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Darryl Stretch, president and CEO of Solid Gold Resources, received a rare court injunction in January suspending drilling on claims near Lake Abitibi in Northern Ontario and ordering him to consult with the Wahgoshig First Nation.
Darryl Stretch, president and CEO of Solid Gold Resources, received a rare court injunction in January suspending drilling on claims near Lake Abitibi in Northern Ontario and ordering him to consult with the Wahgoshig First Nation.

The Law Page

Junior mining firms in 'revolt' over native deals Add to ...

On the sidelines of the mining industry’s massive annual conference in Toronto in early March, a group of disgruntled junior exploration companies held a private meeting.

Calling themselves Miners United, the ad-hoc group of about 60 small-firm executives shared concerns about the concessions and cash they say native bands expect from companies looking for minerals on Crown lands that are considered traditional aboriginal territory, where bands retain hunting and fishing rights. Scores of disputes between native groups and mining companies now end up in court.

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A landmark 2004 Supreme Court of Canada decision said the Crown has a “duty to consult” native bands about development on Crown land that is considered part of a band’s traditional territory. Courts have allowed governments to delegate part of this duty to resource companies, many of whom then negotiate agreements with native groups.

But there is a growing backlash among junior miners about these agreements.

“There’s a revolt taking place, frankly,” said Neal Smitheman, a lawyer with Fasken Martineau DuMoulin LLP who acts for junior mining firms in disputes with aboriginal groups and who spoke at the Toronto meeting. “What’s being asked of them has nothing to do with consultation. It has everything to do with compensation.”

Confrontations between native bands and mining companies, particularly in Northern Ontario, have been increasing. However, the province’s long-awaited new Mining Act regulations, recently released in draft form, would alter Ontario’s “free entry” system of exploration on Crown land. Exploration companies would first have to file plans with the government and native groups, as well as seek permits in some cases, before drilling.

Meanwhile, conflicts continue. The Miners United meeting came just days after the Ontario government withdrew from exploration a large tract of Crown land about 600 kilometres north of Thunder Bay. The move was in response to opposition by the Kitchenuhmaykoosib Inninuwug First Nation, which has refused to allow mining on Crown land it considers its traditional territory.

The band, which saw six members go to jail for contempt of court for blocking drilling by Platinex Inc. in 2008, is still protesting against the presence of a junior mining company, God’s Lake Resources Inc., whose president and chief executive officer, Eduard Ludwig, attended the Miners United meeting.

Also at the meeting was Darryl Stretch, whose Solid Gold Resources Inc. was hit in January with a rare court injunction suspending his drilling on claims near Lake Abitibi in Northern Ontario and ordering him to consult with the nearby Wahgoshig First Nation.

Mr. Stretch, whose lawyer is Mr. Smitheman, has appealed the injunction and plans to launch a lawsuit against the Ontario government. He said a $1-million financing deal he had lined up fell through because of the controversy.

Mr. Stretch said the Wahgoshig wanted him to pay for a $100,000 archeological study to determine if his drill sites were disturbing burial grounds. He refused, saying Solid Gold could not afford it. He argues that his company has no legal requirement to consult the band. “It’s not my obligation to go find arrowheads for those people, period,” he said in a phone interview.

“If they don’t like you, you don’t work,” he said. “What kind of a deal is that? Because I didn’t do it right, the way the Indians wanted me to? Because I didn’t give them money? Because I didn’t beg them for permission to go? It’s just ridiculous, the whole concept.”

Chief David Babin of the Wahgoshig, which sought the injunction after a brief November meeting with the Solid Gold president resulted in an impasse, described Mr. Stretch’s comments as offensive.

“This guy has no intention of working with first nations people,” Chief Babin said in an interview, noting that his band has signed agreements with other exploration companies.

Some in the mining business sympathize with Mr. Stretch but question his uncompromising stance.

“There’s a bunch of us in the industry happy that someone takes a hard-line stand. He may be taking too rigid a stand,” said Garry Clark, executive director of the Ontario Prospectors Association. He also attended the meeting of Miners United, which he said may end up as a subcommittee of the OPA.

Mr. Clark said the prices that native bands are charging for exploratory drilling keep rising and often top $100,000. Junior exploration firms, with no revenue, cannot afford such prices, he said.

In some cases, exploration companies are paying per drill hole, or per metre of drilling, Mr. Clark said, adding that the Ontario government doesn’t know how much cash is changing hands because the deals are usually confidential.

Mr. Clark favours consultations with native groups, to ensure drilling operations do not disrupt hunting season, for example; or, once a mine is being built, to ensure local people benefit from its operations.

While he believes Ontario’s new rules may ease the disputes, he is not sure they will stop the flow of cash to native groups at the exploration stage: “They have to understand that we can’t be held, more or less, to ransom to get on the land.”

Follow on Twitter: @jeffreybgray

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