CANADA Law and Practice Contributed by: Darrell Podowski, Brian Dominique, Joel Matson and Christa Alvernaz, Cassels Brock & Blackwell LLP
company agrees to sell a certain percentage of one or more of the metals/minerals produced from a mining operation to a streaming company, at a fixed price that may be lower than the pre - vailing 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. 5.5 Role of Domestic and International Securities Markets in the Financing of Exploration, Development and Mining Domestic and international securities markets play an especially crucial role in the financing of mining projects in Canada. As discussed in 5.4 Sources of Finance for Exploration, Devel- opment and Mining , junior companies rely on raising capital through Canadian equity markets (and, in some cases, in other markets, such as those in the United States, Australia and Lon - don), especially at the early stages of a project. The amount of investment a junior company can attract depends on commodity prices, world economic health, the state of global mining cycles and competition from other industries for this risk capital. 5.6 Security over Mining Tenements and Related Assets The types of security available over mining- related assets in Canada differ depending on the stage of development and the location of the project. For exploration-stage projects of Crown min - erals, a lender or financer can obtain minimal security due to the nature of the type of mineral tenure that is granted early in a project in most provinces or territories; typically, these are min - eral claims granted under statute. The type of security that can be granted will depend on the statute creating the interest and the related reg -
istry. Some statutes deem mineral claims to be a form of personal property, while others deem mineral claims to be an interest in land equiva - lent to a lease. Regardless of the interest, land title statutes and personal property security legislation typically do not apply to Crown minerals, and security must be registered in accordance with the min - ing statute. Most provincial mineral statutes and registries will, however, allow notices to be filed on mineral claims, giving notice of the security granted over such mineral claims. Many of these statutes do not provide a priority regime and are merely a notice to third parties regarding a potential encumbrance or interest, and the prior - ity is governed by common law. As a project advances, most companies will upgrade their mining or mineral claims to a more secure type of tenure, typically a mining lease (or equivalent). In most jurisdictions, mining leases are considered an interest in land and, therefore, mortgages and other encumbrances can be filed on title, which could provide priorities and enforcement rights to lenders or other financers, depending on the jurisdiction and nature of the mining tenure. When the project has advanced to the stage of mine construction, the security for project financing is generally provided at the project level, by the project entity that owns the project and the minerals.
153 CHAMBERS.COM
Powered by FlippingBook