The mining industry has gone through a challenging period, particularly with the rise of the cannabis market limiting the flow of investment capital into the junior space. However, the fundamentals of metals are solid and companies will need to invest to maintain supply.”

Frank Mariage

PARTNER, FASKEN

May 29, 2019

Fasken has been recognized as the world’s top mining law firm by Who’s Who Legal for four years running. Can you provide an overview of the current global footprint of Fasken and the significance of its Montreal office?

Fasken is a Canadian law firm with offices in Vancouver, Calgary, Toronto, Ottawa, Montreal and Québec with a staff of approximately 600 lawyers, with Montréal housing 190. Internationally, we have offices in London and Johannesburg, with a combined total of 700 professionals worldwide.

Fasken’s global mining group of practitioners comprises of 125 to 150 employees who interact with all mining related issues such as raising capital, the purchase, development and sale of projects, securing titles, engaging Indigenous communities, governments or other stakeholders, structuring transactions and resolving disputes. We boast a good footprint in Africa, South America, Asia and Australia with a major focus on Europe and America. In each of these regions, we work with local law firms to ensure we have the best local knowledge and expertise.

Does Fasken engage with firms of all sizes or focus mainly on larger, more established firms?

Fasken has expertise in opening as well as closing mines and provides a “cradle-to-the-grave” experience. This allows us to work with start-ups in the mining sector by adapting our services and fee structures accordingly, and as these develop, work with the company throughout the project’s lifecycle. If it remains feasible to continue working with these smaller firms as the project develops, we will, but we are also able to help sell companies or projects to the major firms and start over if required.

How has the demand for legal services changed as the market has evolved?

From a First Nations point of view, we are seeing firms looking to not only provide services to mines but now they are beginning to invest in mines and become partners. Québec is recognized for its proven track record of managing relations with Indigenous peoples. These include historical agreements that have allowed for a better operating climate compared to the rest of Canada.

The government has become more stringent with regards to environmental rehabilitation requirements, such as mining companies having to pay the total rehabilitation cost up front. Fasken has one of the biggest environmental law departments in the market and assists with the permitting process, public hearings, and ensuring environmental rehabilitation requirements are adhered to.

To what extent will the legalization of cannabis affect the mining industry?

In terms of health and safety for mining companies, I don’t see much of an affect as mines already enforce a zero-tolerance policy relating to any substance, be that alcohol or drugs. In terms of the market, we are seeing stocks related to cannabis companies on a rollercoaster, and this has created a lot of quick capital, but I feel the hype will disappear. I do not see the demand for metals disappearing, and due to a possible lack of exploration projects and thus supply, commodity prices should skyrocket.

Can you outline the tax incentives for companies with mining operations in Québec?

Firstly, the Flow Through Share (FTS) regime, which is available throughout Canada and offers a 25% tax rebate, has two additional “super flow through” deductions totaling 40% in Québec. Secondly, the government will give you a mining resource tax credit if you do not utilize a flow through. If you can raise actual cash and depending on where the project is in northern Québec, you become eligible for the tax credit. Thirdly, the government will give you a smaller incentive on mining duties payable. Over the last decade we have seen the combined flow through what is called a “charity offering,” whereby a mining company will issue flow through stock at a huge premium to market, and buyers will then donate that stock to a charity, who will then sell those shares to an end buyer, who will buy those shares at either market price or a slightly discounted rate.

What are the main objectives for Fasken in 2019?

We plan to continue playing a major role in the M&A market, as well as increasing activity in Canada for the development of mines. In addition to this, Fasken has started exploring more opportunities in Africa and other jurisdictions further afield. The mining industry has gone through a challenging period, particularly with the rise of the cannabis market limiting the flow of investment capital into the junior space. However, the fundamentals of metals are solid and companies will need to invest to maintain supply. Fasken is well positioned to assist all companies within the sector in a wide variety of transactions.

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