Key Takeaways from PDAC 2015 Greenland Delegation to Canada
Key Takeaways from PDAC 2015 Greenland Delegation to Canada Takeaways from PDAC seminars + investors recommendations Fraser Institute - www.fraserinstitute.org Fraser Institute Mining Survey measuring perceptions of mining jurisdictions from responses of mining executives showed a drop for Greenland 9 spots from 2013 to ranking 32 nd in 2014. Fraser Institute warned Greenland that although the country has bene a top performer in the past, the perceptions globally are starting to slip and this is a good time to take the warning and evaluate what can be done to mitigate for the future. 2014 results: decline caused by poor taxation, concerns with geological database, increased trade barriers, and the availability of labour/skills. Investment Attractiveness index which blends Best Practices Mineral Potential and Policy Perception show Greenland dropping from top 10 down to 41st place. However financiers on the panel agree that the mining survey does not accurately reflect the attitude of investors so this should not raise major alarms to the Greenlandic mining community. What the survey does do is provide content for reflection for the Greenland government in key areas such as policy perception, tax policy, transparency, stable political climate, concerns with geological database that are areas the government can control to increase mining attractiveness for Greenland. Areas of strength in 2014 include security environment, political stability and administrative uncertainty. Like all mining jurisdictions Greenland is competing with other mining jurisdictions around the world to attract the right financing and exploration activity required to create a stable mining sector. These explorers, junior mining companies and investors look on a global scale to find their next activities, so Greenland’s global positioning is important. Mining Reporting for Sustainable practices Canada and Australia are mature mining jurisdictions that have best practices already in place that have been tested and revised continuously over the last many decades of large mining projects in both countries. This experience is available for Greenland to implement locally such as the ‘Towards sustainable Mining’ initiatives by Mining Association of Canada that operates a transparent and industry supported mining report card that other countries such and Finland and Norway are also working to implement. The process does not need to be reinvented; Greenland should look to experienced neighbours to learn from their experiences. Impact Benefit Agreements Another example is with Impact Benefit Agreements and how to use them as a tool for communicating with mining stakeholders. They can be used in several ways and each mining jurisdiction in Canada has a different method, unique for their situation. The delegation was still very unknowing on this topic and would like to learn more from experts such as BLG law firm that acts as advisors for IBAs in northern communities in Canada. Financing Perspective PDAC President Rod Thomas showed us that Equity markets for exploration are down globally, financing is difficult to attain for all mining jurisdictions, and this is not unique for Greenland. In Canada, mining is seeing an increase in debt financing, increasing from 2012 to 2013. The number of mining companies publically listed is still decreasing from 2012 levels Canada tends to be a lead to the rest of the global mining industry in terms of boom and bust. Exploration expenditure in Canada is still down in 2014, with $1.6B forecast (2014), down from $2.37B (2013), $3.91B (2012), $4.39B (2011) Early stage exploration is the most difficult to finance, most banks and investment houses will not invest in exploration projects until a proven resource base has been certified. Canadian, UK and Australian financiers are questioning why Danish investors are not active in Greenland. There is a general feeling that Danish investors do not understand the Greenland/mining investment climate and knowledge transfer in these areas could be the solution to gaining further Danish financing for upcoming mining projects. The finance experts on the panel agree that a stable and transparent long term political climate is pre-requisite for any long term , serious investor Venture North group presented a financial model termed ‘Capital Contribution enhanced Funding Facilities to enhance Greenland’s access to mezzanine, senior debt, and even equity. The model is outlined in Robert Sheldon’s presentation available in Dropbox. Hatch Management Consulting advised that there is low appetite for multi-billion dollar projects, even though they may be technically feasible. It is suggested to start with small projects, as proof of concept and to adapt a risk mitigation strategy, growing the opportunity in Greenland based on proven results and to look to 3rd party infrastructure financing. Hatch provided examples in the Canadian landscape where public private partnership has worked for infrastructure funding such as QNSL Railway, Plan Nord, Ring of Fire, and Yellowknife ice road. Takeaways from the Investor Dinner Five of Greenland’s most advanced mining projects were in attendance for a VIP dinner at the Consul General’s residence on the eve of PDAC, organized by the Danish Consulate General in Toronto. The mining companies greatly appreciated the opportunity to gather in an exclusive environment with their key investors and the government, to share the updates of their projects and support one another in their initiatives. It was expressed several times that this type of event is very valuable and should be repeated at least every year, if not on a more frequent basis. It is the only time the Greenland mining businesses gather in one place. The group was very pleased to hear from the Greenland government on key areas such as licensing and working together to build a sustainable mining sector in Greenland, signalling the transparency and stability that the finance guests were hoping for. The presence was a signal that they are open for cooperation. Takeaways from Timmins Canadian companies have strong interest in partnering with Greenlandic companies in Greenland A valuable next step is to determine the exact areas where Canadian expertise is needed Local government and businesses are keen to re-establish the flight connection between Timmins and Nuuk to transport labour, supplies and other service support between the communities in lead up to future mining activity in Greenland. In addition to tourism benefits. Looking forward: Canadian Delegation to Future Greenland The Trade Council has been approached by several contacts in government, associations, investors and companies in Ontario interested in joining a trip to Greenland. Currently the Trade Council has put together a proposed program and is confirming participation for a group of maximum 15 to visit Greenland May 4-8 2015 in conjunction with the Future Greenland conference and b2b sessions. Final date for registration is March 30. Investor Seminar in Denmark Fall 2015 As a follow-up to PDAC, ACRM will undertake an investor seminar in Denmark in the fall of 2015 with different investors operating in the Arctic. The aim is to promote and show case investment models and ROI in the mining sector in the arctic to Danish/Greenlandic investors and subcontractors. PDAC 2016: Arctic Games in Greenland and Nordic Cooperation Arctic Games will be held in Nuuk in March 2016 and therefore the expected participation from Greenland Business Association and members is expected to decrease but a program will continue in cooperation with ACRM and the Danish Consulate in Toronto and will host any interested companies from Greenland that wish to attend. From this expected drop in numbers, a proposed plan is to join delegations with the other Nordic countries that also host a PDAC programme and look into the options for joint events such as a Nordic mining seminar, B2b session, and especially there is interested in working together on a panel discussion event on sustainable solutions and technology for mining from the Nordic countries. A complementary research report on Nordic solutions for mining is an option the organizers could work on to compliment this cooperation between the countries over the next year. Initial Planning for PDAC 2016 is expected to begin in late spring 2015. Delegation to Baffin Island, Nunavut - Baffinland Mary River project Following interest from the Arctic Cluster of Raw Materials, the Trade Council in Toronto has begun dialogue with local partners in Nunavut for a future delegation to the territory with the intention of visiting the Baffinland Mary River project. Nunavut is a territory in Northern Canada which shares similarities to Greenland in terms of geology, weather, remoteness, aboriginal communities and challenges with northern ‘high latitude’ mining such as access to infrastructure, skilled labour and arctic climate implications such as ice and snow. Nunavut is also relatively close in proximity to Greenland, with the two countries sharing Baffin Bay. Nunavut is a historic mining region, currently with two actively producing mines, and 4 producing mine sin the Northwest Territories. There are also over 13 advanced exploration projects in Nunavut. There is bi-lateral support for ongoing partnership, and a delegation to Nunavut would help to solidify these relations. Mary River is currently in construction phase and after conversations with the project leadership, it is suggested we wait at least one year to plan a visit to wait until construction has ended or is close to finishing to make the trip more valuable, as well logistics and accommodation are important to consider and it is recommended we travel in the late spring or summer – aiming for June/July 2016 at earliest. More information found at www.miningnorth.com Contacts from PDAC 2014 Programme – Presenters MaryAnn Crichton Managing Director, Investment & Business Planning, Hatch Management Consulting + 1 905 403 3952 [email protected] Adam Chamberlain Certified Specialist – Environmental Law Called to the Bars of Nunavut and Ontario (416) 367-6172 [email protected] Robert Sheldon Director, Business Development Venture North Group [email protected] Ken Green Director, The Fraser Institute [email protected] Ben Chalmers VP, Sustainable Development Mining Association of Canada [email protected] 613-233-9391 Rod Thomas, President PDAC [email protected] www.pdac.ca Siddarth Subramani Senior Consultant Hatch Management Consulting +1 905 403 4200x3304 [email protected]
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