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  • Standing Up To Scrutiny: Athabasca Basin Activity

    (click to enlarge)

    Just one day after a research report was released on Lakeland Resources, the company reported expansionary plans in Saskatchewan's Athabasca Basin. Announced November 27, a joint venture teams the company with Star Minerals Group on two claims totalling 1,092 hectares. The new turf sits adjacently north of the Gibbon's Creek target, focal point of Lakeland's Riou Lake property.

    The acquisition takes place while results are pending from autumn field work at Gibbon's Creek. "Based on preliminary findings we decided it was important that we acquire that ground," Lakeland president/CEO Jonathan Armes tells "Star Minerals is focused on a rare earth project north of the Basin so the agreement works well for both companies."

    Gibbon's autumn campaign, including boulder sampling, line-cutting, a RadonEx survey and a ground DC resistivity survey, has just wrapped up, he adds. "We're putting all the data together and we'll get that out imminently."

    A distinct topographical feature of the new property is an uplifted block of basement rock that "highlights the evidence for structural offsets, a key feature of known unconformity-type uranium deposits," Lakeland stated. Historic work by Cameco Corp.-predecessor Eldorado Nuclear found several anomalous soil samples around the uplifted block measuring up to 0.01% uranium. Trenching by Eldorado showed concentrations of rare earths that might also indicate unconformity-type uranium mineralization. The property has also undergone 14 historic drill holes.

    Lakeland plans to follow up on the previous work while reviewing Gibbon's Creek data to identify drill targets. "We still have two other priority projects, South Pine bordering Riou Lake on the west, and Perch Lake farther east," Armes says. "There's lots more field work we can do, even during winter. Both radon and resistivity can be carried out during the winter, so we're not limited to fair weather programs."

    Gibbon's Creek and the new claims also benefit from close proximity to the town of Stony Rapids, a few kilometres away. Apart from the new acquisition, Lakeland has a portfolio of nine properties totalling over 100,000 hectares in the northern and eastern Basin.

    Under the JV agreement, Lakeland may earn a 100% interest in the two additional claims by paying Star $60,000 and issuing 600,000 shares over 12 months. Star retains a 25% buy-back option for four times the exploration expenditures up to 90 days following a resource estimate.

    Zimtu Capital Research & OpinionOne day before the announcement, prospect generator Zimtu Capital released a report on Lakeland. Written by Zimtu research and communications officer Derek Hamill, it places Lakeland in the context of Athabasca Basin exploration, the nuclear energy industry and the outlook for uranium prices. Presented as both research and opinion, Hamill's work shows a shareholder's perspective-Lakeland is a core holding of Zimtu.

    So a degree of self-interest can be acknowledged. But the breadth of research goes far beyond Lakeland, its people and projects, offering a level of detailed scrutiny not often applied to early-stage companies.

    Download the Lakeland Resources research report:

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: Disclaimer: Lakeland Resources Inc and Zimtu Capital Corp are clients of OnPage Media Corp, the publisher of The principals of OnPage Media may hold shares in those companies.

    Nov 28 2:09 PM | Link | Comment!
  • Perspectives On British Columbia: Discussion On Provincial Policies

    Mining and exploration companies headquartered in British Columbia operate all over the world. But what's it actually like to work in their home province? With coincidental timing, two recent events brought that question to mind. On October 3 the Fraser Institute released a report on B.C.'s mining policies. The next day the province's minister of energy and mines touted his government's work to a gathering of 180 industry professionals.

    The Fraser Institute based its report, British Columbia's Mining Policy Performance: Improving B.C.'s Attractiveness to Mining Investment, on past results from an annual international survey of industry executives. The 75-page B.C. study addresses "four barriers to investment"-unresolved land claims, regions declared off limits to mining, environmental uncertainty and regulatory hurdles.

    Alana Wilson, one of the report's three authors, tells the provincial mining study is the first of its kind for the Fraser Institute. A Quebec report is scheduled for release late this year or early next.

    The organization's annual mining surveys, she says, "get a tremendous amount of media interest. We also get a lot of calls and inquiries from government ministries around the world asking about our survey methodology, how specific factors are calculated. We know that governments are cognizant of the survey results and pay attention to them. But in terms of translating that into tangible policy changes, I can't give any specific examples."

    As expected, the report finds B.C.'s unresolved land claims "the single greatest factor deterring mining investment" over the last five years. The authors call on the province to expedite the treaty process, find ways to deal with bands not participating in the process, "develop clearer guidance for third parties to facilitate meeting the Crown's duty to consult" and discuss policy changes with industry.

    Second on the list of concerns is the threat that exploration and mining will be banned from certain regions. Indeed, the Windy Craggy "horror story" continues to haunt the industry. That 1993 New Democratic Party decision saw something of a BC Liberal reprise in 2010, when the government suddenly declared the Flathead Valley off limits to exploration.

    Addressing the third barrier, the authors question the credibility of B.C.'s environmental regulations. "Where regulations are opaque and unpredictable, the perception can arise that the process has been politicized, allowing special interest groups or politics, rather than scientific evidence, to guide policy decisions." In that context the report calls on the province to reconsider its ban on uranium and thorium mining.

    Duplication, inconsistencies and federal/provincial overlap make up the fourth barrier. The institute recommends Ottawa "provide greater clarity and consistent application of expenses eligible for Canadian exploration expenses," and that both levels of government gradually remove "distortionary tax incentives in favour of a single, lower rate of corporate income tax." Both parties should continue working "towards a single, clear and predictable one project/one process" regimen, the report urges. And, surprisingly given the public backlash that defeated the B.C./federal harmonized sales tax, the authors want the province to re-examine the HST.

    Yet they give B.C. credit too. The golden years of 2003 to 2007 were "also facilitated by improvements to the permitting process, including a new online mineral tenure system." Royalty sharing offers natives "a more active role in benefiting from mining and resource development." Reporting comments from surveys of previous years, the report quotes unnamed exploration executives who praised B.C. policies.

    Several other respondents differed, however, with remarks that are almost beyond the pale. Some examples include "aboriginal land grabs and shaking companies down for handouts and royalties" and "uncertainty related to the first nations 'veto' over mining projects."

    But native involvement is an opportunity, not an impediment, the province's minister of energy and mines said in his October 4 remarks to the Association for Mineral Exploration B.C. Bill Bennett had little else to say about the industry's greatest concern, even though he repeatedly described his talk as a report, not a speech. Nevertheless his feel-good generalities were warmly received by the lunchtime audience.

    He did have some specifics, though. "We're not going to raise your taxes," he said to applause.

    "We have no plans to change the Mineral Tenures Act with respect to notice or adding to the obligation to consult."

    Referring to his government's revenue sharing program as "ground-breaking stuff," he said, "I think that within the next five years the rest of Canada is going to realize that we're ahead of them" on native issues.

    On permitting, "notices of work have gone down to a 64-day average. Our target is to get them down by the end of this year to 60 days."

    The province will continue working with Ottawa to reduce duplication in environmental assessments, he promised. "We worked a long, long time on that and it's an improvement," Bennett said. "I think we can do better if we can get to substitution, personally, and we're going to keep working towards that goal."

    Flow-through tax credits will be reassessed for next spring's provincial budget, he pointed out. "I was told that the mining flow-through tax credit is expected to cost the province about $10 million in 2012-13. That to me is not a cost, it's an investment. That's the way I see it and that's the way I'll represent it."

    But the extent to which a mere cabinet minister can influence this government remains to be seen. Under Premier Christy Clark's BC Liberal predecessor Gordon Campbell, policies were determined by the premier and his unelected inner circle, who sometimes kept ministers in the dark until major decisions involving their departments had already been made. Clark, who trades largely on her personality, has yet to show how she'll govern.

    It was under her leadership that the government rejected Pacific Booker Minerals' TSXV:BKM proposed Morrison copper-gold-molybdenum mine despite a favourable environmental assessment. Speaking to following his speech, Bennett declined to discuss it. "I'm not going to get into the dissection of the decision," he said. "It's in court and clearly a minister would be far better off to let the courts figure that out."

    The company has asked the B.C. Supreme Court to order the government to reconsider the mine.

    Bennett told he's not aware of additional proposals similar to HD Mining International's plan to hire exclusively Mandarin-speaking Chinese for underground operations at its Murray River coal project.

    In October 2012 a spokesperson for Canadian Dehua, which holds a 40% interest in HD Mining (another 55% is held by Chinese coal miner Huiyong Holdings) said his company had three more coal mines proposed for B.C., which would all follow the same hiring policy. The BC Liberals overwhelmingly supported HD Mining's plan despite widespread public concern about Canadian jobs and the Chinese mining industry's notorious fatality record.

    But when asked by, Bennett played down his government's enthusiasm. "The only way that our government will support temporary foreign workers is if we are absolutely certain that they can't find workers here in B.C. first of all, or in Canada, to do the work and we know that's the threshold for the federal government…. We don't have a categorical support or opposition to it, we just take it case by case."

    Isn't he concerned that the imported workers are exclusively the same ethnic and linguistic group as the owners?

    "I haven't really thought about it," Bennett replied. "It's not relevant to me where somebody comes from or what language they speak."

    In an article about Chinese-owned mines in Tibet published last April, the Economist wrote, "Managers at big state-owned firms are usually Han Chinese, who in turn tend to regard their own ethnic kin as easier to control and communicate with than Tibetans."

    While HD Mining now says it will transfer 10% of its underground jobs to Canadians each year, those jobs might actually go to "temporary" foreign workers who become Canadian citizens. Under such a scenario, Chinese companies could maintain ethnic and linguistic exclusivity in their B.C. operations indefinitely.

    But that might apply only to actual mining positions. HD Mining does hire Canadians for other jobs, including a former deputy minister and former BC Liberal minister of mines.

    Regardless, Bennett's AME BC speech went over well. No doubt some of the audience remembered the industry-wide trepidation that suddenly ended with last May's unexpected BC Liberal re-election. Referring to the rival NDP's decade in office, Bennett couldn't resist reminding his listeners that "more mines closed in the 1990s than opened." Now B.C. has "20 major mines and major mine expansions moving through the environmental assessment office," he said.

    Oct 17 6:11 PM | Link | Comment!
  • Ned Goodman & Canada's Other Stock Exchange: The CNSX

    The amount and terms are confidential but Canada's other stock exchange got a boost in stature September 30 as Dundee Corp. (OTCPK:DDEJF) closed a strategic investment in the CNSX. Dundee president/CEO Ned Goodman, a strong critic of the TSX Venture regulatory regimen, becomes CNSX deputy chairperson.

    Addressing a September 12 panel discussion hosted by the Venture Capital Markets Association, Goodman called the Venture "a feeding source for the legal community." He added, "You need two hands to lift [the TSXV's] book of regulations and policies. It's absolutely mind-boggling all the things you're required to do to raise a half-million dollars-which means that half of that half-million will go to lawyers."

    The CNSX model, on the other hand, "reduces the time and expense companies face in going public, and in maintaining a listing, along with a high level of continuous disclosure," Goodman said in a statement accompanying the September 30 announcement.

    Speaking to on October 1, Goodman says, "I've been around the CNSX for quite a while, I even have a company listed there [Eurogas International CNSX:EI]."

    Stating his opinion of the Venture indirectly, he adds, "I think the country needs an entrepreneur's stock exchange. So I decided to help out."

    Although he describes issuers' regulatory responsibilities as "a fact of life" largely originating with the securities commissions, he says the TSXV compounds those obligations. "I would say there's tremendous difficulties, there's things thrown in there that mean your legal fees to get listed or stay listed are punishing, and it's almost like it was built for lawyers. You can't do it on your own and entrepreneurs like to do things on their own."

    CNSX Markets CEO Richard Carleton sees two-fold significance in Dundee's investment. "We look at it as a powerful endorsement of our services and our proposition from one of the major figures in junior capital finance in Canada," Carleton tells "Secondly, it provides us with more resources to continue our program of supporting the work of junior capital issuers in Canada with better quality secondary markets through some work we're doing with the dealers, and to build a market-making program that will ideally provide continuous two-sided quotes for all the issuers on CNSX. We're also looking to build more bridges to the independent dealer community, and of course Ned is a very important figure there too. We want to help them reduce their cost of trading and do their corporate finance activities more effectively in a lower-cost environment."

    But rather than build up the alternative, a new advocacy group called the Venture Capital Markets Association wants to fix the Venture. Just prior to the official launch in early September, founder and Cambridge House International chairperson Joe Martin told that over-regulation imposes unnecessary burdens on already struggling companies. After the Vancouver, Calgary and Montreal exchanges merged with Toronto, he explained, juniors lost "infrastructure" that promoted venture capital.

    "Since the exchanges were merged and bought out by the banks, there's been a noticeable change," he said. "The banks couldn't care less about junior capital. It doesn't make them any money and they control the stock markets. It's costing the average junior company $200,000 a year just to keep in compliance."

    By comparison, the CNSX charges what it calls "simple, fixed listing fees: $12,500 for application and $500 per month."

    Martin also said the Venture imposes unnecessary duplication. "For example, by law you've got to do your SEDAR filings and if you're falsifying those things it's criminal. You should be charged. So why the heck do we have to have the exchange put another level of inquisition in there?"

    Martin said he knows one executive who's "so frustrated with what they're doing, he's thinking of moving everything over to CNSX. The CNSX just says, 'You've got your SEDAR filings, you've done your work.'"

    Junior explorers currently make up over 50% of CNSX-listed companies. But with only 180 issuers, the exchange has less than a tenth of the Venture's size. Does Martin see the CNSX gaining more prominence? "Well that's up to them," he replied. "I can't speak for them." His advocacy group, meanwhile, has begun a campaign of lobbying, fundraising and public awareness.

    Obviously Carleton would like to see juniors move from the Venture to the CNSX. "We certainly want to make a compelling case for them to do so. One of the things we want to do is ensure that companies spend less of their money meeting exchange requirements and more of their money growing their business. We do want to offer solutions to the small issuers and independent dealers to help them through these difficult times."

    Of course efforts to recruit listings face challenges, Goodman emphasizes. "We're competing against the banking community that owns all the stock exchanges other than the one I just bought, and the banks control the retail products so it's going to have problems. We've even heard stories that banks won't accept margin on shares listed on the CNSX."

    Attracting new companies is "not going to be easy. But I've created a career by doing things that aren't easy."

    He points to NASDAQ for inspiration. "When it went into the business, no one wanted to know anything about it," Goodman says. "Now the New York Stock Exchange has a complete floor of people that do nothing but try to convince NASDAQ players to come back to the New York Stock Exchange when they were refused in the first place because they were start-ups."

    Taking part in the Dundee announcement was the CNSX's largest shareholder, Urbana Corp TSX:URB.A, which holds interests "across the financial services sector from exchanges to banks to broker dealers and investment managers." Urbana president/CEO Thomas Caldwell chairs the CNSX board.

    As the new deputy chairperson, Goodman says, "I'm partners with him in the sense that we've agreed on how the place is going to be run."

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: DDEJF, CNSX, mining
    Oct 05 2:53 PM | Link | Comment!
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