Many Free Miners will see their fees pursuant to the Mineral Tenure Act Regulation (the Regulation) change dramatically with changes implemented on July 1, 2012 (the Amendments). While the Ministry of Energy and Mines (the Ministry) maintains that the Amendments are as revenue-neutral as possible, the reality is that many will see their operational costs increase depending both on how their claims are managed and what stage of development their claims are at.
For those fairly comfortable with the long-standing procedures and fee structure in place pursuant to the Regulations, the Amendments are a significant overhaul and will substantially alter the processes involved in acquiring and maintaining title. Delays can be damaging to any mining operation and all those with a vested interest would be well served to seek legal advice to determine how the Amendments will affect their operations.
The Amendments will abandon most of the registration fees presently required by the Ministry. Specifically, the Amendments abolish the registration fees associated with: exploration and development work; changing a claim's expiry date; making payments instead of exploration and development; using a claim's one-time 100% Portable Assessment Credit (PAC); amalgamating a claim; reducing a cell claim; and transferring ownership.
The changes are intended to increase the efficiency of the system and encourage Free Miners to submit all of their work by reducing the fee categories from 18 to 10. It is hoped this will provide the Ministry with more complete knowledge of the geological work being undertaken on mineral claims in British Columbia by removing a bar to Free Miners registering their work. Finally, this change attempts to make the Amendments as revenue-neutral as possible which is one of the Ministry's stated goals in implementing these changes.
There will be two changes to the tenure acquisition system currently in place: first, the number of cells that can be selected when registering an individual claim will be increased from 25 to 100; and second, the registration fees for claims will be increased. For mineral cell claims, the per hectare fee will increase from C$0.40 to C$1.75. Placer cell claims will see their registration fees rise from C$2 to C$5 per hectare.
The increase in cell selection per claim works in concert with the addition of a subdivision structure in the Amendments to allow Free Miners to exert greater control over the size and boundaries of their claims. The Amendment to the registration fees is a market correction for fee values that have not changed in more than two decades. Moreover, this acquisition fee increase is also used to combat a regulatory oversight that has been exploited in recent years. Under the current Regulations, it is often more cost-effective for Free Miners to let their claims expire on an annual basis and then reacquire them immediately thereafter in order to avoid having to meet any maintenance requirements. The increase of the acquisition fees is an attempt by the Ministry to close this loophole. Lastly, both of these changes to the Regulations with respect to tenure acquisition accomplish another of the Ministry's stated goals – to update certain structural elements of the Regulations.
The Amendments will make significant alterations to the work requirements involved in the maintenance of a claim. Specifically, a new four-tier system for mineral claims will be implemented to replace the old two-tier model. Along with this, the tiered assessment work requirements (which will continue to be assessed on a per hectare basis) will increase to C$5 for the first two years, C$10 for the third and fourth year, C$15 for years five and six and for any subsequent year the value will be C$20. The current Regulations are structured with a C$4 registered work value for years one through three, followed by an C$8 value for all subsequent years. For placer claims, the one-tier assessment work requirement will continue, but the value will increase from C$10 per hectare to C$20.
The alterations to the work requirements, along with the Payment Instead of Exploration and Development (the PIED) and PAC changes, serve as a response to industry concerns about the preponderance of undeveloped mineral claims in British Columbia. The Ministry is trying to encourage more exploration and development on mineral lands through this amendment. The work requirement changes force Free Miners to conduct more work on their claims in order to avoid the PIED. The Amendments will see the work requirements in British Columbia fall in line with provincial standards across Canada as the requirements have not been updated in a number of decades.
Payment Instead of Exploration and Development
For Free Miners intending to maintain their claims through the PIED, the Amendments stipulate that the PIED will be double the value of the corresponding exploration and development work that would otherwise be required to maintain the claim. Moreover, the PIED will now have a minimum pro-rated period of six months (a substantial increase from the one-day minimum stipulated by the current Regulations). This means even if a Free Miner wishes to maintain a claim for an extra day beyond the expiry date, they will have to register a PIED for a minimum of six months to do so.
A stated goal of the Ministry with respect to the Amendments is to increase the amount of mineral land available. It is hoped the alterations to the PIED will help accomplish this by making it more onerous for Free Miners to hold tenure of mineral lands without actually registering any work on it. An ancillary purpose of this increase is to discourage mineral land speculation to some degree.
Lease Rental Rates
Another change stemming from the Amendments is that lease rental rates will increase dramatically. For mineral leases, the rental rates will go from C$10 per hectare to C$20. Placer leases will see an even greater increase as they rise from C$5 to C$20 per hectare.
Placer Claim Production Limits
In response to two key industry concerns – that production limits are too low and that the limits for cell and legacy claims need to be harmonized – production limits will be raised for placer claims. Under the current Regulations, placer claims can produce 1,000m3 of paydirt per cell or 2,000m3 from each legacy claim. The Amendments will allow for a 20,000m3 production limit from each cell claim or legacy claim.
To increase available mineral land, the Amendments will enable the subdivision of cell claims. Subdivision lets the recorded holder subdivide the original claim by registering two or more new subdivided cell claims (there are various stipulations as to the implications and requirements for a subdivision event and they can be found in section 5.1 of the Amendments). This Amendment provides Free Miners a vehicle with which to subdivide and sell off any parts of their claims that they are not using or any parts they simply wish to sell.
Portable Assessment Credits
To further the broad policy of encouraging more exploration and development work on mineral lands, the Amendments will increase the value of credits required for a PAC from C$16 per hectare per year to C$40. This increase to the per hectare credits required to maintain a claim pursuant to section 31 of the Mineral Tenure Act has the effect of draining each claim's PAC account much quicker than under the current Regulations. This means that Free Miners will either need significantly more work assessment credits to maintain their claim through a PAC, or they must register more work on an annual basis in order to maintain their claim while avoiding assessment of the increased PIED values.
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.