Platinex Settlement Sets The Tone For Ontario Disputes

It’s always been a small, grassroots venture that never particularly gripped the market’s attention on its technical merits, but Platinex’s Big Trout Lake platinum group metals project in far northwestern Ontario will likely be a frequent touchstone in the years ahead whenever land disputes arise in Canada.

The Ontario government has just agreed to pay the Torontobased junior mineral explorer a cool $5 million to drop lawsuits against the Crown and the local Kitchenuhmaykoosib Inninuwug First Nation, which has vehemently opposed Platinex’s exploration activities in the area throughout the last decade.

In more recent years, the confrontation had gotten physical, with KI members blocking access to Platinex’s claims and leases, and provincial police being called in. Platinex responded with lawsuits against both the KI and the Crown, and six KI members were jailed in 2008 for contempt of court.

As part of the settlement, the provincial government is withdrawing the contested land from any further staking or mineral exploration, although Platinex will retain a 2.5% faint-hope net smelter return royalty for the next quarter century.

Remarkably, both sides of the dispute are coming off the settlement announcement broadly feeling like winners. The only big losers here are the long-suffering taxpayers of Ontario, who are once again being ordered to bail out a private company.

• Farther south in northwestern Ontario, there was some unadulterated good news for the mining community: North American Palladium is restarting mining at its Lac des Iles palladium mine, located 150 km northwest of Thunder Bay.

Mining was suspended in October 2008, at the onset of the global recession, when palladium prices plunged below US$180 per oz. from US$475 per oz., or well below the mine’s breakeven point around US$300 per oz.

Today, palladium prices are once again heading towards US$400 per oz. as the palladium-dependent global auto industry recovers.

NA Palladium will rehire 150 employees and is gearing to produce its first concentrate in the second quarter of 2010. The mine will produce 140,000 oz. palladium per year in the next two years, pulling ore only from the underground Roby zone.

More importantly over the longer term, the company has greenlighted development of the nearby Offset zone, and will soon start development of a 1.5-km ramp into Offset. The company believes Offset could produce at least 250,000 oz. palladium annually for at least 10 years at low costs.

• In yet another example of mining’s boom and bust cycles, the partners in the McClean Lake joint venture in northern Saskatchewan are putting their uranium mill on care and maintenance in mid-2010. The JV is held 70% by France’s Areva, 22.5% by Canada’s Denison Mines and 7.5% by the Japanese consortium OURD Canada Co.

The partners say the mill will grind on until July, processing stockpiled ore and producing 1.86 million lbs. U₃O₈ in 2010.

But the partners want to retain some staff so that the mill can restart whenever uranium ore becomes available from Cameco’s flood-crippled Cigar Lake mine, and/or from the JV’s Caribou, Midwest or McClean North deposits.

• South of the border, the largest environmental bankruptcy in U.S. history by American Smelting and Refining (Asarco) has resulted in the payment by its new parent Grupo Mexico of US$1.79 billion towards environmental cleanup and restoration at more than 80 contaminated sites in 19 states.

The U.S. Justice Department describes it as the largest-ever recovery of money for hazardous waste cleanup.

The funds are being divvied up between: the United States government, US$776 million; the Coeur d’Alene Work Trust, US$436 million; three custodial trusts involving 13 states and 24 sites, US$261 million; and payments totalling over US$321 million to 14 different states to fund obligations at over 36 individual sites.

Now under the wing of Mexico’s Grupo Mexico, the 110-year-old Asarco nevertheless remains a leading copper producer and one of America’s largest nonferrous metal producers, despite seeking Chapter 11 bankruptcy protection in August 2005.