The Ontario government says it’s not liable for any damages incurred by a Sudbury-based junior miner after a dispute between the company and a First Nation forced it to abandon exploration work in northwestern Ontario.
The province submitted its Statement of Defence with the Ontario Superior Court of Justice on Jan. 21 in response to a $110-million lawsuit filed against the Crown last October by Northern Superior Resources (NSR).
The company accuses the government of failing in its legal duty to consult with the Sachigo Lake First Nation after a series of disagreements with the band caused the company to suspend exploration on a promising gold property in late 2011.
In an 18-page document outlining its position, the government said the company’s claims for compensation are “exaggerated,
excessive, remote” and should be dismissed. The government contends Northern Superior’s decision to stop exploration was their decision and the Crown is not responsible for any demands made on the company by Sachigo, or the company’s decision to reject them.
In its statement, the government claimed from 2006 to 2011, Northern Superior annually entered into a series of benefit agreements with the band that routinely involved remitting 25 per cent of its exploration budget to the community for salaries, infrastructure, capacity building and donations.
This was done with the knowledge, but without the assistance, of the Ministry of Northern Development and Mines (MNDM).
The company and the band enjoyed a good relationship until things deteriorated in 2011, the final straw being Sachigo’s demand for a 24 per cent “administration fee” to be derived from the company’s upcoming exploration budget.
The government contends any community consultation carried out by Northern Superior was done without ministry assistance and any agreements signed with the First Nation were for the company’s own benefit.
The province said it was never asked by the company to intervene and resolve any disputes. And the ministry was only told of the backstory when Northern Superior sent them a letter in September 2012. The government maintains it “made reasonable and good faith efforts” to repair the relationship, even asking the company to participate in meetings with Sachigo Lake, which it refused.
The ministry claims it heard complaints about the company’s “conduct” which included staking claims without informing the band and beginning exploration outside of any agreements with the community. Northern Superior was “invited” by the government to “voluntarily” participate in a new “plans and permits” process under the Mining Act which didn’t take effect until April 2013. The company refused, the government said.
The new regulations require prospectors and companies to submit exploration plans or apply for exploration permits before starting early work. Part of the process requires companies to consult with affected First Nation communities.
Northern Superior is also challenging the government’s decision to impose an exclusion zone around its claims. After the company stopped exploration, the province closed off a 23,000-square-kilometre tract of Crown land from further staking in January, 2012.
Northern Superior claims this would hamper any future exploration efforts in following its gold discovery.
The government responds it did so at the request of the Kitchenuhmaykoosib Inninuwug First Nation, which asked for an embargo on exploration on its traditional territory until it could finish an assessment, estimated to take three to five years.
The province said Northern Superior held no right and no title to that tract of Crown land and “the Crown owed no duty to NSR to consider its interests in advance of withdrawing said lands from staking.”
In a Jan. 24 release, Northern Superior Resources responded that Ontario did nothing to carry out its legal duty to consult with the First Nation and that there was nothing in the Mining Act in 2011 to ensure that consultation could be done properly and any issues that arose could be resolved.
Northern Superior implied that a double standard exists that companies that “peacefully retreat” from the areas where they have been “evicted” by First Nations are “left to their own devices,” while those that cause “civil disobedience and escalate matters” are compensated by government.
The company said what was “novel” in the province’s statement is that mining companies must “bear all the costs” for the duty to consult.
“This is the first time NSR was ever made aware of such a position in this case.”