2.0 Introduction

Prospecting Permits provide a low cost vehicle to explore large tracts of land in remote areas without interference from competitors. Permits are issued once a year, in the winter, so that exploration companies will have time to plan summer programs. Significant changes, such as eliminating Prospecting Permits, may require a longer period to review and evaluate, and, therefore, will not be considered at this time. However, the following changes are being contemplated:

• drop requirements for filing work plans with applications for Prospecting Permits;
• increase expenditure requirements on Prospecting Permits;
• clearly define acceptable exploratory work on Permits;
• reduce the confidentiality period for exploratory work reports filed on Prospecting Permits;
• increase the time allowed to process Prospecting Permit applications, and
• extend the period for which a promissary note must be guaranteed from four months to six months.

2.1 Requirements of a Work Plan (s. 29(3)(b), 31(1))

Issue:

The requirement to file a work plan serves no useful purpose.

Current Status:

A work plan must accompany the application for a Prospecting Permit. Issuance of a Permit implies approval of the work plan.

Analysis:

Work plans tend to be uninformative documents which are not used to determine the acceptability of an application. The plan serves no function under the Canada Mining Regulations because a government official cannot determine the validity of the program proposed. Initial exploration work is typically an airborne survey. Until results are available, follow-up ground work cannot be predicted. Also, the work plan was never intended to be the subject of environmental screening because intensive ground work requires a land use permit.

Options:

1. No change.

2. * Drop the requirement to submit a work plan under paragraph 29(3)(b) as part of the application for a Prospecting Permit. If this option is followed, the requirement for the Chief to approve the exploration to be undertaken should be removed from section subsection 31(1) and "of a type approved by the Chief" should be deleted from the Regulations.

2.2 Work Requirements on Prospecting Permits - Amount (s. 31)

Issue:

Required work expenditures on Prospecting Permits are based on 1970's costs.

Current Status:

To keep a Prospecting Permit in good standing, the permittee must spend a minimum of $0.10/acre during the first period, $0.20/acre during the second period and $0.40/acre during the final period. Permit applications must be accompanied by a deposit equal to the amount the applicant is required to spend in the first period. Before the second or third work period, the Permittee must also make a deposit equal to the expenditure requirements for that particular period. Once work is completed and approved, the portion of the deposit equal to the value of the work approved is returned to the permittee.

Analysis:

Required expenditures on work for Prospecting Permits have not been changed since 1978. Between January, 1978, when the Canada Mining Regulations were completely revised, and May, 1996, the Consumer Price Index (as a measure of inflation) increased by 255%. Increasing the Permits by the inflation factor would result in expenditure requirements of $0.25/acre in the first term, $0.50/acre in the second term and $1.00/acre in the third term. However, the inflated values, coupled with the requirement for a deposit, may deter applications for Permits. For example, the deposit for the third work period of a maximum size Permit would be $71,661. There are other problems associated with using an inflation factor which are discussed in Section 3.8.

Options:

1. No change.

2. Increase the value of required exploratory work by the inflation factor since 1978.

3. Increase the value of required exploratory work to levels similar to, but competitive with, other Canadian jurisdictions.

4. * Establish a steeper escalation in work requirements to $0.10/ acre in the first term, $0.25/acre in the second term and $0.50/acre, to encourage work and early decisions to stake claims.

2.3 Exploratory Work - Types Allowed (s.31(1), 31(2)(b) and Schedule II)

Issue:

There is no definitive guide to determine types of exploratory work allowed on Prospecting Permits.

Current Status:

Section 2 of the Canada Mining Regulations defines exploratory work as "any work done for the purpose of determining the economic potential of a permit area". In contrast, the Regulations provide a clear and comprehensive definition of representation work (work on mineral claims). Schedule II sets out the value of exploratory work and representation work and the information required to be submitted in relation to that work, and is structured in a way that is consistent with the definition of representation work.

Analysis:

On a Permit, required work would be anything that meets the definition of exploratory work. It is sometimes difficult to assess against Schedule II whether work was done to assess the economic potential of the Permit area, given the broadness of the definition for exploration work. A further discussion of types of work allowed is provided in section 3.12 of this paper, in the context of mineral claims.

Options:

1. No change.

2. Define exploratory work in the same way as representation work.

3. * Insert a section listing types of exploratory work, which would be consistent with the definition used in s. 38(1) (a)(b) and (c), and amend the definition of exploratory work in s. 2 accordingly.

2.4 Exploratory Work - Confidentiality (s. 31(3))

Issue:

1) Is the confidentiality period for exploratory work too long?

2) Administrative complications arise when a single document reports exploratory work (for Prospecting Permits) and representation work (for mineral claims).

Current Status:

Assessment reports on exploratory work remain confidential for three years after expiry of the Prospecting Permit (which have terms of three or five years). In contrast, a representation work report remains confidential for three years from the date filed or until the claim lapses, whichever is the earlier.

Analysis:

A problem may develop when a permittee or permitees, who have staked claims within their Permits, submit a single report documenting work done on both the Permit and the claims, because of the differing confidentiality periods. Administrative problems may arise in trying to distinguish the representation work from the exploratory work. One solution is to request two separate and distinct reports. However, work on Permits and claims may be closely linked and difficult to separate.

It has been suggested that the confidentiality period for exploratory work is too long for assessment reports on Prospecting Permits and that reports should become public when the Permit lapses. This is not possible because the final report does not have to be submitted to the Department until 60 days following the termination of the Permit. The confidentiality period could be reduced to one year after the termination of the Prospecting Permit from the present three years. However, this reduction in time would create a different problem: work on a Permit area could become available under the Permit, while representation work on the claim is still confidential. A further compromise would be to release reports three years after they are filed.

Options:

1. No change.

2. Change the confidentiality period for all reports of exploratory work to three years from the date filed.

3. Exploratory work intended to be used as representation work on mineral claims must be filed separately from exploratory work reported for the Prospecting Permit.

4. Combination of 2 and 3.

5. Establish a confidentiality period of one year after the termination of the Permit, assuming no change is made in the confidentiality period for mineral claims.

6. Where there is a conflict in date for release of a report, release all the data at the latest date.

7. Where there is a conflict in date for release of a report, release all the data at the earliest date.

8. * Option 2, subject to Option 5 (if the three year confidentiality period extends beyond a year after termination of the Permit) and also subject to Option 7.

2.5 Application and Issuing Dates (s. 29(4), s. 29(12) and s. 29(14))

Issue:

There is insufficient time to process applications for Prospecting Permits, given the escalating number of applications over the past four years and new requirements for consultation.

Current Status:

Applications for Prospecting Permits are accepted between December 1 and 31 each year. Approved Permits are effective February 1 of the next year. Permits must therefore be processed during December and January. The large number of applications received in recent years and the increased need for consultation has made timely processing problematic.

Analysis:

During the past four years, between 89 and 393 permit applications have been processed per year in the Northwest Territories. The increase, combined with the recent requirement for external consultation, has resulted in additional resources being needed to meet the February 1 deadline. In particular, the new practice of consulting with settled land claim groups, community representatives, other federal departments and the Government of the NWT has increased the time required to process each application, independent of the greater volume. Some of these participants have voiced concerns about the short length of time allowed to study relevant applications.

Increasing the time to process the Permits is the most feasible way to respond effectively to the escalating work load.

Options:

1. Change the filing period to the month of November, with February 1 remaining as the effective date. This option, although extending the consultation and processing period, would mean that meetings would have to take place over the Christmas period. This could make arranging meetings with affected parties difficult.

2. * Change the effective date to March 1 each year. This option would extend the consultation and processing period and would avoid the Christmas period. The date of issue would be closer to summer, but still allow time to obtain land use permits. However, it may be too late to allow for supplies to be transported over winter roads.

3. The application, review and issuance period could be moved to another part of the year, for example: receive applications during September; review and consult during October and November, and issue Permits effective December 1. However, the Mining Recorder's Office is extremely busy from April through to the middle of October with the increased demand for client service associated with the summer field season.

2.6 Term of Promissary Notes (s. 29(7))

Issue:

Reports submitted 60 days after expiry of a work period on a Prospecting Permit must be reviewed and approved before the end of the term of the promissary note. This is not adequate time.

Current Status:

Along with an application for a Prospecting Permit, the Permitee must submit a deposit for an amount equal to the amount that must be spent on the Permit area in the first work period. The deposit may be in the form of a promissary note, which must be guaranteed for a term of not less than four months after the expiry of the period for which it was deposited. The Permit holder has 60 days after the termination of the work period to submit their report on exploratory work.

Analysis:

A Permittee may submit a report on exploratory work 60 days after the end of the work period. In these instances, Geology Division and the Mining Recorder's Office have only two months to review and approve the report while the promissary note is still in place.

Options:

1. No change.

2. * Amend the Regulations to require promissary note be guaranteed for a period of six months after expiry of the period for which it is deposited.

3. Amend the Regulations to require reports be submitted at the end of the work period.

Back to Index Page