Mineral And Mining Rights In Newfoundland And Labrador

Mineral tenures in the Province of Newfoundland and Labrador are governed by the Mineral Act, SNL 1990 c. M-12 (the "Mineral Act"). Below is a summary of the main aspects of the mining tenure system in Newfoundland and Labrador including the issuance of mineral licences, mining leases and surface leases.

Ownership of Minerals

Title to minerals in Newfoundland and Labrador are vested in the Provincial Crown. Consequently, Mineral exploration and mining in the Province of Newfoundland and Labrador are regulated by the Government of Newfoundland and Labrador principally through the provincial Department of Industry, Energy and Technology (the "Department"). Under the Mineral Act, "minerals" are defined as a naturally occurring inorganic substance including coal and minerals contained in mine tailings, excluding water, quarry materials as defined in the Quarry Materials Act, petroleum as defined in the Petroleum and Natural Gas Act, or stratified deposits other than coal from which oil can be extracted by destructive distillation.

Historical

In addition to the tenure system created by the Mineral Act, in some circumstances parties can hold mineral rights as part of historical fee simple land grants. While modern Canadian land grants typically exclude grants of subsurface mineral rights (they are, in turn, often governed by a separate mineral tenure system), historical grants did not always follow this practice. Holders of such fee simple lands may therefore possess both surface and subsurface mineral rights, and these rights may be held in perpetuity. A number of these historical grants still exist in Newfoundland and Labrador and fall outside the scope of the modern mineral tenure regime established by the Mineral Act.

Mineral Licences

Mineral licences are issued by the Minister of Industry, Energy and Technology pursuant to section 22 of the Mineral Act (hereinafter referred to as a "Mineral Licence"). An application for a Mineral Licence can be for a maximum of 256 claims and all the claims in the application must be coterminous. A claim is a 500 metre by 500 metre square (250,000 m²), being one quarter of a UTM grid square that is bounded by one corner of a UTM grid square. Subject to the terms under which the Mineral Licence is issued, subsection 23(1) of the Mineral Act grants to the licensee the exclusive right to explore for minerals, in, on or under the area of land described in the Mineral Licence from the date of issuing for the period of 5 years. A Mineral Licence may initially be held for a maximum of 20 years, provided that the licensee has complied with all the terms, provisions and conditions of the licence, that the required annual assessment work is completed and reported upon, and that the Mineral Licence is renewed every five years in accordance with section 28 of the Mineral Act. In accordance with section 28.1 of the Mineral Act, a Mineral Licence may be further extended for additional periods of one-year terms to a maximum of an additional ten years. A Mineral Licence extended in accordance section 28.1 is limited to 100 coterminous claims, may not be grouped with other licences issued under the Mineral Act and is subject to the terms and conditions set out in Schedule B to the Mineral Act.

In accordance with section 6 of the Mineral Act, a licence may be transferred at any time during its currency by forwarding an original, duly executed transfer to the mineral claims recorder. Any number of coterminous map-staked licences may be grouped to form a single licence, provided that the claims grouped does not exceed 256 map staked claims, licences are in good standing and held by the same individual or corporation, no extensions under section 28.1 of the Mineral Act are active, and the first-year assessment reports are submitted and accepted.

Upon the expiry of a Mineral Licence, the licensee may apply to convert the Mineral Licence to a Mining Lease in accordance with section 31 of the Mineral Act. If the Mineral Licence is not converted it will expire and, in accordance with section 27 of the Mineral Act, all minerals in, on or under the land affected by the expiry will be available again for staking.

Mineral Licences are subject to the terms and conditions set out as a Schedule to the Mineral Act and, in accordance with paragraph 22(3)(b) of the Mineral Act, other terms and conditions that may be set out in the licence or that may be prescribed by regulation.

Mining Leases

Pursuant to subsection 31(1) of the Mineral Act, provided the equivalent of the first three years assessment work has been completed and acceptable reports submitted, a Licence holder at any time has a right to be issued a Mining Lease for the minimum area necessary to cover an identified mineral resource (hereinafter referred to as a "Mining Lease"). A Mining Lease confers upon the lessee the exclusive right to develop, extract, remove, deal with, sell, mortgage or otherwise dispose of all the un-alienated minerals, or those specified in the Lease, in, on or under the land described in the Lease. Pursuant to subsection 31(5)(b) of the Mineral Act, a Mining Lease is subject to the following conditions:

that the lessee pays in advance an annual rental of an amount calculated in accordance with the formulae prescribed by regulation for the area of land to which it applies,
• that the lessee shall start mineral production capable of extracting a mineral or a mineral ore in saleable quantities within 5 years from the date of the beginning of the Lease and maintain that production without cessation except for a period totalling 5 years during the remainder of the period covered by the Lease,
• that the minister, and the other officers of the department that are authorized by the minister, having a right at reasonable times to enter a mine being operated by the lessee or land held by the lessee in connection with the working of the minerals demised by the Lease and to search, view, inspect and inquire into the condition of that mine or land and to inspect the books of account relating to the working of a mine and minerals or mineral ores being extracted from the land described in the Lease,
• that the lessee fulfils and observes the requirements of all statutes of the province and of Canada and regulations, orders and directions made under those statutes in respect of or relating to the premises demised by the Lease, including environmental control, maintenance of health, building and operational standards, the making of returns and reports and the doing or refraining from doing a matter or thing required to be done or not to be done under or by those statutes,
• that the lessee complies with all provisions prescribed by regulation pertaining to the Lease,
• that the lessee shall, where ordered to do so by the Lieutenant-Governor in Council, complete primary production, in whole or in part, in the province, of a mineral or mineral ore extracted or removed under the Lease, and
• that the lessee shall comply with those other terms and conditions that the minister may impose.

Although the conditions of the Mining Lease require that a lessee must start mineral production within 5 years from the date of issuance of the Mining Lease, the Minister of Industry, Energy and Technology may, upon request by the lessee, relieve the lessee from its production obligation and extend the production requirement.

In accordance with subsection 31(2) of the Mineral Act, the initial term of a Mining Lease shall not exceed 25 years. However, pursuant to subsection 31(6) of the Mineral Act, the minister shall, upon application by the lessee and upon being satisfied that the terms and conditions of the Mining Lease have been complied with, renew the Mining Lease for an additional term not exceeding 10 years from the date of the expiry of the original term of the Mining Lease or prior extension. In order to qualify for the extension, a lessee must demonstrate to the satisfaction of the Minister, including through the confirmation of a qualified person, the existence of a mineral resource that is of sufficient size and quality to be potentially economic.

Surface Leases

In order to develop a mineral resource, it is also necessary to obtain a demise of surface rights in accordance with section 33 of the Mineral Act to the area necessary to enable the lessee to implement the obligations imposed upon the lessee under the Lease and to carry out mineral exploration, mining operations or mineral processing and development in, on or under the land covered by the Mining Lease (hereinafter referred to as a "Surface Lease"). The term of a Surface Lease shall not extend beyond the period covered by the Mining Lease in relation to which the Surface Lease is issued.

Annual Rental

Subsection 31(5)(b)(i) of the Mineral Act provides that a mining lease is subject to the condition that a lessee pays in advance an annual rental of an amount prescribed by regulation for the area of land to which the lease is to apply. The annual rental requirement is further referenced in section 40 of the Regulations, which states that a Mining Lease shall provide for the payment of an annual rental as set out in Schedule B of the Regulations. Schedule B establishes that the annual rental fee is $120.00 per hectare of area of land covered by the Mining Lease.

Prior to the issuance of a Mining Lease, the Mineral Lands Division of the Department will correspond with the intended lessee to advise that a Mining Lease is ready for issuance and will be issued upon receipt by the Division of the first annual rental payment. The Mining Lease is provided thereafter when the rental payment has been received.

Cox & Palmer has extensive experience working in the mining industry and is pleased to provide legal and regulatory advice to mining companies looking to explore, develop and invest in the mineral potential of Newfoundland and Labrador.

This article was written with contributions by Rachel Delaney, a law student at Cox & Palmer.

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.

William T. Cahill
Cox & Palmer
Suite 1000 Scotia Centre
235 Water Street
St. Johns
NL A1C 1B6
CANADA
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