemed appropriate, though this rarely occurs.

land use permit

If desired, prospectors can apply to the MNR for a land use permit. This type of tenure is the weakest form of Crown tenure available. The MNR retains future control of the land and the permit is for a term of ten years or less. Additionally, no extensive or valuable improvements to the land can be completed and the permit cannot be mortgaged or transferred. While this type of tenure does not seem very useful, there are instances when such a tenure is desirable to prospectors such as for building temporary infrastructure associated to mining.

closure plan requirement for advanced exploration and mine production activities

No matter what type of mining tenure is held, a prospector must meet additional requirements before engaging in advanced exploration and mine production activities. To engage in these activities, a prospector must file a certified closure plan with the Director including providing the required financial assurance. In order to submit a closure plan, a prospector must provide the Director with notice in the prescribed form as well as provide notice to the public (where applicable). As of November 1, 2012, a prospector is also required to engage in consultation with Aboriginal communities before submitting a closure plan.

A closure plan is a plan submitted to MNDM that outlines the tasks that will be required to rehabilitate the land during the life of a project and after mining operations have ceased. There are technical standards of rehabilitation that are required to be met and each type of proposed mine hazard has its own required rehabilitation tasks. Additionally, a prospector must submit financial assurance to guarantee the costs of the future rehabilitation.

conclusion

It is important for prospectors and mining companies in Ontario to be aware of the recent amendments to the Mining Act that took effect November 1, 2012. As MNDM continues to test out various new processes associated with the amendments, prospectors and mining companies should keep informed of the changing landscape of mining tenures in Ontario and ensure that they remain in compliance with the Mining Act and any additional requirements from MNDM.

by Matthew German and Joshua Chad, student at law

1 Mining Act, RSO 1990, c M.14.

2 Far North Act, 2010, SO 2010, c 18.
 
3 Assessment Work, O Reg 6/96.


a cautionary note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2013