The Conversation Continues……
The Reclamation Security Tracker from the Department of Mines and Energy website, indicates that as of December of 2018 Atlantic Gold (the parent company) has a security of $8.13 million with increase in increments to 2019 based upon the extent of disturbance. In 2011 the estimates for the cost of reclamation of the Moose River site was $10.4 million.
There has been some concern about the section of the act that allows satellite mines to act as a single mine. Could this impact the reclamation bond for the satellite location? The registrar of Mineral and Petroleum Rights has indicated that each individual mine site will be subject to a reclamation bond or security. Therefore the bond for the Cochrane Hill site will not form part of the main Touquoy Mine bond.
Some of the mines in Nova Scotia are employing progressive reclamation; that is after an area is mined the site is rehabilitated instead of leaving it to the end of the mine. Progressive Reclamation of Industrial Disturbances is a preferred component of Stewardship and a Best Management Practice to reduce the environmental footprint of industrial activities on public land. The intent of Progressive Reclamation is to initiate “ecosystem re-establishment” on those portions of the industrial disturbance that are no longer necessary for the immediate operating requirements of the lease. During my office visit to the Atlantic Gold office in Sherbrooke, I did ask if Atlantic Gold was employing progressive reclamation at the Touquoy mine site. The answer I received was “I don’t know”.
As noted in the introduction, Under the Industrial Approval, Atlantic Gold is required to post a $10.4 million bond in advance of commencement of construction. In March 2016, the Nova Scotia Department of Natural Resources and Nova Scotia Environment accepted a proposal to provide a phased reclamation security to provide satisfactory financial security on a progressive basis commensurate with the area disturbed by the activity on the site at any given time. This approach was designed to ensure that adequate financial security was in place before each phase of disturbance, construction and operation and that the level of provided financial security will be commensurate with the level of reclamation liability associated with the Touquoy Mine at any point during the project. At the Report effective date, $5.7 million had been posted. Two additional financial security tranches were due at specified times, comprising $2.6 million due in the fall of 2018, and $2.10 million payable in the fall of 2019. By 31 December, 2019, the full financial security of $10.4 million must be lodged”. Moose River Consolidated Phase 2 Project Nova Scotia, Canada NI 43-101 Technical Report Page 24-3 ”
Finally there has been some concern regarding the ability to post reclamation bonds in the form of “contributions in kind”. A Joan Baxter article “Like blood from a stone reports “In 2017, Atlantic Gold reported to ESTMA that it paid $2.1 million in “fees” to then Department of Natural Resources (the Geoscience and Mines branch moved to DEM in 2018). The company described this as “In-kind payment reclamation bond valued at fair market value of the bond” for the Moose River mine. In 2016, Atlantic Gold reported that it paid the NS Minister of Natural Resources an “in-kind’ reclamation bond ($3.43 million).” On the surface it appeared that Atlantic Gold was able to deduct the costs of relocating the Moose River Gold Mines Provincial Park and costs associated with the construction of new infrastructure towards the reclamation bond that was owed the province for the Touquoy Mine.
ESTMA stands for Extractive Sector Measures Transparency Act. The Act requires businesses to publicly report certain payments they make to all levels of government in Canada and abroad in relation to the commercial development of oil, gas and minerals.
The article did investigate the “in-kind” claim on the form with ESTMA. The Baxter article goes on to say “ESTMA itself has this to say about how the value of “in-kind” payments is determined: “If a business subject to the Act (“Entity”) can determine the cost of an in-kind payment; that is the value that should be reported. If the cost is not determinable, the in-kind payment should be reported at fair market value.”
Given this claim, I placed a call to the Department Of Energy and Mines to obtain some clarification on this. I was told that contributions in kind are not allowed! However, these expenditures were obligated to be reported under ESTMA.
Save myself from getting the same answer from ESTMA as Joan did I interpreted the claim of “in-kind” as follows. In order to proceed with the Touquoy Mine, Atlantic Gold was obligated as part of the approval process to move the Moose River Gold Mines Provincial Park to another location and provide what ever infrastructure upgrades were necessary to re-instate it as functioning park with public access. Parks were at the time of re-location under the Department of Natural Resources. These were true costs incurred by Atlantic Gold and they had to be reported on the ESTMA form under the government department that was mandated to oversee parks.
Were these costs used to decrease the bond owed the province, the province says no. Were they credited towards royalty payments?… note to self – investigate.