I would like to thank you all for the opportunity to speak here today.
My name is Ron Coombes. Here's a little of my history: on both sides of my family tree I'm a fourth-generation Canadian, and I'm very proud to be a Canadian.
I represent the Waterfront Mining Group of public companies, as president and CEO. We have an office in Thunder Bay, and our main office is in West Vancouver, British Columbia. I've been involved at the executive level in Canadian mining exploration for the past 18 years.
Within our group of companies, we have a major open-pit molybdenum deposit located in northern British Columbia and numerous other exploration projects at various stages of exploration and development in Ontario, British Columbia, and Labrador. Our senior advisers have been in the exploration and mine development business since the early 1960s, and our focus is to explore here in Canada.
Exploration for minerals creates opportunities for high-paying jobs and other forms of indirect opportunity, such as environmental, food, fuel, and supply contracts. These are just a few of the associated benefits available to all local community people.
The policy throughout the mining industry is to retain qualified persons within the communities nearest to exploration projects. This, in most cases, means direct opportunities for first nations communities. In recent years the industry has been inundated with such buzzwords as “duty to consult”. Although many opportunities have been realized within the aboriginal communities, many supportive mining companies have recently been falsely accused, by lawyers who represent these same aboriginal groups, of not consulting with first nations.
You may be wondering how this is relevant to today's discussion on the development of the potential resources in northern Ontario's Ring of Fire and the rest of Canada. I'll get to that question in just a couple of minutes.
First, what has brought us the present opportunity in northern Ontario, now known as the Ring of Fire? Is it infrastructure? No, there is none. Ontario is a very expensive mining district in which to explore for minerals or develop a mining project. Building a mill and mine site, even when roads and power are nearby, is so expensive that unless one has a project of world-class size, it's simply not feasible to develop anything in the Ring of Fire.
Cliffs Natural Resources has a deposit with the economic size to support initial infrastructure costs, which will allow other smaller mines to be economical.
Concerning future opportunities, exploration companies such as ours have taken a chance on the favourable geology and spent hundreds of millions of dollars exploring for exploitable resources in northern Ontario. I'll say once more that world-class deposits are rare and not found often; that's why we only occasionally label one as being world class.
Cliffs Natural Resources owns and is developing the Big Daddy chromite deposit, the only deposit large enough to support the initial infrastructure development costs. Cliffs Natural Resources has been involved in the mining of natural resources for a long time and has a reliable reputation.
The stakes are high with the cost of their development. Incidentally, correct me if I'm wrong; when I saw your number of $500 million, I thought it would be closer to $1 billion, all in.
Once their project has met all the rigorous environmental standards that are scientifically proven best practices, the project, with the aid of the proposed road corridor, will be fast-tracked into production.
How will this proposed road development affect other exploration plans? As an example, our company, White Tiger Mining Corp., traded publicly on the TSX venture exchange under symbol WTC, has developed a smaller deposit known as the Norton Lake property. It's located approximately 140 kilometres south along the proposed road corridor and about 40 kilometres due west.
The Norton Lake nickel, copper, cobalt, and PGM deposit remains open on surface and at depth down-dip. To date we've spent approximately $5 million on this project, and it has an NI 43-101-compliant resource of 2.2 million tonnes. At current metal values, the deposit has a current gross metal value of approximately $200 per tonne.
There are many other opportunities that will evolve with the development of a road along the proposed corridor. It's of interest and a coincidence that many other exploration opportunities are being explored along this proposed north-south road corridor.
White Tiger, during the past two years, without certainty of how to market economically, has postponed further development of its Norton Lake deposit. Everything changes once a proposed road is approved. If approval comes, we'll be able to commission a feasibility study to determine the economic and technical viability of the Norton Lake deposit.
In terms of streamlining the EA process, with regard to the aboriginal first nations and others who remain split on the idea of streamlining the EA process, I think it's fair to say that we all respect first nations' desire for discussion or negotiation. The desire to streamline the EA process is known to be overdue. It will create a more efficient process and at the same time not be a detriment to the process.
Streamlining is not unique in concept to Ontario. Other provinces are doing likewise, such as British Columbia, where they refer to it as harmonizing.
Turning to political involvement, we want to thank Mr. Harper and both the federal and provincial governments of Canada for committing to working with first nations and for recognizing that the resource sector and national interests should not be held captive to long-overdue legislative changes. As well, the industry needs the Government of Canada to provide clarity and direction to the current uncertainty in the resource industry. What is meant or required as “duty to consult” with first nations?
The industry recognizes its duty to engage in socio-economic participation agreements, but currently many first nations, during the exploration phase, construe the duty to consult as a duty to tax the industry in unique ways, and some bands are requesting payments for each exploration drill hole on crown land. As well, I've heard from some contractors that they've been approached by first nations groups that have a desire to create partnerships without making any equity involvement, expecting a percentage of the profits with no participation other than “you work with us.”
First nations cannot be faulted for their creative tenacity, although we do not believe that they have the right to tax while we work on crown land, especially while a project has no economic value. Junior exploration companies do not generate revenues and cannot afford the current financial uncertainty at the early exploration stage; it's just a simple fact. First nations' efforts should be focused on discussion and negotiation with the Government of Canada. Mr. Harper has expressed that the Government of Canada is dedicated to doing so.
The resource industry needs this issue addressed with firm, sound clarity; otherwise, financing exploration projects here in Canada may become impossible, as we are living in a global economy.
I've heard that a few companies within the Ring of Fire have already agreed to make payments on a per exploration hole basis. This formula or similar ones are absurd and a danger to Canada's future. To maintain a viable exploration industry, we need certainty. The long-term well-being of our industry is dependent on very significant private sector funding, which is now being threatened. We need some direction from government, as we are only businessmen and not well versed on these issues, as lawyers or politicians are.
How do we make it happen? No matter how large a company is, there are financial realities. Debts must be repaid and profit margins maintained in our business, all within the cyclical nature of the commodities markets.
With the demise of derivatives markets, the near collapse of the euro, and government bank bailouts in the United States, Cliffs Natural Resources is to be commended for keeping its major project alive and on schedule. The potential benefits to northern Ontario and the rest of Canada are enormous. The mining industry is a great business and offers a wealth of opportunity to all of Canada, but it's like a fruit tree in so many ways: if you let the fruit mature, there will be lots for all to pick, but if you pick it prematurely, there will be nothing for anyone.
With that, I want to thank you all.