Enact laws that encourage First Nations’ rights to financial participation

[Tags: IBA; Financial Participation]

One of the main purposes of an IBA is to ensure that First Nations benefit from the mining project. In addition to the provision of employment opportunities, many IBAs contain some form of financial participation rights for First Nations. There are many different financial participation options, including:64

• Gross Overriding Royalty: This involves sharing a percentage of the mine’s gross revenue (i.e., pre-deduction of expenses) from the sale of ore. It is a common approach adopted by provincial governments for resource royalty payments.Unfortunately, it has seldom been adopted in resource agreements with First Nations.
• Equity:This is an ownership interest in all or part of the mining company. For public companies, the interest is held in the form of shares or stock options, and profits are generally distributed through dividend payments.
• Profit Share: This is a right to a percentage of the total profits from the mine (over its entire life). This approach may be of limited benefit to First Nations since proponents often offset revenue to reduce their profits.
• Guaranteed Base with Upside:This is a right to a percentage of the expected profits (as stated in the proponent’s bankable feasibility study). The right also includes a percentage of any profits exceeding the expected profits (i.e. the “upside”).
• Fixed Payments:This is a right to a predetermined and fixed annual payment that does not fluctuate with the mine’s profitability.

Personal Comment:

Options suggested by others include: land leasing, road tolls, smelting royalties, full or partial ownership of shared resource claims.....and the list goes on. One of the sites I visited even suggested that with IBA agreements that only ones imagination could be used as a limiting factor; sure, why not. Thanks to Luker's recent post (March 31, 2015, "Resource Revenue-Sharing Arrangements with Aboriginal People") I am encouraged to think that the Matawa IBA discussions will have some degree of common sense and fairness attached to them seeing as how past agreements can be used as a basis for arguement; example Voisey Bay. The only issue I see is convincing Matawa that their agreement with Noront should be no different then any other agreement established with other First Nations in Canada, BUT so far this looks like it will be a hard sell. So we wait......

Link to IBA info. : http://www.fairmining.ca/code/negotiation-of-agreements/impact-benefit-agreements/

GLTA

TM.