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May 24, 2013, No. 102

PDAC President Glenn Nolan joins Canadian Prime Minister Stephen Harper in Peru

PDAC President Glenn Nolan joined Prime Minister Harper during his visit to South America this month (May 21 to 24). During the visit, President Nolan met with leaders and representatives from the private sector who are helping to increase economic prosperity, reinforce democratic governance, and advance common security in the region. In his discussions with the Prime Minister, Nolan stressed the importance of revenue transparency and community engagement.

PDAC First Vice-President Rod Thomas in Africa with Governor General

PDAC First Vice-President Rod Thomas joined Canada’s Governor General, His Excellency David Johnston, in Africa along with leaders from Canada’s public and private sectors. The group included leaders in the fields of business, education, innovation, social justice and development who shared their experiences and knowledge. These exchanges aim to further develop the wide-ranging and multi-faceted relationships Canada has with Ghana, Botswana and South Africa. Click here for photos.

National Mining Week Events

Minister Joe Oliver kicks off Mining Week and opens the TSX

National Mining Week kicked off with Minister Joe Oliver opening the TSX with leaders form the PDAC, Mining Association of Canada, and industry executives. Prior to the event, the Minister discussed Canada’s mineral resource advantage and highlighted the role that Natural Resources Canada plays in helping to raise awareness of the important contributions the mining sector makes to Canadian communities and the national economy. For more information, visit www.nrcan.gc.ca/minerals-metals/nmw-smc/­4448.

Minister of Natural Resources visits PDAC 

PDAC Executive Director Ross Gallinger welcomed Minster of Natural Resources, the Honourable Joe Oliver, to the PDAC’s office during National Mining Week. The Minister participated in a roundtable discussion with industry leaders to discuss revenue transparency (photos). The PDAC, along with the Mining Association of Canada, Publish What You Pay Canada, and Revenue Watch Institute signed a Memorandum of Understanding (MOU) last year to improve Canada’s transparency regime as it relates to extractive company payments to governments. Learn more here.

Minister Oliver attends S-IMEW 2013

For the first time ever the Minister of Natural Resources attended PDAC’s Student Industry Mineral Exploration Workshop (S-IMEW) in Sudbury.  Minister Oliver toured the KGHM Podolsky property with some of Canada's top geosciences students.  “Mining continues to be a cornerstone of the Canadian economy, providing employment and benefits to communities across the country,” Oliver said. “Mining is directly responsible for 330,000 Canadian jobs. These are first-rate jobs in a growing global industry.” Check out all of the S-IMEW photos on Facebook.  


S-IMEW Generates Strong Media Interest

PDAC’s seventh annual Student Industry Mineral Exploration Workshop generated some excellent coverage from a variety of media outlets. This year’s event was highlighted with a keynote speech by Shawn Ryan, the prospector whose discoveries in Whitehorse, Yukon, spurred a new Klondike gold rush. The two-week gathering provides the top geoscience university students from across the country with an opportunity to experience the many facets of the mineral exploration industry. Learn more about the students’ experiences by watching this S-IMEW Video, and checkout the media stories.  CBC  | Sudbury Mining Solutions | Sudbury Star | Mining.com

PDAC Events

CSR Roadmap Survey

The PDAC is currently undertaking a broad outreach process to members and stakeholders in order to develop a new operational plan for its Corporate Social Responsibility (CSR) program. This process, called our CSR Roadmap, includes a short online survey, which is available in English, French and Spanish. Click on the link below to complete the survey and help shape the focus of the PDAC’s work in the area of CSR for the next five years: http://pdac-csrsurvey.environics.ca/

CSR Workshops in Vancouver on June 17

The PDAC will be holding two workshops for corporate members in Vancouver on June 17 as part of the development of its Corporate Social Responsibility Roadmap—the operational plan that will shape the association's activities in this area for the next five years. The workshops will provide an opportunity for PDAC members to share their experiences in managing social and environmental issues, and to identify how the PDAC can better support them in this regard. Please contact Emily Nunn, Manager, Corporate Social Responsibility, at [email protected] for more information.  


Securities Roundtable

The Prospectors & Developers Association of Canada is engaging stakeholders in discussions about what actions can be taken by actors in the securities domain (e.g. Ministers of Finance, Securities Commissions, stock exchanges) to streamline regulations and reduce compliance costs for PDAC members. Sessions have already taken place in Vancouver, Halifax, Montreal and Calgary. Upcoming sessions include Winnipeg (May 30) and Toronto (June 4).  For more information, contact Nadim Kara, Senior Program Director, at [email protected] or read more here. To register, please contact Alissa Reed at [email protected].

PDAC Convention 2014

Mark your calendars for PDAC 2014 from March 2-5

The four-day annual convention held in Toronto, Canada, has grown in size, stature and influence since it began in 1932 and today is the event of choice for the world’s mineral industry. In addition to meeting over 1,000 exhibitors and more than 30,000 attendees from 125 countries, it allows you the opportunity to attend technical sessions, short courses, as well as social and networking events. We look forward to seeing you there!

PDAC 2014 Convention – Hotels

Reservations open on June 26 at 11 am EDT. A list of participating hotels, and their PDAC preferred rates, will be posted to the Hotels page of the convention website on June 14. Book early to avoid disappointment!

Industry News

PDAC Past President Jon Baird honoured by CIM

Congratulations to Jon Baird who was honoured by the CIM Vale Medal this month at the Annual CIM Conference in Toronto. The award is presented as a mark of distinction and recognition to the person who has made a meritorious and practical contribution of outstanding importance to the mining and metallurgical industry of Canada. Baird, who is the Managing Director of the Canadian Association of Mining Equipment and Services for Export (CAMESE), started his career in the mining industry in Canada’s North working as a field geophysicist and has long been dedicated to bringing together the industry. “It is important how the Canadian mining industry collectively tackles problems that affect everyone,” says Baird.  

Mining Matters reach out to Franco-Ontarians

The Mining Matters Aboriginal Education and Outreach Programs team took on another exciting element of programming with their first-ever French-language instructed Mining Rocks Earth Science Program in the north west community of Dubreuilville, Ontario. A team of five instructors including three bilingual staff facilitated the program sponsored by Prodigy Gold Inc. (now Argonaut Gold Inc.). The four-day initiative included two complete days of school programming for all grades in both the elementary and secondary school, a field trip to Prodigy’s Magino Gold Project Core Shack, concluding with a lively Community Engagement Event. In all, 195 community members were reached and the event was deemed an incredible success by all who participated.

Directly following the program in Dubreuilville, Mining Matters completed another specially-tailored two-day program in Wawa, Ontario, sponsored by the Wawa Economic Development Corporation. Two French and English programs were delivered in Wawa secondary schools for Grades 9-12. Special guest speaker Dr. Robert Dodds presented a 45-minute, career-focused session that highlighted the exciting and varied careers available in the geosciences using his own personal story as the backdrop. In addition to a Community Engagement Event, the program reached a total 170 Francophone and Anglophone students, educators and members of the general public. The program’s wealth of information and hands-on activities related to rocks, minerals, the mining cycle and the exciting future opportunities available in the mining sector in the Algoma region.

Regulatory Update

Proposed approach to implementing New Fisheries Protection Provisions (Fisheries Act)

The attached discussion paper has been prepared by the Department of Fisheries and Oceans to explain recent amendments to the Fisheries Act related to fisheries protection and to provide an interpretation of new language and concepts found in the Act. The discussion paper focuses on the factors that will provide direction in Ministerial decision-making (the new section 6 of the Fisheries Act) and the new prohibition against causing serious harm to fish (the new section 35).

Your feedback is sought to further refine the interpretation in order to develop operational guidance prior to the coming into force of these new provisions. DFO asks that you provide feedback to [email protected] by May 29, 2013. In addition, a Science Advisory Report regarding scientifically significant terms in the amended Fisheries Act 2012 is now available on the Canadian Science Advisory Secretariat website:  

If you require further information, please do not hesitate to contact Steve Burgess, A/Director General, Ecosystems Program Policy, at 613-998-9088 or [email protected]PDAC contact: Nadim Kara, Senior Program Director, at [email protected].

PDAC and MAC in post-budget conversations with Ministry of Finance

On May 10, 2013, Tom King and Ron Gagel (members of the PDAC Finance and Taxation Committee) joined members of the Mining Association of Canada to discuss recent changes to Canadian Exploration Expenses (CEE) announced in Budget 2013 with officials from Natural Resources Canada and Finance Canada. The 2013 Federal Budget proposes to phase out this CEE treatment for pre-production mine development expenses (PPDE), instead treating them as Canadian Development Expenses (CDE). CDE are deductible on a 30% declining balance basis.

Prior to Budget 2013, a taxable Canadian corporation that incurred certain expenses for the purpose of bringing a new mine in Canada into production (e.g. removing overburden, stripping and sinking a mine shaft) could treat them as Canadian Exploration Expenses. Subject to certain restrictions, 100% of the balance in a taxpayer’s cumulative CEE account could be deducted by the taxpayer in a taxation year, or carried forward indefinitely to future taxation years (adapted from PWC memo).  
In an entity with a single mine that attains profitable status, this shift would result in the mining entity becoming subject to federal income taxes (and in provinces where the computation of taxable income is harmonized with the federal system, also provincial income taxes) before the mining entity has recovered its initial capital investment. This change in policy thereby:

  • adds additional cash flow risk to an investor in a mining project,
  • impacts cash flow available to repay project financing,
  • extends the time during which the project financing remains outstanding, and
  • consequently increases the financing cost of the project.

Of greater importance will be the negative impact this change in policy will have on the ability of junior mining companies to finance intangible mine development costs through the issuance of flow-through shares. The flow through of a CDE deduction versus a CEE deduction to an investor will be less appealing and will negatively impact this source of financing. Historically, most flow-through funding raised in respect of intangible mine development has come from junior mining companies. Senior mining companies are able to utilize the deductions against income derived from other projects.

There are very significant costs of bringing a mine into production and the resources of the junior mining industry are already strained.  The additional constraint on raising capital created by the budget will likely lead the junior mining industry to transfer all or significant interests in their development properties to the more senior mining entities.