Canada: A Guide To Mining Titles In Quebec: Mining Of Metallic, Industrial And Construction Minerals

Copyright 2009, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Mining, November 2009

The province of Quebec is one of the most attractive mining jurisdictions in Canada. It offers mineral potential, top expertise, advantageous tax incentives and a modern legal regime. With the adoption by the Government of Quebec of a new Mineral Strategy in June 2009, this mining environment is expected to further improve over the coming years as a result of the introduction of funding and legal measures aimed at promoting the development of new projects, fostering exploration work and ensuring an environment- and community-friendly approach to mining. See the July 2009 Blakes Bulletin on Mining: Quebec Government Unveils Mineral Strategy for a discussion of this new mineral strategy.

This bulletin provides an overview of the various mining titles necessary to conduct mining of metallic, industrial and construction minerals in the province of Quebec throughout the mining life cycle. Mining of petroleum and gas and brine and the operation of underground reservoirs, as well as mining in seabed areas, require different mining titles which are not addressed in this bulletin. It also outlines certain rights and obligations associated with such mining titles.

Quebec's mining legal regime is set forth principally in the Mining Act and governmental regulations supplemental thereto. Other laws, such as environment, public lands, forests and tax, complement the mining framework set forth in the Mining Act.

Since 2000, the province has implemented a highly-developed computerized mining register which is open for public consultation. This register contains information regarding mining titles and title holders and numerous online maps and tools allowing for the efficient search and management of mining titles.

1. EXPLORATION AND DEVELOPMENT

Mining begins with the search for minerals. In Quebec, mining is open to everyone; however, no person may conduct any exploration work without a valid exploration title.

A. Claims

The claim is the only title that may currently be issued for exploring for mineral substances. A claim gives its holder the exclusive right to search for mineral substances (other than petroleum, natural gas and brine, sand, gravel and other surfaces substances) on the parcel subject to the claim. A claim may be obtained:

• by map designation, in which case it is called a "map designated claim" or a "CDC" (from the French "claim désignée sur carte"), or
• by staking on lands designated for such purposes, in which case it is called a "staked claim".

Since 2000, map designation is the principal method used to acquire claims. This method consists essentially in choosing pre-established parcels of land available for exploration from maps prepared by the Ministry of Natural Resources and Wildlife. This method is relatively simple and fast. In order to acquire a "CDC", an applicant must complete a notice of designation of claim in a prescribed form, in which it will identify itself and make a selection of claims, and send such notice to the office of the mining registrar or the regional office, together with the payment of prescribed fees.

Staking is more complex. In order to obtain a staked claim, the applicant must first hold a valid prospecting licence and acquire staking tags from the Ministry of Natural Resources and Wildlife. The applicant may then stake the land in accordance with prescribed staking rules and must submit, within 20 days from the date of staking, a notice of staking, a copy of the map of mining titles showing the perimeter of the staked land as well as several other supporting documents, together with the payment of prescribed fees, to the office of the mining registrar or the regional office.

If the notice of map designation or the notice of staking is accepted, the applicant will be issued a certificate of registration in respect of the selected claims.

A claim has a term of two years. It may be renewed for additional periods of two years upon compliance with renewal and minimum exploration work requirements and the payment of renewal fees. A claim may also be abandoned in a prescribed manner.

The holder of a claim may conduct exploratory work for mineral substances on its parcel, other than for petroleum, natural gas and brine, sand, gravel and other surfaces substances. The holder may also extract or dispatch mineral substances, but only for geological or geochemical sampling and in a quantity not in excess of 50 metric tons. Similarly, deforestation of the parcel of land is permitted without a special permit, but only for line cutting, trenches and excavations, subject to, in the latter case, receiving prior authorization.

While the holder of the claim is given freedom to manage the exploration work on the parcel of land subject to its claim, it must nonetheless conduct a minimum amount of exploration work in order to keep its claim active. The nature and the minimum cost of such work, as well as various rules in respect of the allocation of such work among claims and the timing thereof, are prescribed by regulation. Failure to comply with this requirement may result in the loss of the claim and, consequently, in the loss of priority over the minerals that may later be found in the land subject to the claim.

B. Mining Exploration Licences And Exploration Licences For Surface Mineral Substances

Prior to November 22, 2000, explorers could be issued mining exploration licences and exploration licences for surface mineral substances.

Mining exploration licences were issued for the exploration of those same minerals for which claims are currently issued instead. Mining exploration licences are no longer issued and those few mining exploration licences that may still exist will eventually disappear on expiry or following their conversion into map designated claims, as applicable.

Exploration licences for surface mineral substances were issued for the search of surface mineral substances, except sand, other than silica sand used for industrial purposes, gravel, common clay and certain other surface mineral substances. Since November 22, 2000, such licences are no longer issued and those that have been issued prior to that date have likely all expired. Persons wishing to mine such surface mineral substances must now obtain a lease to mine surface mineral substances, as more fully described below.

2. EXTRACTION AND PROCESSING

The development of a mine generally includes a number of important activities, such as conducting a feasibility study and an environmental assessment, designing the mine, acquiring the right to mine and preparing the site for mining. A claim may permit some of this preparatory work, but intrusive activities on the ground, and in particular mining of mineral substances, will require that a mining lease or another extraction title be obtained, as described below.

A. Mining Lease

The mining lease is the title allowing its holder to mine any mineral substances, other than surface mineral substances, petroleum, natural gas and brine, in the territory subject to the lease. The "mining concession" is the predecessor of the mining lease.

Any person holding one or more claims or mining exploration licences may obtain a mining lease for the parcels of land subject to such claims or licences, provided that such person can prove the existence of indicators of the presence of a workable deposit on such land. For such purposes, the applicant must submit an application to the Minister of Natural Resources and Wildlife, together with documents proving the existence of such indicators of the presence of a deposit and payment of prescribed fees. Additional documents may be requested if the parcel subject to the lease is located in restricted areas or is subject to other mining titles. The area of a mining lease generally may not exceed 100 hectares.

A mining lease has a term of 20 years. It may be renewed for additional periods of 10 years, but generally not more than three times. There are no renewal fees, but the holder of a mining lease must pay the annual rental for the first year of the renewed term at the time of filing the renewal application. A mining lease may also be abandoned in whole or in part, subject to compliance with environmental laws and fiscal obligations, and notification to creditors and others. If the lessee wishes to preserve its rights over the parcel of land covered by the lease that it wishes to abandon, it has the option to acquire a claim to such parcel of land.

The lessee must pay an annual rent before the beginning of each year of its lease. The amount of the annual rent is prescribed by regulation and depends on the category of the land on which the parcel of land subject to the mining lease is situated.

A mining lease holder has the right to use the surface of public land on its parcel, but such use must be restricted to mining purposes and shall be restricted, in particular, to the establishment of tailings yards, workshops, plants and other facilities required for mining activities. In certain cases, the holder of the mining lease may be required to purchase the land subject to the lease or to obtain the consent of other users thereof. A lessee may generally use sand and gravel from its parcel for mining activities without being required to obtain a separate lease for such purpose. Subject to obtaining necessary authorizations, a lessee may deforest the land, build, use or maintain access roads, cableways, railways and pipelines, build storage yards for mine tailings and other mining facilities and develop watercourses necessary for the operation of a mine.

B. Lease To Mine Surface Mineral Substances

In general, no person may extract or mine surface mineral substances unless it holds a lease to mine surface mineral substances.

A lease to mine surface mineral substances used for construction purposes, such as sand, except silica sand used for industrial purposes, gravel, common clay, every other mineral substance found in its natural state as a loose deposit and inert tailings, is non-exclusive, except if it is granted to municipalities and other public bodies for roads or other public works, if a supply guarantee in respect of such minerals is warranted, or if such minerals are mined for export outside Quebec, in which case a lease for such minerals can be exclusive. A non-exclusive lease is not transferable.

A lease to mine silica sand used for industrial purposes or surface mineral substances other than those for which a non-exclusive lease can be issued is exclusive.

A non-exclusive lease is valid from the date of its registration in the mining register and ends on March 31 of the year following the year of its registration. It can be renewed annually. The term of an exclusive lease will depend on the anticipated duration of the activities for which the minerals are mined, but may not exceed 10 years. The terms of an exclusive lease may be renewed for periods not exceeding five years. Exceptionally, the term of an exclusive lease to produce peat is 15 years, renewable for the same number of years. As with a mining lease, a lease to mine surface mineral substances can be abandoned in whole or in part, subject to compliance with environmental laws and fiscal obligations, and notification to creditors and others.

The holder of a lease to mine surface mineral substances must pay annual rent. The amount of such rent and certain exemptions therefrom are determined by law.

Prior to commencing any mining (extraction) work, the lessee or the operator of a mine or mill on the land subject to a lease must submit a rehabilitation and restoration plan for the site of the proposed mine and related facilities and deposit a financial guarantee, as more fully described below.

3. MINE CLOSURE AND REHABILITATION AND RESTORATION MEASURES

Mining has a significant impact on the environment, and the impact can be even more pronounced after an improper closure of a mine. In addition to the usual damage caused to the environment by the deforestation of land, construction of roads and excavation and mining of substances, a mine that is no longer operated can be a source of health and safety hazards due to the existence of the accumulation of toxic gas, unsupervised accessible deep tunnels and dumps. The province of Quebec, similar to many other mining jurisdictions, imposes early in the mining life cycle complex measures on holders of mining rights aimed at ensuring that the environment is rehabilitated and restored to a satisfactory condition after the end of the life of a mine.

The principal responsibility imposed by the Quebec government is the obligation to rehabilitate and restore the land. Every mine or mill operator, every lessee and every other persons carrying on certain exploration work or mining activities must, before commencing any mining activities, submit a rehabilitation and restoration plan and deposit a financial guarantee in support of the performance of such plan with the Minister of Natural Resources and Wildlife. The amount of the financial guarantee is currently set at 70% of the estimated rehabilitation costs. The government has discretion to increase or decrease the amount of such guarantee and to impose its payment in full in certain circumstances. It should be noted that the new Mineral Strategy of the Government of Quebec recommends increasing the amount of this guarantee from 70% to 100% of the estimated rehabilitation costs. If the rehabilitation plan is not complied with, the government may have the rehabilitation work performed by third parties at the expense of the person otherwise responsible for such work.

Among other protective measures, the holder of a mining claim, mining exploration licence or exploration licence for surface mineral substances is required to remove, within 30 days after the termination of its mining right, all its property from the parcel of land subject to such right. In case of mining leases and mining concessions, the holder thereof must remove all its property and any extracted ore from the parcel of land within one year from the termination of its lease or mining concession, unless the holder thereof opted, when permitted by law, to register a claim for the parcel of land covered by the lease or mining concession. If justified by the circumstances, the one-year term may be extended. Upon expiry of this term, however, any property and ore remaining on the public land will become public property or the government may remove it at the expense of the holder of the mining right.

CONCLUSION

Mining is a complex and constantly evolving area of activity which is highly regulated due to its important environmental, social and economical impact. Quebec's mining regime has its own particularities, and explorers, investors and other participants in the mining industry should be aware of the legal requirements applicable to them throughout the mining life cycle so as to ensure proper compliance and thereby avoid any unexpected pitfalls.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.