CANADA Law and Practice Contributed by: Darrell Podowski, Jennifer Poirier, Joel Matson and Simi Fagbongbe, Cassels Brock & Blackwell LLP
amendments will also broaden government discretion to order pre-closing net benefit to Canada reviews for proposed acquisitions of control of Canadian busi - nesses, unless the investor is from a trade agreement country. The developments discussed in this section portend significant scrutiny on proposed acquisitions and investments in Canadian mining companies by Chi - nese, Russian, North Korean and Iranian investors and other state-owned or influenced entities, includ - ing non-Chinese companies with material Chinese shareholders. In November 2024, the federal government released its annual report covering foreign investment reviews under the ICA from April 2023 through March 2024. The report confirmed that foreign investment contin - ues to trend toward pre-COVID-19 levels. It also noted a decrease in the number of extended national secu - rity reviews, down from the peak number of reviews seen in the 2022–2023 fiscal year. 5.3 International Treaties Related to Exploration and Mining Canada is a party to several multilateral free trade agreements and investment agreements, which give foreign investors (including Canadian mining compa - nies) the right to file a claim for damages against the government of the host country for expropriation or unfair or discriminatory treatment of their investments and investors. The Canadian government’s Foreign Investment Promotion and Protection Agreement Model confirms that Canada intends to continue pro - viding international dispute resolution protections to foreign investors. To date, Canadian investors in the mining and oil and gas industries have been relatively more aggressive in asserting arbitration rights to safeguard their offshore interests, with the majority of their complaints target - ing Latin America. Investors must now submit claims under the United States-Mexico-Canada Agreement. The Canadian mining sector is subject to Canadian economic sanctions legislation as well as foreign anti- corruption legislation, including the Extractive Sector Transparency Measures Act, which requires Canadian
mining companies to implement mandatory report - ing standards and report annually on payments to all levels of government, domestically and internationally. 5.4 Sources of Finance for Exploration, Development and Mining In Canada, the traditional sources of financing for exploration-stage projects have been capital raises through equity markets (eg, private placements or public offerings) and option/joint venture transactions – eg, a junior company that owns a project grants an option to a more senior company for it to earn a con - trolling interest in the project in exchange for explo - ration expenditures (or cash payments). In option/ joint venture transactions, the junior company is not required to fund the initial stages of the project and is “carried” until the senior company earns its majority interest, following which the parties form a joint ven - ture and fund the project pro rata. As a project evolves into the development phase, debt financing becomes more accessible (eg, bond or convertible debt offerings, or bank facilities). Once a production decision is made based on a feasibility study, project financing is the most common source of financing for mine construction, with the assets of the project being offered as security. Such project financing may be supplemented by offtake agree - ments, where the producer will sell all or a percent - age of future production from a specific facility to an end user. Other less traditional finance methods, such as roy - alties and metal streaming, are used in financing all stages of a project, even well before the construction of a mine. Stream financings are where a company agrees to sell a certain percentage of one or more of the metals/minerals produced from a mining opera - tion to a streaming company, at a fixed price that may be lower than the prevailing market rate, in exchange for an upfront payment. This enables a company to wholly or partially monetise a specific metal/mineral prior to physically extracting it.
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