Mining law embraces all the legal issues related to the mineral exploration, development, production and reclamation cycle, from grass roots exploration to the production and sale of the finished product, as well as mine closure and re-opening.
The Canadian Environmental Assessment Act, 2012, came into force on July 6, 2012, replacing the old Canadian Environmental Assessment Act, which had reigned for some two decades. The new legislation overhauls the federal environmental assessment process by limiting the occasions on which assessments will be required, revamping the assessment process, reducing the number of regulatory authorities involved, diminishing public participation, broadening the role of Cabinet, and adding penalties for non-compliance.
Unlike the previous legislation that mandated an assessment whenever a federal authority performed certain functions, such as providing financial aid, the new law stipulates that the only projects subject to assessment are projects so designated by Ministerial regulation or order.
So far, the legislation has named the National Energy Board, the Canadian Nuclear Safety Commission and the Canadian Environmental Assessment Agency as the three regulators with authority to conduct assessments. While other authorities may yet be designated, the process is a distinct improvement from the old system, where as many as 40 federal entities could conduct reviews.
Projects regulated by the CNSC or NEB or designated by the Minister will automatically require an assessment without a screening process. All CEAA-regulated projects will undergo a screening that must be completed within 45 days of the date that the CEAA notice of the project.
After the CEAA determines that an assessment is required, and in all other cases, either the responsible authority or a review panel appointed by the Minister will conduct it. Regulators must complete assessments within 365 days of the date when a notice of commencement of the assessment is posted on the relevant website. Where the Minister appoints a review panel, the Minister has two years to establish the panel, get the report and make a decision. The Minister may extend time limits by up to three months, and the Cabinet, on the recommendation of the Minister, may grant a further extension. The time taken by the project proponent to respond to a request from the Agency or review panel is not counted in a deadline's calculation.
Screenings that have already begun under the old legislation will continue, unless the Minister deems any one of these projects to be a designated project in which case it becomes subject to the new time limits. Studies commenced under the old law will continue under the old regime except that new time limits may apply. If a study concludes that a review panel is necessary, the new legislation will apply to the panel and the Minister will determine the timeline. The new legislation also applies to ongoing review panels.
CSA HIGHLIGHTS PEA ISSUES
In August 2012, the Canadian Securities Administrators set out its position on a number of issues regarding use and disclosure of preliminary economic assessments. CSA Notice 43-307 Mining Technical Report – Preliminary Economic Assessment deals with compliance with National Instrument 43-101 Standards of Disclosure for Mineral Projects.
A PEA, sometimes called a “scoping study,” is a study that is distinct from a preliminary feasibility study or a feasibility study. Unlike the other two studies, PEA may contain an analysis based on inferred mineral resources. But in that case, the PEA must contain cautionary language including a statement that the PEA is preliminary in nature, that it includes mineral resources that are too speculative to be categorized as mineral reserves, that there is no certainty that the PEA will be realized, and that mineral reserves do not have demonstrated economic viability.
The PEA must also contain a statement regarding the assumption on which its conclusions are based and the qualifications of the individual relied upon, as well as a statement that notes the PEA's impact on any PFS or feasibility study.
As regards PEAs, CSA staff identify a number of issues they consider to be problematic. These include creating confusion between a PEA and a PFS by stating that the PEA's components are done at the level of a PFS, which has the effect of producing a PFS with inferred resources. To avoid this problem, the Notice recommends that a study not be described as a PEA unless it falls clearly within the definition, and that PEAs should be not be compared to PFS standards if the study includes inferred mineral resources.
The Notice also reminds issuers that disclosing results of potential economic outcomes for material properties could amount to a PEA, thus triggering the need to file a supporting technical report; that disclosed forward-looking information must be reasonable; that Qualified Persons authoring or contributing to reports must act consistently with industry best practice and that any divergence must be disclosed.
The Notice adds that caution is required in PEAs that include projected cash flows for by-products not included in a mineral resource estimate, and that Qualified Persons must have experience relevant to the subject matter of their reports.