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Quebec Mining

Canada: Substantial Amendments To The Quebec Mining Act Come Into Force – by Jean-Philippe Buteau, Amy Gauthier, Pierre-Christian Labeau, François Lévesque and Jean Piette (Mondaq.com – January 17, 2014)

http://www.mondaq.com/

Norton Rose Fulbright Canada LLP

The Quebec Mining Act has been substantially amended and modernized by Bill 70, which the Quebec National Assembly adopted on December 9, 2013. This fourth attempt to update Quebec’s mining legislation follows on the heels of the defeat of Bill 43 and that of Bills 79 and 14 in previous legislative sessions. The amended Act came into force on December 10, 2013, saving a few sections which will come into force at a later date.

Key amendments

Aboriginal communities

The Act now contains three provisions that relate specifically to aboriginal communities, including a provision that the Minister is to draw up an aboriginal community consultation policy specific to the mining sector. The Act also states that it is to be construed in a manner consistent with the obligation to consult aboriginal communities and requires the Minister to consult aboriginal communities separately if the circumstances so warrant. What those circumstances might be, however, has not been clarified.

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Quebec’s Osisko comes out fighting against Goldcorp bid (CBC News Business – January 15, 2014)

http://www.cbc.ca/news/business

Calls $2.6B offer for gold miner too low and opportunistic

Osisko Mining Corp. is calling a hostile takeover bid for the company by Goldcorp Inc. “very low” and opportunistic. Company CEO Sean Roosen said Wednesday the Osisko board is continually seeks value for its shareholders.

“We’re shareholders of the company ourselves. We’re focused on shareholder value 365 days a year and seven days a week. We look at our valuations on a constant basis and so does our board,” Roosen said in an interview with CBC’s The Lang & O’Leary Exchange.

“Osisko’s board of directors noted that the 15 per cent premium to Osisko’s unaffected share price implied by Goldcorp’s offer is very low and the price opportunistic in light of Osisko’s proven high quality asset base,” the company said in a statement.

Osisko urged shareholders to hold off from accepting the $2.6-billion bid until the board, which has formed a special committee including five independent members to review the offer, makes a recommendation on the proposal.

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Takeover bids cut both ways in Quebec – by Peter Hadekel (Montreal Gazette – January 15, 2014)

http://www.montrealgazette.com/index.html

There’s long been a circle-the-wagons mentality in Quebec about corporate takeovers. When a buyer from outside the province is interested in a Quebec company, a protectionist reflex often kicks in and calls are made for government action.

We saw it again this week when Vancouver-based mining giant Goldcorp Inc. made a $2.6-billion hostile takeover bid for Montreal-based Osisko Mining Corp., operator of the big Canadian Malartic gold mine in Abitibi.

The Board of Trade of Metropolitan Montreal was quick to ring the alarm bells, calling on the Quebec government to ensure that if the transaction goes through “it won’t harm the economy of Quebec and the metropolitan region.”

But for every Quebec company that gets taken over by outside interests, there’s one making a deal abroad. That’s how the market works in a global economy.

Widely-held Osisko is one of the few Quebec-based mining firms with operations and production in the province, said Board of Trade president Michel Leblanc.

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Goldcorp launched hostile bid for Osisko after repeated rejections – by Rachelle Younglai (Globe and Mail – January 15, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Five years of thwarted efforts to negotiate a friendly deal with Osisko Mining Corp. pushed Vancouver-based Goldcorp Inc. to launch a hostile $2.6-billion bid for its smaller rival this week.

According to Goldcorp’s formal bid filings on Tuesday, the miner describes how Montreal-based Osisko repeatedly rejected offers to merge and refused to provide key information after the companies signed a confidentiality agreement in the summer of 2008.

Calls to Osisko requesting comment were not returned. Goldcorp chief executive Chuck Jeannes has wanted to get his hands on Osisko’s giant Canadian Malartic mine in Quebec since 2008, when he was in charge of finding new projects as Goldcorp’s executive vice-president of corporate development.

In September of 2008, both Goldcorp and Osisko’s shares were volatile amid fallout from the U.S. housing crisis. Osisko, whose stock dropped as low as $1.86 a share, asked Goldcorp whether it would buy a small stake in the miner.

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Osisko bid leaves Quebec with much to lose – by Sophie Coustineau (Globe and Mail – January 15, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

MONTREAL — Like a big rock that fell in a puddle of grimy slush, Goldcorp Inc.’s takeover offer for Osisko Mining Corp. has splashed Quebec Inc. in the face.

With the prospective loss of head office jobs and consultant work, hostile takeovers are never greeted like a cup of warm cocoa. But there is even more unease this time around.

Osisko is more than your regular mid-tier producer. It is Quebec’s biggest gold producer and the province’s best-known mining company – for some good and not so good reasons.

Its main gig is the Canadian Malartic gold mine, the country’s biggest open-pit mine that was dug smack in the middle of a small town in the northwestern Quebec region of Abitibi. The designing of this mine gave a new meaning to the “not in my backyard” knee-jerk reaction.

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Goldcorp bid as good as it gets for Osisko: analysts – by Liezel Hill and Andy Hoffman (Bloomberg News/Montreal Gazette – January 14, 2014)

http://www.montrealgazette.com/index.html

TORONTO — Osisko Mining Corp. investors wagering on a higher bid than Goldcorp Inc.’s $2.6-billion offer have few places to look other than Goldcorp itself.

Osisko closed yesterday 5.5 per cent above the C$5.92 a share value of Goldcorp’s unsolicited cash-and-stock offer. Based on closing prices before the deal was announced, the premium was 15 per cent, which could be viewed as low compared with historical gold-sector standards and might need to be raised to win over Montreal-based Osisko’s shareholders, said Michael Parkin, an analyst at Desjardins Group.

“There is room for Goldcorp to raise the bid, if needed,” Parkin said yesterday in a note. “With our view of a low potential for an emergence of a white knight, we view Goldcorp’s initial bid as a smart starting point.”

Gold-mining companies are reassessing their businesses following the biggest annual drop in the gold price in more than three decades.  The companies are close to their cheapest relative to book value in at least two decades, according to data compiled by Bloomberg, providing opportunities for producers looking to replenish their reserves and acquire more profitable mines.

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Goldcorp seizes opportunity with hostile bid for Osisko – by Peter Koven (National Post – January 14, 2014)

The National Post is Canada’s second largest national paper.

TORONTO – By bidding $2.6-billion for Osisko Mining Corp., Goldcorp Inc.’s chief executive Chuck Jeannes is taking advantage of poor gold market conditions and going after a mine he has craved for years.

Goldcorp has held on-and-off negotiations with Osisko Mining Corp. for several years, and owned more than 10% of the stock between 2009 and 2011 before selling it. Osisko became a rising star in that period as it brought the giant Canadian Malartic mine in Quebec into production.

Back then, a takeover of Montreal-based Osisko was a strong possibility. Both Goldcorp and Kinross Gold Corp. owned large blocks of Osisko shares, and with gold prices rising and consolidation happening across the sector, the stock soared above $16. But no takeover bid materialized, and as gold prices plunged and Osisko struggled to ramp up production at Canadian Malartic, its shares fell back to earth.

That brought Mr. Jeannes and Goldcorp back into the picture. On Monday, the Vancouver-based miner launched a hostile bid for Osisko valued at just $5.95 a share. While Goldcorp would almost certainly raise its cash-and-stock offer to get a friendly deal, it is still a relative bargain.

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NEWS RELEASE: Goldcorp announces offer to acquire Osisko for C$5.95 per share in cash and shares

(All Amounts in U.S. dollars unless stated otherwise)

VANCOUVER, Jan. 13, 2014 /CNW/ – GOLDCORP INC. (TSX: G, NYSE: GG) today announced that it intends to commence an offer to acquire all of the outstanding common shares of Osisko Mining Corporation (“Osisko”) (TSX: OSK, Deutsche Boerse: EWX) for approximately C$2.6 billion in cash and shares (the “Offer”).

Under the terms of the Offer, Osisko shareholders will be entitled to receive 0.146 of a Goldcorp common share plus C$2.26 in cash for each Osisko common share. Based on Goldcorp’s TSX closing share price of C$25.29 on January 10, 2014, the total consideration offered to Osisko shareholders is C$5.95 per Osisko common share representing a premium of 28% over the 20-day volume-weighted average share price of Osisko from all trading on Canadian exchanges for the period ending January 10, 2014 and a premium of 15% over Osisko’s TSX closing share price on January 10, 2014.

Transaction Highlights

Consistent with Goldcorp’s strategy of disciplined portfolio enhancement, focus on gold and investment in low political risk jurisdictions.
Large ~10 million ounce gold reserve(1) that, with Goldcorp’s financial and technical resources, should support a long mine life and low all-in sustaining costs.

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Goldcorp to spend US$570-million on Éléonore mine – by Robert Gibbens (Montreal Gazette – January 10, 2014)

http://www.montrealgazette.com/index.html

Goldcorp Inc. said it is spending US$570 million this year on its Éléonore mine in Quebec’s James Bay region to get it into initial production of 40,000 to 60,000 ounces in the final quarter.

The new mine has a total capital cost of $1.8 billion to $1.9 billion, up from the last estimate of $1.75 billion, and targets average annual output of 600,000 ounces, Goldcorp CEO Chuck Jeannes said Thursday. (All figures are in US dollars.)

“We’re counting on strong cash flow from our other gold mines, including Red Lake in Ontario, with 2014 output of 440,0000-480,000 ounces, and Penasquito in Mexico with 530,000-560,000 ounces, to provide the liquidity to fund Éléonore and our other projects requiring total capital spending of $2.3 billion to $2.5 billion,” he said in a quarterly update.

Also, Goldcorp has a $2-billion undrawn credit facility available, he added. Overall, Goldcorp expects to produce 3 million to 3.15 million ounces in 2014, up 13 per cent to 18 per cent from 2013, and targets 3.5 million to 3.8 million ounces in 2018.

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Oil ‘manifesto’ urges Parti Québécois to develop province’s resources – by Nicolas Van Praet (National Post – January 9, 2014)

The National Post is Canada’s second largest national paper.

MONTREAL — A group of prominent Quebecers is urging the Parti Québécois government to move ahead with oil development as concern builds over the province’s financial predicament.

Former PQ premier Bernard Landry and former Liberal finance minister Monique Jérome-Forget are among 11 noteworthy people who on Wednesday released a so-called “Manifesto to benefit collectively from our oil.” Several businesspeople are also among the signatories.

The effort was organized by the largest network of business people and companies in Quebec, the Fédération des Chambres de Commerce. It underscores a debate on energy in Quebec that has only just begun – one pitting people who believe the province should seek to produce its own oil against those who argue the risks are too high and that the world is moving toward cleaner energy.

It comes at a critical time as economists at the Royal Bank of Canada warn that Quebec’s economy may be entering a “new normal” period of slow growth, challenged by deteriorating working-age population numbers and the highest debt-to-GDP ratio of all the provinces.

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Schefferville enjoying resurgence thanks to iron ore venture – by Robert Gibbens (Montreal Gazette – December 23, 2013)

http://www.montrealgazette.com/index.html

MONTREAL — In 1982 Brian Mulroney, then head of the Iron Ore Co. of Canada, suddenly announced the shutdown of the company’s Schefferville mines in Quebec-Labrador. The news hit Montreal 1,000 kilometres away like a thunderbolt.

Mulroney said the Schefferville mines, built in the early 1950s, were no longer economic at prevailing prices and IOC would focus on its newer mines and concentrators 217 kilometres south at Carol Lake, near Labrador City.

Now — more than 30 years after Mulroney’s coups de grâce — life is returning to Schefferville and the billions of tonnes of high-grade iron ore deposits lying along the 210-kilometre Millennium Iron Range.

In September, New Millennium Iron Corp. and India’s Tata Steel, through a 20-80 joint venture called Tata Steel Minerals Canada, began shipping beneficiated ore by rail from Schefferville to the Port of Sept-Îles. The ore is loaded into 150,000-tonne ore carriers for delivery to Europe.

This is known as the “DSO Project” and it is the New Millennium partners’ initial iron ore production effort at Schefferville.

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The battle between Cree First Nations and Strateco Resources heats up – by Henry Lazenby (MiningWeekly.com – December 21, 2013)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – The grand council of the Crees of Eeyou Istchee, the Cree regional authority and the Cree nation of Mistissini on Friday said they had filed a declaration of intervention in the legal proceedings recently started by uranium explorer Strateco Resources against the Quebec Environment Minister Yves-François Blanchet.

Strateco, who seeks permission to undertake underground exploratory drilling in search of uranium at its Matoush advanced exploration project, early this month asked the Superior Court of Quebec to nullify the minister’s decision to refuse to grant a certificate of authorisation for the exploration.

Strateco had also asked the court to force the minister to issue a certificate of authorisation for the project. In his decision of November 7, Blanchet said that he refused to authorise the Matoush project owing to the absence of social acceptability for the project, particularly among the Crees.

Through the intervention filed today, the Crees sought full rights of participation in the proceedings, and urged the court to dismiss Strateco’s request.

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Canada: Québec Finally Adopts Its Reform Of The Mining Act – by François Paradis, Hugo-Pierre Gagnon and Sophie Amyot Osler, Hoskin & Harcourt LLP (Mondaq.com – December 19, 2013)

http://www.mondaq.com/

On December 10, 2013, Bill 70 – An Act to amend the Mining Act (Bill 70), tabled by the Minister of Natural Resources (the Minister) on December 5, 2013, was adopted by the Québec National Assembly. Bill 70 is the current government’s second attempt to reform Québec’s mining legislation after Bill 43, tabled in June and which sought to replace the existing Mining Act, was blocked by the opposition on October 30.

Bill 70 includes most of the changes proposed by Bill 43 (see our Osler Update of June 14, 2013, Plan Nord – Parti Québécois Advances Reform of Québec’s Mining Act) for the main provisions of Bill 43); however, in order to obtain the opposition parties’ support, the government had to make certain concessions, discussed below, on important aspects of the bill.

Conditions for granting a mining lease

First, with respect to the conditions for granting a mining lease, the ore processing feasibility study proposed in Bill 43 and which mining investors viewed as a major irritant, has been replaced by a scoping and market study, expected to be both less costly and less time consuming.

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Native rights a contentious issue as mining bill passes – by Kevin Dougherty (Montreal Gazette – December 9, 2013)

http://www.montrealgazette.com/index.html

Bill 70 adpopted with support of the Liberals and CAQ

QUEBEC — The Coalition Avenir Québec and Quebec Liberals backed the Parti Québécois government Monday night, with only Quebec solidaire opposed, to adopt Bill 70, the first major change in the province’s Mining Act in almost a century.

Martine Ouellet, Quebec’s natural resources minister, said the bill struck a balance between the claims of the mining industry, environmentalists, communities affected by mining and native people.

But Ghislain Picard, chief of the Assembly of First Nations for Quebec and Labrador, warned the bill could face a court challenge because it ignores the ancestral rights of Quebec aboriginals. The assembly was summoned Monday for an “extraordinary session” to fast-track adoption of Bill 70.

The issue of aboriginal rights was the major disagreement between Ouellet and the opposition Liberals and Québec solidaire, who opposed her rush to legislate. Ouellet said she has listened and a new chapter in Bill 70 calls for consultations with native communities on mining projects.

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Strateco seeks to force deal on disputed uranium mine – by Jordan Fletcher (Globe and Mail – December 10, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

The battle over uranium mining in northern Quebec is heating up again. Strateco Resources Inc. petitioned a Quebec court on Dec. 5, seeking to force the province’s environmental minister to allow underground uranium exploration at the company’s Matoush project, located in the Otish mountains 200 kilometres northeast of Mistissini.

Quebec’s Minister of Sustainable Development, the Environment, Wildlife and Parks had denied Strateco’s permit on Nov. 7 after the local Mistissini Cree community refused to consent to uranium development near its hunting grounds and trap lines.

“Many Cree work in the mining industry; we are not anti-development,” said Cree Grand Chief Matthew Coon Come. “But uranium is a special case. The tailings will remain toxic for hundreds of thousands of years. It is a burden for future generations that we are not prepared to assume.”

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