A Sudbury junior miner has dropped a $25-million duty-to-consult lawsuit against the Ontario government and has settled out of court.
With their case still on appeal, Northern Superior Resources president Tom Morris said with a favourable outcome far from certain, it just made financial sense for the small exploration firm to end its five-year legal battle with Queen’s Park.
He declined to comment on the terms of the agreement reached with the province.
“There was no guarantee that we were going to win anything out of that. The reality was that with what was offered to us, it just made sense to bite the bullet and move on; and the same from the government’s standpoint."
Morris said four-person, budget-conscious, exploration outfits like his are ill-equipped to engage in drawn-out legal battles.
Northern Superior had originally sued the province for $110 million in the fall of 2013, arguing that the province failed to properly consult with Sachigo First Nation and didn’t protect the company’s government-granted right to stake and explore for gold near the Manitoba border.
The company later lowered its compensation demands in the hope of reaching an out-of-court settlement.
The case was scheduled to go before an Ontario Court of Appeal this year where a three-judge panel would rule on the evidence already presented in the last trial.
As part of their settlement with the province, Northern Superior won’t have to pay the legal bill and they certainly won’t be compensated for the money they were asking for.
“God, no,” said Morris. “We lost, essentially the trial. We decided to cut our losses and move on.”
In its lawsuit, the company claimed it lost access to its three northwestern Ontario gold properties after refusing to give in to a demand by Sachigo to pay an exorbitant 24 per cent “administration fee” to be drawn from the company’s exploration budget. It was one of a series of disputes with the community.
The company claimed they were eventually “evicted” by the First Nation from having access to its gold properties in the fall of 2011. In denying the allegation, the province responded that it was unaware of any difficulties between the junior miner and the community, and only became aware of it when Northern Superior intended to sue.
The government maintained they made “reasonable and good faith efforts,” to bring the company and band together to resume dialogue and restore the relationship, but without success.
If Northern Superior had won, it would have altered the Ontario Mining Act and the way consultation with First Nations is done on resource projects.
The province delegates the duty to consult down to industry, despite a growing body of federal Supreme Court decisions to the contrary.
As part of Ontario’s exploration permitting process, companies are required to engage with area Indigenous communities on whose traditional lands their mineral claims sit.
Looking back, Morris said he’s hard-pressed to come away with any positives from their legal action. It failed to address and clarify the thorny issue of what actions constitute proper consultation with First Nations.
“I think it was a waste of time. I don’t think the government has learned anything from the exercise.”
Morris alluded to a recent legal challenge by Eabametoong First Nation, which went to court in Toronto in February, seeking a judicial review to overturn a permit allowing Landore Resources to explore for gold on its traditional territory. Ironically, the First Nation is arguing the province failed in its duty to consult.
Morris challenged Queen’s Park and First Nations to collectively “define what that is.”
“Sooner or later industry is going to shrug its shoulders and say, we’re not really welcome here.”
Unilaterally, some Indigenous communities have resorted to drawing up their own individual protocols to deal with industry.
On his dormant northwest gold properties, left untouched since 2011, Morris will attempt to re-establish relations with Sachigo, “or do something with those properties.”
“They’re very valuable and important to us, which is why we took it to court in the first place. We didn’t want to lose them.”
But the company’s options are limited.
The Ontario government effectively boxed them in when they established a 23,000-square-kilometre exclusion zone – roughly the size of Prince Edward Island – in early 2012 that effectively walled off the area outside their claims to further mineral exploration.
It was the province’s answer to quell rising tensions involving two junior mining companies and the community of Kitchenuhmaykoosib Inninuwug (K.I.) First Nation. The two junior miners were paid off by Queen’s Park to abandon their claims.
It’s unknown when the province intends to lift that regional ban on exploration.
“We’re told (by the government) that they’re working on it,” said Morris.
“They threw a huge exclusion zone around K.I. and skillfully managed to exclude our properties. It’s caused all kind of problems which the government doesn’t understand or care.”
Morris said he’s been taken aback by criticism that Northern Superior sued to get a payout from Queen’s Park. “The reason we took the government to court was because we had the properties up there – and still do – and we were getting screwed out of an opportunity to move those properties forward.
“We tried. We stood up for what we thought (was right). We’ve been treated very badly by the local First Nation and the government. We clearly highlighted things that we thought were wrong with the process. We got no support from anybody. I’m not here to make policy for the industry. With the resources that we have and the size of the company we are, it didn’t make sense to pursue this.”
Currently, Northern Superior has two cornerstone gold plays: the Croteau Est in west-central Quebec and the Ti-pa-haa-kaa-ning (TPK) property in Ontario’s Far North, near the Ring of Fire.
At TPK, Morris said they enjoy a “stellar” relationship with Neskantaga First Nation, supported by an exploration agreement that is periodically renewed.
Morris doesn’t hide his feelings that Quebec provides a more mining-friendly working environment with plenty of infrastructure near the company’s gold property and an engagement protocol with the Indigenous Cree that’s far more predictable.
Morris finds that during early-stage exploration programs in Quebec, not a lot of consultation is required.
“Whereas you go into some areas of Ontario, it becomes incredibly difficult for a small junior to even know where to begin in terms of consultation.”
Morris suggests Queen’s Park and First Nations need to step back and better understand where junior explorers fit in the mining cycle.
“If they are serious about being open for business, they need to understand the business they say they’re open for.
“You’re either open for business or you’re not. And if you’re not open for business you should be honest about it and say so.”