Commentary: Plan Nord+ – Fresh breezes from the Belle Province

Having just recently attended the Precious Metals Summit in Beaver Creek, Colo., and the Denver Gold Show, I was pleased to see that even with dampened enthusiasm on the show floors due to the downward-trending price of gold, there was plenty of good cheer to be found — most notably among my fellow Quebec delegates, excited by the renewed prospects for Plan Nord, the mega-economic development strategy for Quebec’s north that had stalled under the previous Parti-Québécois (PQ) government.

In fact, there was an undeniable perception among the delegates that the new Liberal provincial government’s pledge to revamp Plan Nord (or “PlanNord+,” as it’s being called in some circles) will, at the very least, stabilize the mining and exploration sector in Quebec and provide the impetus to stop the province’s continuing slide in the Fraser Institute’s annual global mining survey.

From 2007 to 2009, Quebec  ranked first in the survey, then dropped to fifth in 2011, eleventh in 2012 and finally twenty-first in 2013, due largely to changes in Quebec’s mining and tax policies under the PQ government.

Plan Nord is the economic development strategy launched by the Liberal government of former premier Jean Charest in May 2011 to develop the natural resources sector north of the 49th parallel in Quebec. The 25-year plan was intended to foster nearly $80 billion in energy, mining, and forestry investments, and create quality jobs and infrastructure development.

As the centrepiece of the previous Liberal government’s political legacy, Plan Nord had received the full support of the mining industry, as well as the endorsement of most of the region’s First Nations.

However, with PQ’s election in late 2012, Pauline Marois’ administration repositioned and re-branded many of the Plan Nord ideas. They even renamed Plan Nord as “Nord Pour Tous” (North For Everyone) in an effort to fend off opposition by environmentalist groups in the province.

The unfortunate reality is that the PQ’s downplaying — if not outright dismissal — of Plan Nord, along with some ill-advised tinkering with the mining tax regime, led to Quebec becoming a less attractive global mining jurisdiction and fed into the general unease caused by the worldwide mining markets slowdown.

It was, indeed, a blessing for junior exploration companies in the province that alternative financing solutions, such as the flow-through share donation program, could help keep at least some capital flowing in an extremely tight market.

However, the election in April 2014 of a majority Liberal government under Philippe Couillard has brightened the future of the Quebec mining and the resource sector.

Plan Nord+

Under Plan Nord+ the new Quebec government has already committed nearly $5 billion in funds to develop renewable energy sources north of the 49th parallel and $33 billion for investment in the mining sector, including building infrastructure such as roads, rail lines and airports.

Some of the highlights of Plan Nord+ that have already been announced by the Couillard government include reviving a feasibility study on extending a Labrador Trough rail line that would complement the two railways that connect the St. Lawrence River deep-sea port of Sept-Îles to the iron-ore operations to the north. It also includes extending and repairing highways to the Côte-Nord region and as far north as James Bay.

Lastly, the government has also committed to boosting its direct investment in mining and oil and gas companies by acquiring significant equity interests in a number of plays. Plan Nord+ will also encourage the development and maintenance of smaller, local hydroelectric projects that should benefit remote northern communities.

While Plan Nord+ addresses some of the relatively immediate needs for strategic infrastructure in Quebec’s northern region, it still adheres somewhat to the mantra that “if you build it, they will come.” That said, there is a wealth of untapped opportunities in the Plan Nord region that could captivate the interests of domestic and global mining companies.

The territory in question currently produces — or is in a position to produce — substantial nickel, zinc and iron-ore, and hosts part of Canada’s overall gold and mineral-production capabilities, as attested by projects such as Raglan, Nunavik Nickel, Arnaud, Bracemac-McLeod, Strange Lake, Coulon, Eagle Hill Exploration’s Windfall property near Lebel-sur-Quévillon, Bachelor Lake, Goldcorp’s world-class Éléonore gold mine, which begins production this quarter, and Stornoway Diamond’s Renard diamond mine project, which is under construction.

Meanwhile, exploration plays in the region — whose proponents were active participants at the Beaver Creek and Denver shows — include projects like Eastmain Resources’ Clearwater and Eastmain gold projects, Virginia Mines’ numerous projects in the James Bay area, Balmoral Resources’ Martiniere gold project and Grasset nickel-copper-platinum group metals project.

Immediate impact

The Quebec Liberals’ renewed push on Plan Nord seems to be having an almost immediate impact on companies in the junior exploration sector — the lifeblood of the mining sector in this country — who are now finding interested investors knocking on their doors. This is a pleasant change for juniors, who have often had to look for alternative capital-sourcing options to continue their operations.

For example, flow-through share donation financing (FTSDF), a program established in 2007 by my firm PearTree Financial Services to bolster the fundraising efforts of registered charities across Canada, has been a lifeline for many juniors in Quebec and elsewhere. The program provides access to otherwise unattainable — yet much-needed — institutional and offshore capital, with less dilutive impact than standard share offerings.

Now, with Plan Nord+ looking ready to take off, the full social impact of a program like FTSDF can really take effect, as the prosperity of the Quebec mining sector gets passed along to the benefitting charities. It’s a winning proposition for all stakeholders.

With an energized junior exploration sector in northern Quebec, combined with the ongoing work of established large companies such as Goldcorp, Agnico Eagle Mines and Hecla, I believe the province, as a whole, is quickly re-establishing itself as one of the most favourable jurisdictions in the world for mine explorers, developers and producers. 

The Plan Nord initiative can be viewed as a generational investment that could propel Quebec to becoming a major supplier of commodities to the ever-growing Asia-Pacific region (particularly China and Japan). Add the potential development of other strategic transportation corridors in Canada’s north, and the future prospects for Plan Nord+ are looking brighter than ever.

— Éric Lemieux, M.Sc., P. Geo., is a consulting technical advisor for PearTree Securities (http://peartreefinserv.com). Before joining PearTree, Lemieux was a sell-side mining analyst with Laurentian Bank Securities. As a consulting geologist-analyst, he has worked with clients including the Quebec Securities Commission, the New Brunswick Securities Commission and the Montreal Exchange. Previously, as an exploration geologist, he managed projects for Cambior, Noranda and Soquem.

Lemieux owns the following stocks: Balmoral Resources, Eagle Hill Exploration, Eastmain Resources, Goldcorp, Stornoway Diamond and Virginia Mines.