"Everybody wants to mention their clean operations, but with no fixed standard that accounts for the stage of development of the corporation, it gets complicated."

René Branchaud & Josianne Beaudry

PARTNERS, LAVERY

July 27, 2022

What work has Lavery taken on in the mining sector over the past year?   

JB: Lavery has been involved in the mining industry for over 50 years, representing clients at all stages of development, accompanying them in their transactions including amalgamations,  acquisition of mining rights, financing and permitting, as well as JV, option agreements, royalties, and streams. Our client base is composed of local, national, and international companies, primarily public companies in addition to institutional investors, private funds, and brokers.

RB: Examples of recent clients include Osisko Gold Royalties, Osisko Development Corp., Osisko Metals, Midland Exploration, Hecla Mining, Yamana Gold, Fancamp Exploration and Abcourt mines. We were also recently involved with Gold Royalty Corp's purchase of a portfolio of royalties from Monarch Mining. The mining world in Québec is small – we have worked with nearly everyone.

How would you assess the current regulatory environment pertaining to ESG standards?

JB: The challenge regarding ESG from a legal standpoint remains the lack of comprehensive standards that are adaptable to the stage of development of the corporation. Currently, all corporations look at the same criteria, but companies at different development stages will face different challenges in meeting them. That said, for over a decade the mining industry has taken social acceptability seriously, and today, it is well understood by all players that you cannot develop a mine without first attaining social acceptability from the First Nations and surrounding communities.

How have mining companies been responding to this lack of streamlined regulations?

JB: There has been a need expressed across all industries for clearer criteria that corporations can adhere to. Everybody wants to mention their clean operations, but with no fixed standard that accounts for the stage of development of the corporation, it gets complicated.

RB: While the government has not provided specific legislation for ESG, some issuers have started to produce their own annual reports. For example, our client Dynacor Gold Mines recently issued its second annual ESG report. Other issuers have started to do so as well, constructing reports based on disparate pieces of legislation rather than what will inevitably become uniform. In the current climate, there is room for an institutional investor to set their own standard, thereby forcing corporations to adapt to these standards to receive financing.

To what extent do mining companies in Québec interact with their First Nation counterparts?

RB: In Canada, companies have the obligation to sit down with the First Nation before even starting exploration activities. This model works well, especially with certain communities such as the Cree in Chibougamau. Both parties recognize the benefits of these negotiations; the First Nations can provide local manpower instead of mining companies having to constantly fly in and out their labor. These communities also have a lot of wisdom to share.

JB: First Nations communities are more business-oriented and organized than they were even 10-15 years ago. These negotiations take on a completely different nature today.

What are some benefits you see for mining companies to operate in Québec?

JB: There is an abundance of inexpensive, easily available energy in Québec. It is also a politically stable place to operate with good technology and skilled people.

RB: We take it for granted, but Québec has a lot of minerals, particularly critical minerals, and we have seen large corporations such as BHP and Rio Tinto return to the province to explore for this reason.

Are there any trends you will be tracking in the industry over the next few years?

JB: A current challenge for the sector is the volatility of the market, meaning financing a project right now is difficult. It is clear, however, that critical minerals will remain very attractive to investors.

RB: The lack of manpower makes it difficult for companies to recruit and keep miners, and this will remain a challenge over the next few years. Even the availability of qualified persons for the preparation of a technical report is low. The silver lining to the lack of manpower exacerbated by the pandemic is that it has forced innovation – we now see more miners working in their office with a joystick to operate various pieces of equipment. This is great, as it is better to send a machine to the bottom of a mine than a person. We anticipate innovation will continue in the mining sector at an accelerated rate.

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